The use of FIDIC Contracts and Agreements in the Nordic market

Kaj Möller (SWE), FIDIC Exec. Committee member 2011 – 2014. Liaison with the FIDIC Contracts Committee.

International Federation of Consulting Engineers

Professional Services Agreements

FIDIC publishes model agreements for professionals services:

- Client/Consultant- Joint Venture- Sub-Consultant- Representative

Works Contracts – Rainbow Collection

FIDIC publishes internationally recognized forms of contract for infrastructure works as well as for industry investments. Hard Copies, soft copies, e-book……

More than 40,000 copies supplied each year

Works Contracts – Red book spin-offs

Originating from the Construction-only (Red Book): •The 2010 Multi-Lateral Bank (MDB) Harmonized Red Book (Pink Book);•The 2011 Subcontract for Construction-only contract form.

Works Contracts – Silver book spin-offs

Originating from the 1999 EPC/Turnkey (Silver book)•The 2008 Design, Build and Operate form (The Gold book).

FIDIC Contracts - Advantages

Essential clauses.

Detailed definitions.

Consistent structure.

Risk allocated to party best placed to

control it, bear it, and deal with it.

Drafted by consulting engineers who

design and manage projects.

Range covers most needs.

Readily adaptable to fit requirements.

Positive FIDIC image.

World-wide acceptance

Tested for more than 50 years.

CLEAR, COHERENT

FAIR, EQUITABLE

THIRD PARTY

COMPLETE, FLEXIBLE

RECOGNISED

Procurement & Business Practice – Work in Progress

Contracts & Agreements in progress

•Design, Build and Operate 1st edition 2008 (Gold Book) form, additional updates, Retention Guarantees and ICC ref.;

•Client / Consultant 4th edition 2006 update;

•Joint Venture 1st edition 1992 update;

•Sub-Consultant 1st edition 1992 update;

•Short form (Green Book), Construction (Red Book), Plant and Design-Build (Yellow Book), EPC/Turnkey (Silver Book), 1st edition 1999 (Rainbow Suite) update;

•Dredging and Reclamations, 1st edition 2006 update;

•Sub-Contracts forms for Yellow and Silver Books, first release;

•Tunnelling Contract form, first release;

•Operate, Design and Build (ODB) Contract form, first release.

The use of FIDIC Contracts and Agreements in the Nordic market

Kaj Möller (SWE), FIDIC Exec. Committee member 2011 – 2014. Liaison with the FIDIC Contracts Committee.

International Federation of Consulting Engineers

National forms in the Nordic market

All Nordic countries have their own Conditions of Contract for works and services, e.g:

• Swedish General Conditions of Contract for Consulting Agreements for Architectural and Engineering Assignments (ABK 09);

• Danish General Conditions for Consulting Services (ABR 89);

• Finish General Conditions for Engineering Consulting Services (KSE 1995);

• Swedish General Conditions of Contract for Building and Civil Engineering Works and Building Service (AB 04);

• Swedish General Conditions of Contract for Design and Construct Contracts for Building, Civil Engineering and utilities (ABT 06);

The Nordic construction and eng. market

Globalization has finally reached the Nordics in full force. Global players use global suppliers. In the home market as well as overseas!

International Federation of Consulting Engineers

The Nordic construction and eng. market

From a protected national monopoly to full international competition.

Even the public funded Clients are looking around for alternative supplier!

Developed national markets for international suppliers have now reached the Engineering Consulting industry.

The Nordic construction and eng. market

So, are the competitors (contractors) coming?“North ring road Stockholm” – one main contractor Bilfinger (GER).

“Copenhagen Cityring” – main civil contractor Salini Construttori (ITA).

Olkiluoto 3 Nuclear power plant”, Helsinki. EPC contractor Areva (FRA) / Siemens (GER).

The Nordic construction and eng. market

So, are the competitors (consultants) coming?

“Bypass Stockholm”

A 22 km long section of the freeway ring-road around Stockholm, with some 18 km in tunnels.

Employer, Swedish National Transport Authorities.

Total Project budget app 3 BEUR.

Main engineering design agreement (25 MEUR) awarded at app. 40 EUR / h to a supplier with bulk engineering provided from Poland.

The Nordic construction and eng. market

So, are the competitors coming (consultants)?

Copenhagen “Cityringen”

A15.5 km long new subway line with 17 new sub-surface stations

Client, Metroselskabet I/S through Municipality of Copenhagen, Danish State and the Municipality of Frederiksberg.

Main Civil (EPC) Contract won by Italian Contractor Salini Construttori.

Salini procured Detailed Design services at app 55 EUR / h from Italian Engineering Consultant Technimont.

The Nordic construction and eng. market

Thanks to the global exposure, global Clients also invest in the Nordic countries!

Facebook Data Server Centre, Luleå (A), Sweden

•Facebook´s first Data Server Centre outside the US;

•Location deciding factors; Access to highly developed internet fiber

network; Cold climate in rural area and thus reduced

need for, but yet access to, inexpensive cooling capacity without restrictions;

Access to renewable energy, wind and hydro-electrical power;

Easy to achieve required security level in this remote area;

Access to nearby international full-scale cargo airport.

FIDIC forms in the Nordic market

What does all this mean in the context of the use of FIDIC Contract and Agreement forms in the Nordic countries 1 (2)?

• Private funded Nordic Clients: Well familiar and open to using FIDIC forms both in home market and overseas market, if not having established own corporate contract standard, which is a very rare case;

• Private funded global Clients; Prefer globally recognized forms such as FIDIC. Feel uncomfortable with national forms;

• Public funded Nordic Clients: Slowly moving towards internationally recognized forms. All Nordic countries has their own National forms. However, no regulatory obstacles to apply FIDIC forms for public works and services;

• As for Red, Yellow and Silver book, public funded Nordic Clients need to get used to main principles as “The Engineer”, Variation & Claim resolutions and “DAB´s”;

FIDIC forms in the Nordic market

What does all this mean in the context of the use of FIDIC Contract and Agreement forms in the Nordic countries 2 (2)?

• English is the Nordic people´s “first” language which reduces the doubt and hindrance of using FIDIC forms;

• There is an unfortunate development towards “commoditizing” Procurement Departments. FIDIC Agreement forms not necessary popular as they focus on QBS rather than CBS. However, the trend seems temporary as project tend to fail when being procured on this principle;

• Public funded Clients move towards EPC or Design-Build delivery methods. With more international Contractors in the market, this will generate an increased use of FIDIC Services Agreements for sub-suppliers.

FIDIC World Consulting Engineering Conference

Quality of Life – Our Responsibility

International Federation of Consulting Engineers

President Geoff French, UK

President Elect Pablo Bueno, Spain

Secretariat FIDICWorld Trade Center 2Geneva AirportBox 311 CH-1215 Geneva 15 Switzerland Tel: +41 22 799 49 00Fax: +41 22 799 49 01

fidic@fidic.org www.fidic.org

Managing Director Enrico Vink

Nordic Liaison Kaj Möller

kaj.moller@sweco.se

+46 734 12 65 03