project management in the context of fidic ver...

International Federation of Consulting EngineersFIDIC

Project Management in the context of FIDIC Conditions of Contract

EIC Annual Meeting – Belfast 2014

Svend PoulsenProject Director, Atkins – Chairman FIDIC Updates Task Group

The FIDIC Rainbow SuiteThe FIDIC Rainbow Suite

FIDIC publishes internationally

recognised forms of contract

for infrastructure works.

More than 40,000 copies supplied each year


Sharing the Project RiskEmployer's Risk and Control

Employer Specified Project

Employer Requirements

Risk allocation under Risk allocation under FIDICFIDIC

Contractor's Risk and Control

Requirements for Plant, Design –Build

EPC/Turnkey


The FIDIC Risk Allocation Philosophy• Balanced risk allocation

• Risk is allocated to the party that is best able to• Control and Manage the risk• Sustain the consequences

• Silver book is the exception• New for FIDIC

Risk allocation under Risk allocation under FIDICFIDIC

• New for FIDIC• Employer pays higher price to transfer more risk

• Based on commercial practice where projects where privately funded

• Contractual mechanism allows for only paying for risks that eventuate


Why an Engineer and not a PM?

Role of the Engineer under Role of the Engineer under FIDICFIDIC

The principle of the FIDIC Conditions of Contract is to engage an Engineer that has a sufficient relevant technical background to run a project and to make fair determinations for the benefit of the projectThe role of the Engineer can be considered as three-fold:1. To act on behalf of the Employer, as his agent;2. To administer the contract as it is written or can be interpreted.


2. To administer the contract as it is written or can be interpreted. (That would include within any limitations imposed on his duties and authority through the contract, typically through Particular Conditions of Contract Sub-Clause 3.1 [Engineer‟s Duties and Authority]);

3. To make decisions and determine on various matters in accordance with the contract

Defining the Role of the Engineer

RED Book Sub-Clause 1.1.2.4

‘Engineer’ means the person appointed by the Employer to act as theEngineer for the purposes of the Contract and named in the Appendixto Tender, or other person appointed from time to time by the Employerand notified to the Contractor under Sub-Clause 3.4 [Replacement ofthe Engineer].


As per Sub-Clause 1.1 Introductory

‘...the word ‘person’ can mean a company, so the Engineer may e.g. benamed as a firm of Consulting Engineers rather than an individual. Ifthe Engineer is a company then the company should designate anindividual to carry out the role of the Engineer.’


The Engineer shall act fairly and in accordance with theContract whenever he or she carries out any of theassigned duties and responsibilities under the Contract.

These assigned duties may include:


General obligations

These assigned duties may include:• any approval, check, certificate, consent, examination,

inspection, instruction, notice, proposal, request, test, orsimilar act


Arguably one of the most important but alsomisunderstood duties of the Engineer. It is describedunder Sub-Clause 3.5 [Determinations]:

Whenever these Conditions provide that the Engineer


Determinations

Whenever these Conditions provide that the Engineershall proceed in accordance with this Sub-Clause 3.5 toagree or determine any matter, the Engineer shall consultwith each Party in an endeavour to reach agreement. Ifagreement is not achieved, the Engineer shall make a fairdetermination in accordance with the Contract, taking dueregard of all relevant circumstances


There is no apparent time-limit for theEngineer to act in accordance with cl. 3.5….

….However, with reference to Sub-Clause 1.3 [Communications] this is put into

Determinations under FIDICDeterminations under FIDIC

Determinations

Clause 1.3 [Communications] this is put intoperspective:

Approvals, certificates, consents and determinations shall not be unreasonably withheld or delayed.


““Dispute” means any situation where (a) one Party makes a claim

against the other Party; (b) the other Party rejects the claim in

whole or in part; and (c) the first Party does not acquiesce,

provided however that a failure by the other Party to oppose or respond

Dispute resolution under FIDICDispute resolution under FIDIC

Claims = Disputes?

provided however that a failure by the other Party to oppose or respond

to the claim, in whole or in part, may constitute a rejection if, in the

circumstances, the DAB or the arbitrators(s), as the case may be,

deem it reasonable for it to do so.”

Ref. FIDIC Design, Build, Operate Conditions of Contract (2008)


“…. Major projects give rise to major risks, which have to be dealt with if they occur ....In these events, the claims procedures are specified so as to provided the degree of formality considered

Dispute resolution under FIDICDispute resolution under FIDIC

FIDIC Guide, pp. 88-89

to provided the degree of formality considered necessary for the proper administration of a…project .

Complying with these procedures and maintaining a co-operative approach to the determination of all adjustments should enhance the likelihood of achieving a successful project.”


Dispute Boards under FIDIC

• DAB method adopted by FIDIC – Red, Yellow, Silver and Green – Gold and Blue

Project Project Management Management under FIDICunder FIDIC

• Standing v. Ad-hoc– Standing DAB

• Red and Gold

– Ad-hoc• Yellow, Silver, Green and Blue


DB - Lessons Learned• Expectations and process must be managed by DB

– Define and document process early– Help to minimize procedural posturing during hearings

• No counsel present at hearings – parties manage– Help avoid frivolous claims and preserve relationships


– Help avoid frivolous claims and preserve relationships• Contractor should not be "claims minded"• Employer should not be "claims frightened"• Facilitate cooperation & positive working relations

– DB internally– Employer/Contractor

– Well reasoned decisions helps promote positive process


• Choose correctly– Standing v. ad-hoc– Composition of DB

• Ensure understanding of process


DB - Lessons Learned

• Ensure understanding of process • Ensure compliance with applicable legal system• Jointly define procedures

– Rules

– Establishing a ‘common culture'



Svend PoulsenProject Director Project and Construction Management

Atkins Danmark A/SArne Jacobsens Alle 17


Arne Jacobsens Alle 17DK-2300 Copenhagen SDenmarkT: +45 5251 [email protected]

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