FIDIC News

Annual conference to address the consequences of the need for innovation

The consequences of the need for innovation from a business perspective is the theme for the FIDIC 2010 Conference in New Delhi.

Managing innovation - The way forward, the theme for the FIDIC 2010 New Delhi Conference, addresses the consequences of the need for innovation from a business perspective, notably the challenging and difficult task that consulting engineering firms will have if they are to develop innovative solutions in a risk adverse environment where clients will be grappling with the impact of climate change and a new regulatory environment. Plenary sessions, nine seminars and several interactive workshops are being developed for the three-day event, with three key themes focussing on innovation risk in procurement, the impact of new policies and client attitudes, and the complex question of sustainability in projects.

FIDIC Construction Subcontract published

FIDIC has published a subcontract to accompany the two editions of the FIDIC Construction Contract.

The need for FIDIC to produce a subcontract for the FIDIC Construction Contract, 1st Edition 1999 (the "1999 Red Book") was occasioned for a number of reasons. Important amongst these reasons was the insistence of Multilateral Development Banks, when providing financing for EPC contracts, that the subcontracts issued under those forms be an internationally recognised form of subcontract.

Until now standard subcontract conditions designed to be used with the 1st Editions 1999 FIDIC suite of conditions of main contracts did not exist. The first standard condition of subcontract for use with the FIDIC Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer, 4th Edition 1992 (the 1987 Red Book") was published in 1994. The new subcontract, called the FIDIC Conditions of Subcontract for Construction and available as a Test Edition, has been written on the same basis as the 1994 FIDIC form: (i) the Subcontractor assumes the duties and obligations of the Contractor under the Main Contractor for the Subcontract Works, and (ii) paid-when-paid conditions have been maintained. The drafting task group of the FIDIC Contracts Committee, mindful that paid-when-paid conditions are not enforceable under certain jurisdictions, have included guidance notes and sample Particular Conditions for adapting the General Conditions of Subcontract to comply with the substantive law.

Considerable attention has also been given to the dispute resolution provisions of the subcontract. Clause 20 included in the General Conditions includes for an ad-hoc Subcontract DAB for the resolution of subcontract claims ("Unrelated Claims"). In particular the drafters have introduced the concept of a suspension period within which the Contractor must pursue claims made by the Subcontractor that arise out of the Main Contract ("Related Claims"). The suspension period "quantifies" the simple "best endeavours" obligation that is included in most other standard forms that the Contractor is to pursue subcontractor entitlements under the Main Contract. Additional effort has been made to provide alternatives for Clause 20 for subcontracts where (i) the Parties prefer a simpler dispute resolution process, or (ii) it can be anticipated that complex subcontractor claims are likely to arise that will be "related" to Contractor's entitlements under the Main Contract.

European services standardisation to address terminology

Europe's standards organisation is to develop standard terminology for consulting engineering services for both traditional and new sectors.

Measures are being taken to facilitate the provision of services between European Union (EU) Member States and to remove obstacles for professionals to work in other countries. In particular, a 2006 EU Directive has encouraged the development of voluntary European standards that facilitate the compatibility between services supplied by providers. A European Commission Programming Mandate to the European standards organisation CEN in the field of services provided an opportunity for the French standards organisation AFNOR supported by the European Federation of Engineering Consultancy Associations (EFCA) and France's SYNTEC-Ingénierie to examine the "Feasibility and opportunity to develop a standardisation work programme concerning engineering consultancy services". The aim was to evaluate the feasibility of reaching a consensus on a scope of work for harmonising EU best practices and for describing the degree of standardisation of scopes of services in order to create conditions for standardisation that would be useful, acceptable and effective in most EU countries.

The study concluded in July 2009 that standardisation was an appropriate response to the needs of the consulting engineering sector. It led to a proposal by AFNOR and the CEN Technical Board to set up CEN Technical Committee 395 (Engineering Consultancy Services). CEN/TC 395 will first develop standard terminology for the sector before assessing the need for further standardisation work. Two working groups have been established (for the standardisation of terminology for buildings, infrastructure and industrial units and for industrial products) to reflect the fact that consulting engineers are active not only in the traditional area of buildings, infrastructure and industrial facilities but also in services related to the definition, design, manufacture, and commercialisation of industrial products. Meanwhile, FIDIC, with input from EFCA, has published Best Practice Guidelines for the Definition of Services: Building Construction that take a first step in consolidating global best practice for defining consulting engineering services during the nine phases of building construction. Supplements covering the other two traditional areas of industry activity (infrastructure and industrial plant) will follow. Interestingly, the AFNOR feasibility study complemented the FIDIC guidelines by taking a first step in outlining the consulting engineering services that are involved in the various phases of industrial production.

Environmental management capacity to be developed

The FIDIC Member Association for Tunisia will partner with various organisations to help implement Environmental Management Systems.

Protection of the environment is a key issue for Tunisia given the importance of tourism. International Engineering Days organised in December 2009 by the FIDIC Member Association ANBEIC indicated that local consulting engineering firms needed to strengthen their capacity in the area. It was agreed that ANBEIC would work with the Centre International des Technologies de l'Environnement de Tunis
( CITET) and other partners to develop a programme to help organisations in both the public and private sectors to establish ISO 14001 certified Environmental Management Systems (EMS) given that European Union funding was available to help some 100 firms identify weaknesses in their EMS. FIDIC has offered to support the programme by making available an EMS Training Kit that was developed in association with the UN Environmental Programme (UNEP) and ICLEI, the international association of local governments.

Member firms to be required to implement integrity management

The CESA-South Africa President has announced that member firms will be required to incorporate business integrity as part of quality management.

The CESA-South Africa Business Integrity - The CESA Way conference held in Johannesburg in October 2009 focussed on adaption of the FIDIC Business Integrity Management System (BIMS) and the FIDIC
Government Procurement Integrity Management System (GPIMS) to the local context and how to fight corruption by forging partnerships with government. Keynote speakers were Trevor Manuel, Minister in the Presidency in charge of the National Planning Commission, who supported earlier commitments to help stamp out corruption, and Renko Campen, Past-Chairman, DHV, The Netherlands, and a member of the FIDIC Integrity Management Committee. Zulch Lotter, CESA President, presented the work that will lead to CESA's Business Integrity Guidelines that are being developed in parallel with the requirement for member firms to have BIMS as part of a Quality Management System.

ASPAC Asia-Pacific group has elected a new chair

Dennis Sheehan from Australia has taken over as chair of the ASPAC members' group at a time when ASPAC needed to formulate an agenda for the region.

Dennis Sheehan from Australia has taken over the chair of the ASPAC Asia-Pacific group of FIDIC Member Associations from Aki Hirotani who was elected to the FIDIC Executive Committee at the FIDIC 2009 General Assembly Meeting. ASPAC currently aims to coordinate information on capacity development events in the region, to establish a young professionals forum, to create an effective environment for communication among members, and to present the region's concerns to multilateral organisations, notably the Asian Development Bank, and to political groupings such as the Association of Southeast Asian Nations and the South Asian Association for Regional Cooperation. An ASPAC Task Group similar to that which developed an action plan for the GAMA Africa group of Member Associations is being considered in order to respond to ASPAC's main challenge, namely the wide diversity of countries which make up the Asia-Pacific region. This diversity means that it is difficult to establish a common agenda and a range of activities that meet the needs of all of the region's Member Associations.