Adopting standard contracts can help deliver sustainability goals on PPP projects

Speaking at a United Nations Economic Commission for Europe meeting, FIDIC's CEO makes the case for using standard contracts on PPP projects

FIDIC chief executive Nelson Ogunshakin has highlighted how using FIDIC standard procurement contracts can help to deliver sustainable development goals, when he spoke this week in Geneva at a working party meeting at the United Nations Economic Commission for Europe (UNECE) on how innovation and competitiveness can be achieved on public private partnership projects to achieve the UN Sustainability Development Goals (SDGs).

The meeting, held in partnership between the UN and the Chinese government team responsible for the One Belt and Road initiative (BRI), discussed ‘People-first Public-Private Partnerships (PPPs), which ensure that out of all stakeholders on a project ‘people’ are on the top. People-first PPPs focus on improving the quality of life of communities, particularly those that are fighting poverty, by creating local and sustainable jobs, promoting wellbeing, gender equality, access to water, energy, transport, education for all and social cohesion.

During the session, which was attended by representatives from over 50 countries including more than 25 experts, of which FIDIC was one, there was a debate on three categories of projects - international cross border infrastructure projects (transport projects); national-based projects (social projects); and so-called people to people projects (small scale communities projects).

Ogunshakin said: “The aim of the UNECE working party was to learn from global experiences on PPP and develop a new model which enables people to be at the centre of PPP projects. In essence this model should leverage on the Chinese ‘One Belt and Road Initiative’ to establish appropriate stages in the project life cycle - project definition, development, engineering, procurement, commission and operations – that embrace the UN SDGs across the process.”

FIDIC’s chief executive argued that adopting the new FIDIC 2017 standard procurement contract agreements enables project sponsors (government), promoters (special purpose vehicles) and investors (banks, international financial institutions etc) to incorporate the sustainability development goals agenda within the Particular Conditions part of the contract to deliver the UN agenda.

“FIDIC’s 2017 contracts are ideally suited to this task because they have been created with the UN SDGs in mind,” Ogunshakin said. “In addition, FIDIC advocates adopting a blended finance strategy to increase the number of bankable projects and using the expertise of the global professional consultancy and engineering sector to deliver institutional capacity required in the hosting country,” he said. “Using standard contract agreements and financial documentation can help to significantly reduce the risk associated with PPP projects while still helping to deliver the UN’s SDG agenda,” Ogunshakin said.

The working party meeting concluded that existing PPP project matrices can be used to develop the methodology for the evaluation of schemes and that additional guidance will be provided on the evaluation selection process to achieve the SDGs. Geoffrey Hamilton, chair of section in the economic cooperation and integration division of UNECE, said that expert organisations like FIDIC will be invited to contribute to the development of the evaluation process to secure the right outcome for the new PPP model.