Stéphane Giraud EGIS France PPP

KEY ASPECTS OF FIDIC DBO
CONTRACTS
23/09/2011
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
THE NGRBA AND THE FRENCH

SUPPORT
THE NGRBA AND THE FRENCH SUPPORT
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
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).

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 subbasin levels.
They establish some rules related to water use,
licensing and public participation.

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.
MEASURING RESULTS
200
1990
2008
9
FIDIC DBO CONTRACT
HOW TO CHOOSE THE BEST FIDIC

CONSTRUCTION CONTRACT FOR A WASTE/WATER
INFRASTRUCTURE PROJECT IN PPP ?
10
FIDIC PRESENTATION
FIDIC founded by French engineers in 1913 as
Fdration Internationale des Ingnieurs 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.
11
FIDIC CONTRACTS / PARTIES INVOLVED

Lenders
The Employer
DESIGN
BUILD
Disputes
(Adjudication
Board)
SERVICE
CONTRACT
CONTRACT
OPERATION
TAKING-OVER
The Engineer
or Employers
representative
CERTIFICATE
Auditing Body
SERVICE
CONTRACT
The Contractor
FIDIC contract
Administration
No contractual link !
12
Historic Background of FIDIC contracts
13
Historic Background of FIDIC

contracts
14
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 ?
Fixed Cost
Risks borne mainly by the
Contractor
yes
no
Discuss in details
no
yes
Operations(DBO)
yes
no
15
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
16
COMPARISON FIDIC / French law

1 YEAR
1 YEAR
1 YEAR
FRANCE
CCAG P.I.
IDEA => DEGREE OF PRECISION
CONCEPT
PFS -FEED
DTL DESIGN
2 YEARS
< 20 YEARS
CCAG
TRAVAUX
LAW
CONSTRUCTION
OPERATIONS
FRENCH CONSTRUCTION LAW
FIDIC
CONTRACTS GOVERNED BY LOCAL LAWS OF THE COUNTRY

White book
Red book
Yellow book
Silver book
Gold book
17
FIDIC DBO CONTRACTS : KEY POINTS

Employers 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
18
20
CLAUSES
CLAUSE 3 The Employers representative
CLAUSE 2 The Employer
193 SUBCLAUSES
CLAUSE 4 The Contractor
CLAUSE 20.7 Amicable Settlement (DAB)
COST
CLAUSE 15 Termination by Employer

CLAUSE 16 Termination by Contractor
CLAUSE 19 Force Majeure
CLAUSE 20 Claims
COSTS
CLAUSE 1 General Provisions

CLAUSE 17 Risk allocation
CLAUSE 18 Exceptionnal Risks
CLAUSE 19 Insurance
CLAUSE 13 Variation and Adjustements

CLAUSE 14 Contract Price and Payment
FIDIC
CLAUSE 5 Design
CLAUSE 6 Staff and Labour
CLAUSE 7 Plant, Materials, Workm
CLAUSE 11 Testing
CLAUSE 12 Defects
QUALITY
CLAUSE 8 Commencement,
Completion and Programme
CLAUSE 9 Design-Build
CLAUSE 10 Operation Service
GOLD
BOOK
CLAIMS
NO
ES
TIC
DEL
AYS
CONTRACT
TIME
19
SOME PITFALLS IN CONSTRUCTION

CONTRACT
3. MAIN PITFALLS IN CONSTRUCTION CONTRACT

BEFORE COMMERCIAL OPERATIONS
20
21
22
23
24
25
26
27
28
29
SOME PITFALLS IN CONSTRUCTION

CONTRACT ACCESS TO SITE
Design
DELAYED
FOR SITE
INVESTIGATIONS
TOPOGRAPHY AND
GEOTECHNICS (SC 2.1)
FORCE MAJEURE
(EARTHQUAKE,
STRIKE, WAR) (SC
18)
New Critical
Path
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
NO RAW WATER IN TIME

AS NETWORKS WORKS
ARE DELAYED (SC 11.2)
Commissioning
WHO PAYS FOR DELAY ? (SC
9.13)
OPERATIONS
Time of Completion
YEAR 1
YEAR 2
Cut-Off
UP TO Date
20 YEARS
30
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 !
31

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KEY ASPECTS OF FIDIC DBO

THE NGRBA AND THE FRENCH

THE NGRBA AND THE FRENCH SUPPORT

THE NGRBA AND THE FRENCH

FRENCH EXPERIENCE IN WATER MANAGEMENT

Major features of water sector in France :

FRENCH EXPERIENCE IN WATER MANAGEMENT

Major features of water sector in France :

FRENCH EXPERIENCE IN WATER MANAGEMENT

Major features of water sector in France :

FIDIC DBO CONTRACT

HOW TO CHOOSE THE BEST FIDIC

FIDIC CONTRACTS / PARTIES INVOLVED

Historic Background of FIDIC contracts

Historic Background of FIDIC

Best choice for FIDIC CONTRACT

Principles FIDIC : Risks allocation

COMPARISON FIDIC / French law

FRENCH CONSTRUCTION LAW

CONTRACTS GOVERNED BY LOCAL LAWS OF THE COUNTRY

FIDIC DBO CONTRACTS : KEY POINTS

Careful technical investigations of site

CLAUSE 3 The Employers representative

CLAUSE 2 The Employer

CLAUSE 20.7 Amicable Settlement (DAB)

CLAUSE 15 Termination by Employer

CLAUSE 1 General Provisions

CLAUSE 13 Variation and Adjustements

SOME PITFALLS IN CONSTRUCTION

3. MAIN PITFALLS IN CONSTRUCTION CONTRACT

SOME PITFALLS IN CONSTRUCTION

CUSTOM DUTIES NOT SOLVED

NO RAW WATER IN TIME

BUT WHO IS PROVIDING THE FINANCE ? FROM DBO,

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