eic board meeting - tmb.org.tr20seminar-fidi… · 17 april 2008 joint rub -eic seminar 5 eic...

RUB-EIC Seminar The EIC View on the FIDIC “New Books”

by Hakan Broman, NCC Interational

St. Petersburg, Russia, 17 April 2008

Joint RUB -EIC Seminar 217 April 2008

Structure of the Presentation

FDIC „New Books“ 1999

EIC Contractor’s Guide to the FIDIC “Red/Yellow/Silver Books”(2000 - 2003)

MDB Harmonised Edition of the “New Red Book” (2006)

EIC Position on MDB Harmonised Edition (not yet published)

FIDIC DBO Contract (2008)

EIC Position on FIDIC DBO Contract (not yet published)


FIDIC 1999 „New Books“

6

Guidepublished 2001

First Editions Published 1999


The EIC Contractor‘s Guides

EIC ContractorEIC Contractor‘‘s Guides on the FIDIC s Guides on the FIDIC „„New BooksNew Books““ were produced were produced between 2000 and 2003 and were all published in the ICLR.between 2000 and 2003 and were all published in the ICLR.

EIC Blue Book on Sustainable EIC Blue Book on Sustainable Procurement was published in 2004Procurement was published in 2004

March 2003March 2003March 2000March 2000 March 2002March 2002


EIC General Remarks

Characteristics of the New Red & Yellow Books

For traditional competitive tendering procedures

Balanced risk sharing between the Parties

Contract administration, supervision and certification is carried out by the EngineerEngineer is no longer impartial, but “shall be deemed to act for the Employer”

Claims must follow strict procedureon both sides

Characteristics of theSilver Book

For innovative tendering proceduresor negotiated contractsUnfair risk allocation in favour of the Employer

Contract administration, supervision and certification is carried out by the Employer’s RepresentativeEngineer is no longer impartial, but “shall be deemed to act for the Employer”

Claims must follow strict procedureon both sides


EIC Position on the FIDIC 1999 New Red/Yellow Books

Improvements

Employer’s Financial Arrangements (Sub-Clause 2.4)

Procedure for Employer’s Claims (Sub-Clause 2.5)

Engineer is agent of the Employer (Sub-Clause 3.1)

Performance Security (Sub-Clause 4.2)

Payment (Sub-Clauses 14.7 and 14.8)

New concept of Force Majeure (Clause 19)

Dispute Adjudication Boards (Clause 20)


EIC Position on the FIDIC 1999 New Red/Yellow Books

Retrogressions

Fitness for Purpose obligation (Sub-Clause 4.1)

Errors in Setting Out (Sub-Clause 4.7)

Completeness of Site Data (Sub-Clause 4.10)

Unforeseen Physical Conditions (Sub-Clause 4.12)

Termination for Convenience (Sub-Clause 15.5)

Limitation of Liability (Sub-Clause 17.6)

Time bar (28 days) on right to claim (Sub-Clause 20.1)


EIC Position on the FIDIC 1999 Silver Book

From the beginning, EIC has strongly opposed the publication of an such unbalanced FIDIC standard form

Contractor is asked to cover a wide range of risks, which leads to higher risk premiums

EIC was successful in convincing FIDIC to provide for a “health prescription” in the Introductory Note

“Silver Book” is not suitable for use under certain circumstances

Read the Introductory Note (and convince Employer to use the ”New Yellow Book”)!


EIC Position on the FIDIC MDB Harmonised Red Book

Part of World Bank’s Standard Bidding Documents for Major Works

MDB Edition accommodates some of the EIC comments, such as

Obtaining building permit is responsibility of the Employer

Employer’s Claims also under a risk of being time-barred

Engineer has to make determination within 28 days

Commencement of the Works only upon fulfilment of certain conditions

Additional right to refuse a Variation

Termination by the Contractor possible in case of “economic imbalance”


The new FIDIC DBO ContractFIDIC statements

Design + Construction + Operation in 1 single contract“Green-field” scenarioBase case: Operation for 20 yearsMinimisation of delays and optimisation of activitiesLess risk of price overruns due to cost commitment carried by the ContractorBetter quality since a Contractor has an incentive to design and build the facility well

EIC statements

EIC welcomes the fact that FIDIC has addressed the DBO option

DBO format opens the door for a competition based on quality rather than on price

BUT:

“New Yellow Book” + Annex for Operation a better option?

“One-size-fits-all” approach?

Performance Guarantee for 20 years’ contract life?


Selected EIC Comments on specific clauses

Sub-Clause 3.1: “Engineer” or “Employer’s Representative”

Sub-Clause 4.2: Split of the Performance Security into amount/percentage related to Design-Build and Operation

Sub-Clause 8.7: “Design life” instead of “residual life”

Clause 9: Clear delimitation between the obligations of the construction phase and the operation phase

Sub-Clause 13.1: Limited rights for Variations after completion of the facility, i.e. during the operation phase

Clause 14.18: “Rebasing clause” in order to provide for periodic updates of Asset Replacement Fund

The new FIDIC DBO Contract


Our experience on long-term projects

Financiers:City of St. Petersburg, EBRD, NIB, NDEP, Finnish Ministry of Environment, SIDA

Owner & Operator:SUE Vodokanal

Contractor: SWTP Construction Oy (Jjoint venture of NCC, Skanska and YIT)

Project Cost: appr. 180 mil. €

Project was timely completed and within budget and

St. Petersburg Wastewater Treatment Plant Project – a true international PPP!


EIC Contact

Address: EIC SecretariatKurfuerstenstrasse 129, D - 10785 Berlin, Germany

Phone: ++49 (0)30 /21286-244

Fax: ++49 (0)30 /21286-285

E-mail: [email protected]

Internet: www.eicontractors.de