Online conference shines light on FIDIC contract use in Asia-Pacific region

29 May 2024

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The 2024 Official FIDIC Contract Users’ regional conference for the Asia-Pacific region took place online on 29-30 May 2024. Day one of the conference began with an opening address from FIDIC vice president James Mwangi, who thanked the sponsors, strategic partner Fenwick Elliott, the UK’s largest law firm specialising in construction and energy law, gold sponsor law firm CMS, silver sponsor law firm White & Case and bronze sponsor, the law firm Charles Russell Speechlys.

“Events like this one are really important for FIDIC and the users’ of our contractual documentation as they provide a valuable and essential update on FIDIC’s contract suite, as well as discussions on the latest developments in the contracts arena,” he said. “This online conference over the next two days will highlight some of the key and emerging issues that we face in the contracts arena in the Asia-Pacific region, as well as giving attendees the opportunity to meet and network with key global stakeholders from across the FIDIC contracts ecosystem,” said Mwangi.

The two-day online conference offered attendees the opportunity to share progress on the application and use of FIDIC contracts in the EMEA region and included participation from multilateral development banks, other funders, private sector organisations and clients, government, engineers, contractors, investors, lawyers, consultants and many other stakeholders who have an interest in the use and application of FIDIC contracts.

The keynote speaker for the conference was Jeff Taylor, the deputy director general in the procurement, portfolio and financial management department from the Asian Development Bank. He also serves as ADB's chief procurement officer representing ADB in the MDB heads of procurement forum and has been working on the public procurement of infrastructure projects for 36 years, the last 16 years of which have been with ADB.

How the Asian Development Bank is influencing the market

Described by James Mwangi as “a real expert on procurement and one that is also genuinely enthusiastic as well as knowledgeable about his area of expertise”, Taylor shaed some of his valuable insights on the direction of travel for the ADB on procurement and how the bank is looking to influence the market and improve the way that projects are procured in order to help support important areas like sustainability and the environment, skills and capacity building and the future vitality of the sector.

Taylor said that he expected the ADB’s use of FIDIC contracts to continue into the future and was also excited to hear that FIDIC was working on net zero clauses, as that was a clear direction of travel for the bank with sustainable public procurement a clear priority for the bank. “Sustainable procurement covers almost every aspect of ADB operations,” he said and its impact extends beyond ADB operations, with the bank influencing the market by its actions. “Annual global government procurement totals $13 trillion and improving sustainability in this spending can have huge potential for delivering global public good,” Taylor said. He stressed that sustainable procurement was also an amplifier of environmental, social and economic impacts through market shaping.

He highlighted some examples of the bank’s work in this area. These included work which was laying the foundation for green supply chain in projects like the Uttarakhand Integrated and Resilient Urban Development Project in India. With the procurement of some 260,000 tons of low-carbon cement instead of ordinary Portland cement, the project can reduce GHG emissions by 67,850 tons of CO2-eq. This translates to $55m in climate mitigation financing through the use of low-carbon cement alone.

Taylor also talked about how the bank’s projects were unleashing local climate resilience potential through construction traineeships like on the Ulaanbaatar Urban Services and Ger Areas Development Investment Programme in Mongolia. This project had facilitated the placement of 101 trainees on construction sites in various technical occupations under contractors who were supported with a ‘train and certify’ on the job training programme (Build4Skills). The project involved cooperation with 16 construction companies and 90 contractor staff were trained as on-site instructors.

Taylor ended by outlining the bank’s key focus areas in 2024-25 which included work to understand the carbon emission of ADB’s construction projects to inform potential procurement intervention, heavy construction materials market maturity assessment and industry dialogue, enhanced guidance on social and gender aspects of SusPP, progress/impact evaluation, monitoring and reporting and also strengthened collaboration and partnerships between governments, market, civil society and international organisations.

An update on FIDIC contracts

The first main session of the conference, chaired by FIDIC Contracts Committee chair Vincent Leloup, was an update on FIDIC contracts, which presented some of FIDIC’s newest contract publications and also discussed the use of the contracts in the Asia-Pacific region. Leloup highlighted some of the key users of FIDIC contracts in the region including the ADB, JICA, the World Bank, the UN-ILO, AFD and the Millennium Challenge Corporation. He also spoke about the use of the 2021 edition of the FIDIC Green Book which was typically being used on projects where the perceived level of risk is low and/or where parties want to use a form which does not require significant contract administration and management resources.

Leloup also highlighted a number of new FIDIC contracts that were in the pipeline, which included a Subcontract to the 1999 Silver Book, a Bronze Book Test Edition, a Collaborative Contracting contract, a Subcontract to the 2017 Yellow Book, new net zero provisions for FIDIC contracts and the Golden Principles for FIDIC Services Agreements.

The second speaker in the session was Siobhan Fahey, a former member of the FIDIC Contracts Committee, who have a comprehensive overview of the recent reprints of the FIDIC contract updates for the Red, Yellow and Silver Books. She highlighted the underlying philosophies of the updates which she said were that these were by engineers for engineers but recognising that FIDIC contracts were a legal document that were also used by lawyers.

The updates also enhanced project management ‛tools’ and mechanisms, reinforced the key role of the engineer, balanced risk allocation encouraging more reciprocity between the parties and reflected current international best practice. Fahey also said that the reprints addressed issues and feedback raised by contract users during the many years that the 1999 contracts were ‛tried and tested’ and incorporated the most recent developments in FIDIC contracts.

A real expert on FIDIC contracts, Fahey’s presentation was typically comprehensive and detailed many of the benefits and updates that users were benefiting from as a result of the contract reprints, particularly in the area of dispute resolution and arbitration.

Next up was Hannes Ertl, a director of Vista Perfecta, who spoke about the Emerald Book Reprint 2023, the contract for underground works and tunnelling and the new guide to its use. Ertl walked attendees through the main features of the Emerald Book and highlighted the fair allocation of risk it contained where each risk is allocated to the party that is best prepared to control it in order to get best value for money. This meant that the employer was responsible for all ground-related risks and the contractor for all performance-related risks.

Envisioning the future of construction contracting

The next session on the future of contracting in construction and engineering, chaired by vice chair of the FIDIC Contracts Committee Adriana Spassova, was a very interesting and insightful discussion on the future shape and scope of construction contracts and how these could be used to better build more sustainable projects, achieve net zero and deliver projects on time and on budget in ever-changing environment.

First speaker Marie Didier Antoine Guynet, a principal procurement specialist at the Asian Development Bank, highlighted some of the measures the bank had taken to help strengthen the public procurement process. This included the use of e-procurement which was leading to improvements in the areas of transparency, fairness and cost. In the area of contract management, the bank had introduced a number of changes. The bank’s new standard bidding documents, using FIDIC contracts, included the use of dispute boards payable by the employer. “We hope that this will incentivise the appointment of these boards and promote dispute avoidance. Prevention is better than cure,” said Guynet.

He also spoke about the ‘dashboard’ the bank was using to monitor and manage the progress of contracts which was detailed in their contracts, though not mandated. This was fostering a collaborative approach and a philosophy that was more conducive to more effective and efficient working. There were limitations to the progress that could be made due to the challenging environment that many of the bank’s borrowers work in. Guynet thought that the future would see more digitalisation and more collaboration going forward and better risk management across all projects.

Collaborative contracting practitioner at Dial Before You Dispute Lyndon White, spoke next and highlighted the importance of integrity in the contracting process. He spoke about the FIDIC Golden Principles and their importance in helping parties not to stray from contract boundaries but stressed that it was vital to ensure that there was robust dialogue at all levels and that issues and challenges were properly aired.

Good procurement - a catalyst for change

Hugo Fonseca, a FIDIC presidents list adjudicator and co-founder and head of claims, dispute avoidance and resolution at ADEPT, spoke next and highlighted the importance of influencing the supply chain, which he said could have a transformative effect on contract management and delivery. “As the World Bank recently said, procurement is a catalyst for change and can influence a new way of doing things and we need to remember the importance of that,” said Fonseca.

Next up was Eugenio Zoppis, project director at Webuild in Italy, said that he wanted to see contracts that were lean, flexible and collaborative and which promoted social value for end users. “I’d like to see the engineer acting as a skilled professional and who is neutral,” he said. On dispute boards, he said that they should be standing features and included in the costs of the contract. Quality and control and safety considerations ought to be overseen by all parties to the contract and not dealt with by individual parties as they often are currently. Better coordination and collaboration would reduce disputes and foster better risk management, Zoppis said. “We also need less confrontation between the parties,” he said.

Next speaker, Amit Kumar, senior vice president at Mott MacDonald, highlight ed a range of areas of improvement for the future including covering the costs of value engineering and also having a robust information management system that acted as a “single source of truth” to reduce misunderstandings and improve communication between the contract parties. Like many of the other speakers, Kumar stressed the key importance of collaboration between the parties, which he said was absolutely vital to the better running of contracts now and well into the future.

The first day of the conference concluded with two discussion tables dealing with the jurisdictional aspects of using FIDIC forms in the region and also a Q&A with the FIDIC Contracts Committee. Both tables were well attended with many questions being raised by the 140+ strong audience.

Day 2 of the 2024 Official FIDIC Contract Users’ regional conference for the Asia-Pacific region takes place on Thursday 30 May 2024 starting at 3pm Singapore time.

Click here for details of the conference and to book a place.

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