FIDIC’s significant contribution to the industry praised at Asia-Pacific contracts conference

20 May 2022

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The second day of the Official FIDIC Contract Users’ Conference (Asia-Pacific time zone event) on 20 May 2022 focused on client and contractor experiences of FIDIC contracts on funded projects and regional use of FIDIC forms with a particular focus on projects in Indonesia and Vietnam, 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 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 second day of the conference, FIDIC board member Sarwono Hardjomuljadi thanked the sponsors for their support and said he was looking forward to hearing from the leading experts assembled who would look at the use of FIDIC works contracts - the FIDIC Suite of Contracts 1999 and 2017 Editions - and how they are used by clients and contractors on various projects, including on projects funded by IFIs.

Conference chair, FIDIC Contracts Committee member Kiri Parr (Australia), introduced the day two speakers who included Taisuke Miyao (Nepal)​, a senior procurement specialist at the Asian Development Bank, Keisuke Fukui (Japan)​, director of the loan procurement policy and supervision division at the Japan International Cooperation Agency, Christiaan Grosskopf (Thailand)​, a dispute avoidance practitioner and FIDIC certified adjudicator, Julien Bergerat (Vietnam), general counsel for Nghi Son Refinery and Petrochemicals, ​ Song Dongsheng​ (China), independent advisor for power and infrastructure, Sarwono Hardjomuljad​ (Indonesia), FIDIC board member and Weddy Sudirman​ (Indonesia), executive vice president at PT PLN Persero.

Taisuke Miyao, senior procurement specialist at the Asian Development Bank, spoke about the ADB’s experiences of working with FIDIC in Nepal and Sri Lanka through the Covid pandemic period. He highlighted the bank’s use of the FIDIC Red, Pink and Gold Books in the bank’s standard bidding documents and particularly praised the FIDIC Covid guidance that had been issued during the pandemic, saying that this had been useful for all parties to contracts. ​

Second speaker, Keisuke Fukui, director of the loan procurement policy and supervision division at the Japan International Cooperation Agency (JICA), gave a detailed overview of the JICA organisation and highlighted their procurement guidelines, standard bidding documents​ and the use of dispute boards in JICA ODA loan projects. He also talked about some of the challenges JICA faced, including concerning appropriate risk allocation to all parties. “For the sake of proper and effective use of FIDIC contract conditions, better and deeper understanding on FIDIC contract conditions by the executing agencies, the engineers and contractors are required,” Fukui said. This issue of training and capacity building was a recurring theme of the conference.

Dispute avoidance practitioner and FIDIC certified adjudicator,​ Christiaan Grosskopf, spoke about the use of dispute boards (DBs) and debunked some of the reasons put forward by some people for not using them. Comments like “we don’t have a dispute, we don’t need a dispute board” or “dispute boards are expensive and don't add value” were often raised as justifications for not using DBs, he said. Strongly advocating their use, Grosskopf said: “Dispute boards are there to AVOID and RESOLVE disputes​ and they are effective and save costs​. Therefore, please promote DBs​ and use them in your projects​,” he said.

Julien Bergerat, general counsel for Nghi Son Refinery and Petrochemicals, spoke about his experiences of working with FIDIC contracts, highlighting in particular the extent of the contractor’s obligations after taking over work, the unexpected allocation of burden to the employer and the lessons learned from his experiences.

Song Dongsheng​, independent advisor for power and infrastructure, spoke about the transformation of global infrastructure development from government-led to privately-led​ procurement, highlighting the key differences between public and private sector project owners. He said that FIDIC had made outstanding contributions to global infrastructure development and cooperation, project contract governance, dispute avoidance and resolution. He also said that the FIDIC Silver Book for EPC and Turnkey projects had been used in a much more widespread extent than expected. “Many countries have produced their standard contract templates referring to FIDIC Silver Book and many private owners have made their contracts more one-sided based on it also,” he said.

FIDIC board member Sarwono Hardjomuljad​ spoke about the employer’s and contractor’s different interpretation of the use of Silver Book on FIDIC EPC/Turnkey projects in Indonesia, concluding that the “for new and ongoing projects using Silver Book, the parties have to develop ‘good faith’ and promote good intentions to solve any problem with the perspective of “fairness and proportionality” by searching for a ‘win-win’ solution.”

Weddy Sudirman​, executive vice president at PT PLN Persero, highlighted some of the lessons learned from adopting the FIDIC EPC Contract on a hydropower plant project in Indonesia. Sudirman’s conclusions, based on the project he highlighted, were that “a better understanding of risk allocation is needed for each party​ and the process at the pre-construction and procurement stages must be distinguished from the design-bid-build contract pattern, including the contract requirements adopted”. Echoing other speaker’s comments, he said that there was a need for the employer and the employer's representative to scale-up their contract knowledge, including on contract administration issues such as the selection of the project delivery system, dispute settlement and the establishment of dispute boards.

Summing up the two days of the conference, FIDIC board member Liu Luobing thanked strategic partner sponsors, international law firm CMS, (https://cms.law/en/gbr/) and the silver sponsors Fenwick Elliott and bronze sponsor Changaroth International Consultancy for their generous support of the event. Thanking the speakers for their insights and contributions over the previous two days, Luobing said: “These conferences offer a unique opportunity to share progress on the application and use of FIDIC contracts internationally and across different regions and I hope that you have all have gained insights and knowledge from your attendance. Please do keep letting us have your feedback as this is so important to us in improving future events.”

He concluded by reminding attendees about the Official FIDIC International Contract Users’ Conference and FIDIC Contract Users’ Awards, which would take place as an in-person event in London from 29-30 November 2022. “Make sure that you save the date in your diaries - it is an event not to be missed and the first chance for some time for the FIDIC contract users’ community to gather together, in person,” he said.

 

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