KEY ASPECTS OF FIDIC DBO
CONTRACTS
23/09/2011
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Content
1. INTRODUCTION : THE NGRBA AND THE FRENCH SUPPORT
2. HOW TO CHOOSE THE BEST FIDIC CONSTRUCTION
CONTRACT FOR A WASTE/WATER INFRASTRUCTURE PROJECT
IN PPP ?
3. MAIN PITFALLS IN CONSTRUCTION CONTRACT BEFORE
COMMERCIAL OPERATIONS
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THE NGRBA AND THE FRENCH SUPPORT
THE NGRBA AND THE FRENCH SUPPORT
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THE NGRBA AND THE FRENCH SUPPORT
Technical Assistance to NGRBA for project
preparation (FASEP team based in Delhi + experts
from France – Consortium Egis / SCE / Egis India)
Duration of the services is 15 months
Objectives :
=> Launch Team to facilitate the projects
implementation in the 5 states along Ganga river
=> Move ahead rapidly with the World Bank
Program
=> Support NGRBA in NMCG (ex-PMG) operations
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FRENCH EXPERIENCE IN WATER MANAGEMENT
Major features of water sector in France :
Creation of Water agencies since 1964 for the 6 main hydrographical
basins
they collect water consumption fees and pollution taxes
(households, industries, pesticides users)
They use them to invest in water infrastructures and environmental
actions within the river basin (subsidies to local authorities).
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FRENCH EXPERIENCE IN WATER MANAGEMENT
Major features of water sector in France :
“Water Parliaments” at the basin level provide the democratic basis
for debate and consultation in water management issues.
There are water management plans at basin and sub-basin levels.
They establish some rules related to water use, licensing and public
participation.
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FRENCH EXPERIENCE IN WATER MANAGEMENT
Major features of water sector in France :
Private participation through delegation of public service
Mainly CONCESSION (BOT) or LEASE CONTRACT in water supply and
sanitation.
The public authority is still present (regulatory role) and shares the
exploitation financial risk with the private actor
The Contractor shall produce an annual reports showing incomes
and expenses in a transparent way, including reinvestment of savings
in infrastructures.
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MEASURING RESULTS
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1990
2008
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FIDIC DBO CONTRACT
HOW TO CHOOSE THE BEST FIDIC CONSTRUCTION
CONTRACT FOR A WASTE/WATER INFRASTRUCTURE PROJECT
IN PPP ?
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FIDIC PRESENTATION
FIDIC founded by French engineers in 1913 as Fédération
Internationale des Ingénieurs Conseils (International
Federation of Consulting Engineers)
1945 = 40 Engineers Associations ; 2009 = 80 Engineers
Associations including India
1957 = 1st Red Book as « Conditions of Contract for
Construction for Building Works designed by the Employer »,
2008 = 1st Gold Book
www.fidic.org , HO in Geneva, Switzerland.
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FIDIC CONTRACTS / PARTIES INVOLVED
Lenders
The Employer
DESIGN
BUILD
Disputes
(Adjudication
Board)
SERVICE
CONTRACT
CONTRACT
OPERATION
TAKING-OVER
The Engineer
or Employer’s
representative
CERTIFICATE
SERVICE
Auditing Body
CONTRACT
The Contractor
FIDIC contract
Administration
No contractual link !
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Historic Background of FIDIC contracts
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Historic Background of FIDIC contracts
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Best choice for FIDIC CONTRACT
The Engineer
undertakes
(small amounts, small risks)
the design ? yes
no
Small project ?
yes
no
The Contractor undertakes
the design
The project is a plant and includes a
balanced risk allocation ?
no
Fixed Cost
Risks borne mainly by the
Contractor
yes
no
Discuss in details
yes
Operations(DBO)
yes
no
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Principles FIDIC : Risks allocation
Increase cost of
Project
Increase risk
for The
Contractor
GOLD
BOOK /
SILVER
BOOK
YELLOW
BOOK
RED
BOOK
Increase risk for
the Employer
Increase design
control by the
Employer
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COMPARISON FIDIC / French law
1 YEAR
1 YEAR
1 YEAR
FRANCE
CCAG P.I.
IDEA => DEGREE OF PRECISION
2 YEARS
< 20 YEARS
CCAG
TRAVAUX
LAW
CONCEPT
PFS -FEED
DTL DESIGN
CONSTRUCTION
OPERATIONS
FRENCH CONSTRUCTION LAW
FIDIC
CONTRACTS GOVERNED BY LOCAL LAWS OF THE COUNTRY
White book
Red book
Yellow book
Silver book
Gold book
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FIDIC DBO CONTRACTS : KEY POINTS
Employer’s requirements :
•
•
•
•
Careful technical investigations of site
Risk assessments (technical, commercial, financial)
Infrastructure to be « fit for purpose »
Tender procedure with prequalification
Design responsibilities :
• Strict definition of design criteria
• Unforeseable difficulties to be foreseen (!)
• Interfaces management (networks Vs. treatment plant)
Claim management :
• Special care for drafting the Contract (Particular
Conditions of contract to be fit with the Laws)
• Contemporary records to be kept
• Mechanisms to avoid disputes
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20 CLAUSES
CLAUSE 3 The Employer’s representative
CLAUSE 2 The Employer
CLAUSE 20.7 Amicable Settlement (DAB)
CLAUSE
CLAUSE
CLAUSE
CLAUSE
193 SUB-CLAUSES
CLAUSE 4 The Contractor
COST €
1 General Provisions
17 Risk allocation
18 Exceptionnal Risks
19 Insurance
CLAUSE 13 Variation and Adjustements
CLAUSE 14 Contract Price and Payment
CLAUSE
CLAUSE
CLAUSE
CLAUSE
15 Termination by Employer
16 Termination by Contractor
19 Force Majeure
20 Claims
FIDIC
CLAUSE
CLAUSE
CLAUSE
CLAUSE
CLAUSE
5 Design
6 Staff and Labour
7 Plant, Materials, Workm
11 Testing
12 Defects
QUALITY
GOLD
BOOK
CLAIMS
CONTRACT
CLAUSE 8 Commencement,
Completion and Programme
CLAUSE 9 Design-Build
CLAUSE 10 Operation Service
TIME
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SOME PITFALLS IN CONSTRUCTION CONTRACT
3. MAIN PITFALLS IN CONSTRUCTION CONTRACT BEFORE
COMMERCIAL OPERATIONS
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SOME PITFALLS IN CONSTRUCTION CONTRACT
ACCESS TO SITE DELAYED
FOR SITE INVESTIGATIONS
TOPOGRAPHY AND
GEOTECHNICS (SC 2.1)
FORCE MAJEURE
(EARTHQUAKE, STRIKE,
WAR) (SC 18)
New Critical Path
Design
Civil works
ADVERSE SUB-SOIL
CONDITIONS => COST
+40% (SC 4.12)
Procurement
CUSTOM DUTIES NOT SOLVED IN TIME
DUE TO MINISTRIES DELAYS (SC 9.4)
Initial Critical Path
Erection
Commissioning
NO RAW WATER IN TIME
AS NETWORKS WORKS ARE
DELAYED (SC 11.2)
WHO PAYS FOR DELAY ? (SC 9.13)
OPERATIONS
Time of Completion
YEAR 1
Cut-Off Date
YEAR 2
UP TO 20 YEARS…
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CONCLUSION
INTERNATIONAL FIDIC DBO CONTRACT « GOLD BOOK » IS
PARTICULARLY FIT FOR THE PURPOSE OF PPP WATER
TREATMENT; IT IS …
• COMPLETE
• COMONLY SHARED BY ALL INTERNATIONAL PARTIES
• DRAFTED TO AVOID AND TREAT PITFALLS
… BUT WHO IS PROVIDING THE FINANCE ? FROM DBO, ADD AN
« F » …THERE COMES THE « DB
F O » CONTRACT
- THANK YOU FOR YOUR ATTENTION THINK ABOUT FRENCH EXPERTISE ON FIDIC AND ON WATER PROCESS !
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