The opening event in FIDIC’s 2024 webinar series took place on 13 February 2024 with the future of procurement under the spotlight, writes FIDIC communications adviser Andy Walker.
The webinar, Where is procurement going? Future trends and challenges for the industry, organised by FIDIC’s Business Practice Leadership Committee (BPLC) and sponsored by Bentley Systems, looked at the crucial issue of procurement, exploring the latest developments and trends and discussing how procurement should evolve - and is indeed evolving - to deliver better and more sustainable infrastructure projects.
Speakers at the webinar, which was chaired by managing director of WSP Spain and Portugal Manuel Pérez Sierra (Spain), who is also the chair of the BPLC, included Ines Ferguson, business development director of TYPSA (Spain), Denis Rizaov, senior legal counsel at Granit Construction (Macedonia), Zanda Zarina, business development manager at JurisConsultus (Latvia) and international procurement adviser Dilek Macit (UK).
Introducing the webinar, Prashant Kapila, managing director of Intercontinental Consultants and Technocrats (India), FIDIC board member and the primary board Liaison for the BPLC, said that a key role of the Business Practice Leadership Committee was to promote the adoption of best business practices throughout the global consulting engineering industry and also to provide guidance and advocate for fair competition, consultant and contractor selection, procurement and appropriate risk allocation. To that end, it was very appropriate that the webinar was looking at where is procurement headed and discussing the future trends and challenges for the industry, he said.
Webinar chair, Manuel Pérez Sierra, managing director of WSP Spain and Portugal and chair of the FIDIC BPLC, said that the webinar would be looking at how procurement is and should evolve in the future. He highlighted that there was room for improvement in the area of procurement in the construction and infrastructure sector to improve efficiency. Pérez Sierra said that there was a need for training in the industry to improve procurement practices and to address key issues like sustainability and social value and how these impact on project development and delivery.
Key role of data
The first speaker Ines Ferguson, business development director of TYPSA and president of the European consultancy federation EFCA, spoke about a sustainable procurement toolkit that has been developed by EFCA with the MDBs. She said that the toolkit fostered innovation and would lead to project savings by talking a longer view, using procurement as a strategic tool to drive the sustainable delivery of projects. “We also need to make an effort to digitalise projects as data is crucial in achieving sustainability,” she said. Ferguson said that data management was crucial in improving decision-making and this needed to be embedded into contracts and the procurement process. “This means using quality as a determining factor in the selection process and moving away from price,” she said.
Every project is a different story
Denis Rizaov, senior legal counsel at Granit Construction, spoke about the procurement process as a risk management tool for clients and the consulting engineering industry. He highlighted the important role of the engineer on projects and the professionalism they apply to their work, which he said was crucial in delivering successful outcomes. Rizaov said that a FIDIC contract culture creates a sound basis for projects as they have been developed using expert input and take into account new developments and client needs like net zero and sustainability issues. He also made the point that every project was a “different story”, with new lessons to be learned. “Procurement builds a foundation and a skeleton for projects and if you make it right at the beginning then everything should run more smoothly,” he said. He also said that having a firm contractual basis made it easier to deal with challenges as they arose during the project.
Understand what you don’t understand
Zanda Zarina, business development manager at JurisConsultus, also highlighted the benefits of using FIDIC contracts and specifically the key values of quality, integrity and sustainability. Collaboration was also key, she said, and not just between consultant and client. There were many players involved in construction contracts and all of these needed to share a common understanding in order to achieve project success. Zarina also mentioned FIDIC’s guidance on the selection of consultants as important reading for those undertaking construction contracts. “We also need to do more to promote the benefits of FIDIC contracts in the Baltic region, especially the Golden Principles, which form a solid basis for successful project execution and delivery,” she said. She also made the important point that it is people who deliver projects and good communication and collaboration was crucial. Clients also need to be educated on risk management and wider project delivery issues and there was no substitute for that, she said, though she recognised that this was easier said than done. “Make sure you understand everything you don’t understand,” she advised.
Strategic role of procurement in delivering project success
International procurement adviser Dilek Macit said that procurement needed to be discussed at the project design stage and needed to have a louder voice at the table. “The more strategic role that procurement can play in the delivery of sustainable infrastructure the better,” she said. Multilateral development banks (MDBs) had an important role to play in formulating procurement and project delivery, said Macit. “We are looking for an informed client who understands their own capability and capacity and knows where there are gaps to be filled,” she said. Macit also highlighted the importance of clients having proper governance and risk management in place and she said that the MDBs were in a position to influence this, especially in the area of ESG (environmental, social and environment). “We also need to ensure that in challenging times best practice is followed, with proper evaluation criteria,” she said, citing the World Bank’s ‘rated criteria’ as a key method in achieving that.
Addressing the issue of procurement evaluation panels, Macit also stressed the crucial importance of having the right people with appropriate experience, knowledge and independence on those panels. If that knowledge was not readily available then advisors needed to be brought it, she said.
The Q&A session and panel discussion raised a number of issues including examples of indicators that could be used for the delivery of sustainable infrastructure, issues around local access to information on the application of FIDIC contracts, the role of MDBs in influencing the client to deliver sustainable infrastructure, issues around payment obligations, public procurement challenges, how to make the contract more transparent and overcoming the problems of corruption in government sector, the role of e-procurement and examples of how flexible procurement strategies have successfully managed risks and responsibilities in real projects, especially when dealing with the complexities of legal and compliance factors.
The next webinar in FIDIC’s 2024 series of events is organised by the FIDIC International Financial Institutions Committee and takes place on Tuesday 27 February 2024 at 12 noon CET and will be looking at the issue of investment for large-scale infrastructure and how such investments can be de-risked by international financial institutions like the multilateral development banks in order to draw in private sector finance thereby helping to fill the funding gap.
Click on the video below to watch he full webinar recording.
