copenhagen, 5th march 2009 dansk byggeri - export section1 by frank kehlenbach director of eic

Copenhagen, 5th March 2009Copenhagen, 5th March 2009 dansk byggeri - Export Section 1

By Frank KehlenbachDirector of EIC


15 MEMBER FEDERATIONS


With an aggregated international turnover in 2007 of more than 120 billion , European international contractors are the most important players in the international construction business.


EIC Contractor‘s Guides on the FIDIC „New Books“ were produced between 2000 and 2003 and have been published in the International Construction Law Review.

November 2004November 2004March 2000March 2000 March 2002March 2002 March 2003March 2003

EIC welcomes that FIDIC have enlarged its

suite of standard forms with a DBO option

Competition is based on efficiency & life-cycle costs

BUT: Uneasiness as the FIDIC DBO Contract assigns to

the Contractor a strict responsibility for the quality

or any loss or damage of the asset or loss of

production of the facility for a period of 20 years

EIC would have preferred that FIDIC had distinguished more clearly

between Design-Build and Operation & Maintenance phases

EIC doubts whether a “one size fits all” approach meets the

sector-specific demands

Copenhagen, 5th March 2009Copenhagen, 5th March 2009 5dansk byggeri - Export Section

Definitions are now in alphabetical order

Employer must detail his financial plan already

in the Financial Memorandum at tender stage

Contractor is not obliged to proceed with a

Variation during the Operation Service Period

Termination for Convenience now provides for

loss of profit

The issues of Risk & Responsibility, Insurance and Force Majeure

(“Exceptional Event”) have been re-arranged in a more logical way

Claims, Disputes & Arbitration clause includes new positive

elements


“Employer’s Representative” is in fact an Engineer!

Performance Security shall be valid also for

the Operation Service Period

Difficulties in establishing the meaning of the (new)

term “Design-Build” in relation to the “Works”

The provisions regulating the Operations Service

Period are under-dimensioned

Limitation of Liability clause has been watered down

considerably

A new “guillotine clause” with regard to the Contractor’s Claims

in relation to substantiation of claims


The FIDIC DBO Contract could open the door for a quality-

based competition for the lowest life-cycle cost of a facility

European contractors have a large experience in

providing Design-Build & Operation/Maintenance projects within

a single contractual package

However, in PPP schemes the contractor’s liability is usually

limited to the equity in the Special Purpose Vehicle, whilst no

such limitation is stipulated in the DBO Contract

EIC‘s DBO Contractor’s Guide shall draw the attention of

members to the risks and challenges of FIDIC‘s new form


Is there a sufficiently large market for this new FIDIC

standard form? For what type of projects, for which type of

clients and in which countries?

Is the FIDIC DBO form compatible with 3rd party

financing?

How will the incentives for payment during the

Operation Service Period work in practice?

Can the Contractor limit his liabilities and obligations?

Is the Dispute Settlement procedure (Clause 20)

adequate? Also for the Operation Service Period?


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


copenhagen, 5th march 2009 dansk byggeri - export section1 by frank kehlenbach director of eic

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