Good procurement is about “art of the possible,” Asia Pacific contract event hears

19 May 2022

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The Official FIDIC Contract Users’ Conference (Asia-Pacific time zone event) took place online and was delivered in-house by FIDIC from 19-20 May 2022, writes FIDIC communications advisor Andy Walker.

The event, sponsored by international law firm CMS, supported by silver sponsors Fenwick Elliott and bronze sponsor Changaroth International Consultancy, targeted the Asia-Pacific contract users’ community and offered attendees the opportunity to share progress on the application and use of FIDIC contracts internationally. The event was attended by a range of stakeholders including MDBs, private sector organisations and clients, government, engineers, contractors, investors, consultants, and other stakeholders who have an interest in FIDIC contracts. 

Opening the first day of the conference, FIDIC president Tony Barry welcomed attendees to the event and thanked strategic partner sponsor CMS as well as silver sponsor Fenwick Elliott and bronze sponsor Changaroth International Consultancy. Barry said that, despite Covid, the past year had seen FIDIC’s contracts increasingly becoming the benchmark for global construction projects, a position helped by the number of organisations that have signed licence agreements with FIDIC to use the contracts on their projects.

“FIDIC places great importance on its contracts and the high regard in which these documents are held only serves to raise their profile even more and that is why FIDIC has looked to respond to that increasing interest by ensuring that we take steps to build up our contracts community by providing more opportunities for users to connect and network,” said Barry.

Before introducing the event keynote speaker, Barry congratulated FIDIC board member Sarwono Hardjomuljadi from Indonesia who had recently received the Dispute Resolution Board Foundation’s prestigious Al Mathews Award for Dispute Board Excellence. The award is given each year to a champion from the dispute resolution community for their exemplary service in advancing the use of dispute board concepts and the Dispute Resolution Board Foundation and Sarwono Hardjomuljadi was a worthy recipient of the awards, said Barry.

The keynote speaker at the conference was Dan Yang, director general, facilities and administration services department at the Asian Infrastructure Investment Bank (AIIB). Yang leads a diverse team at the AIIB responsible for building the bank’s institutional infrastructure focusing on corporate procurement, facilities management, administrative services, records and information and security and emergency. She also oversees the bank’s business continuity framework.

Speaking live from Beijing, Yang congratulated FIDIC for holding the conference while Covid was still ongoing. “This conference sends a strong message that we are on the way back and I pay tribute to FIDIC for playing a key role in improving people’s lives by promoting its key values of quality, integrity and sustainability on construction contracts,” she said. Yang also congratulated FIDIC on its credentialing programme, FCL and its FCCE programme in China which was setting standards for the training of professionals working in the infrastructure, engineering, or construction industries around the world. She also praised FIDIC for its outstanding work across the global industry in setting contract standards on major projects.

The first session of the conference, chaired by FIDIC Contracts Committee chair Vincent Leloup (France), updated attendees on the latest state of play regarding FIDIC contracts. Speakers included FIDIC President’s List adjudicator Sebastian Hök (Germany), Jeff Taylor (Philippines), director for procurement at the Asian Development Bank (ADB) and Siobhan Fahey (Ireland), a chartered engineer, chartered arbitrator and member of the FIDIC Contracts Committee.

Speaking first in the session, Vincent Leloup gave an overview of the new FIDIC Green Book Second Edition and the new features the contract contains to improve flexibility and usability for practitioners. He reported that the new edition had been well received by the industry and he expected to become a popular contract that would be seen by clients as a viable option for their projects when they would not have previously considered using the 1999 Green Book form. He also shared some of the very favourable industry feedback that had been received on the new second edition, including from leading international law firms.

Second speaker in the session, Sebastian Hök, spoke about the FIDIC Bronze Book (Operate-Design-Build-Operate form of contract) and the work of the FIDIC task group which has adapted the concepts embedded in the FIDIC Gold Book for use on brownfield projects where the contractor will work on existing assets, whereas the Gold Book was targeting greenfield projects. At the root of the Bronze Book process is the existing assets inventory, between those which are easily accessible (Class A Assets) and for which the contractor takes responsibility and liability, and those which are not (Class B Assets) for which the employer keeps responsibility and liability. Hok explained that assets inventory is first defined by the employer in the tender documents and scrutinised by tenderers at tender stage, then further scrutinised by the contractor once awarded the contract during the initial operation service period under the contract. Hok said that any tension associated with such asset classification will be first determined by the engineer, and, if turning into a dispute, will be in first instance resolved by the dispute board.

Speaking next, the ADB’s Jeff Taylor spoke about sustainable procurement, the bank’s sustainable procurement guidance notes and its future direction of travel in this area. He addressed the potential of public procurement on a global scale, which he said accounted for $13 trillion a year, averaging 13-20% of nations’ GDP. Enabling better infrastructure outcomes to boost sustainability was therefore crucial, said Taylor. “Sustainable public procurement allows governments to meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole-life basis in terms of generating benefits not only to the organisation, but also to society and the economy, while remaining within the carrying capacity of the environment,” he said. These ‘public goods’ as he described them were absolutely critical to society and therefore the industry.

Taylor also highlighted some of the future tools that the ADB was looking to incorporate into its procurement process to improve sustainability. These included whole of life considerations, functional specifications, measuring and quantifying environmental/social impacts and action on price and quality-based selection, including the ADB’s merit-based criteria. Taylor said that a balance needed to be struck between price, quality, service and sustainability to achieve best value. “Good procurement is about the art of the possible and the art is in the balancing,” he said.

Siobhan Fahey then presented a comprehensive overview of the important differences between the FIDIC contracts 1999 and 2017 editions, highlighting some of the new provisions that had been introduced to the 2017 editions to promote better collaboration between the contract parties and ensure that the contracts were easier to use, while at all terms preserving the key independent role of the engineer. She also spoke about the positive role of dispute boards and DAABs and pointed to how the FIDIC contracts encouraged their use.

Following the first conference session, there were three breakout sessions covering: Dispute resolution by arbitration, Dispute boards in Asia Pacific region and a Meet the FIDIC Contracts Committee session, where attendees were able to quiz members of the committee on their ongoing work.

The session on Dispute boards in Asia Pacific region, moderated by Fenwick Elliott partner Nicholas Gould, heard from legal and contractual experts and adjudicators on the use of dispute boards in the Asia Pacific region and examples of best practice. The critical role of dispute boards in avoiding disputes was highlighted and it was explained how they can be instrumental in providing informal advice and assistance rather than going straight to referral and a formal dispute phase.

Attendees at the Dispute resolution by arbitration session, which was moderated by CMS partner Kelvin Aw, heard dispute resolution experts discuss the latest developments and trends in dispute resolution using arbitration. Attendees were able to ask questions about future developments around case management and the conduct of arbitral proceedings and hearings in virtual times and in the future.

The Meet the FIDIC Contracts Committee session, moderated by the committee’s chair Vincent Leloup, offered a unique opportunity for attendees to meet members of FIDIC’s influential contracts committee and hear about the latest developments in the FIDIC contracts pipeline. The session included a Q&A on FIDIC contracts and their use.

Day two of the Official FIDIC Contract Users’ Conference (Asia-Pacific time zone event) continues on Friday 20 May 2022 starting at 7am CET.

Click here for full details of the conference, including registration information.

 

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