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Smart Public and Private Procurement

Smart Public and Private Procurement. Procurement in the construction sector and the use of FIDIC contracts British Chamber of Commerce seminar and discussion on Smart Public and Private Procurement Lukáš Klee. Lukáš Klee for BCC in CR. Smart Public and Private Procurement.

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Smart Public and Private Procurement

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  1. Smart Public and Private Procurement Procurement in the construction sector and the use of FIDIC contracts British Chamber of Commerce seminar and discussion on Smart Public and Private Procurement Lukáš Klee Lukáš Klee for BCC in CR

  2. Smart Public and Private Procurement Construction industry • Very unique configuration of processes. • Risks sometimes hard to foresee or difficult to analyze. • Realisation on vast sites. • Time for completion usually exceeds 2 years by large projects. Lukáš Klee for BCC in CR

  3. Smart Public and Private Procurement Construction industry • Construction project is not a production line. • Design errors, weather, unforeseeable physical conditions, access to the site, construction permits, environmental activists, changes, variations etc. • Procurement often based on the one and only criteria of price. • Conditions of contract have to foresee solutions. Lukáš Klee for BCC in CR

  4. Smart Public and Private Procurement FIDIC • Fédération Internationale des Ingénieurs-Conseils (International Federation of Consulting Engineers). • Most popular conditions of contract for construction projects. • Used all around the world. • In civil law and common law environment. • In the Czech Republic for example as conditions of contract for infrastructure construction projects. Lukáš Klee for BCC in CR

  5. Smart Public and Private Procurement FIDIC Rainbow Suite – First Edition 1999 Lukáš Klee for BCC in CR More risk at the Contractor = higher price More risk at the Contractor = higher price Lump sum contract Lump sum contract Measurement contract

  6. Smart Public and Private Procurement Recommendations • Czech Directory of Highways use translation of FIDIC Red Book. • Red Book - balanced measurement contract. • Employer is responsible for the design. • DBB (Design – Bid – Build) Project. • In CR detailed design in the terms of reference - lot of time to prepare it. Lukáš Klee for BCC in CR

  7. Smart Public and Private Procurement Use of Yellow Book • Worldwide, in last years increase of D/B (Design – Build) projects. • Yellow book represents a typical D/B system. • Yellow Book - lump sum contract. • Contractor is responsible for the design. • Use of FIDIC Yellow Book could simplify the preparation. Lukáš Klee for BCC in CR

  8. Smart Public and Private Procurement Clarification of the Engineer’s role The Engineer • the most important participant of construction project next to the Contractor and the Employer. • Stems from the British tradition. • agent of the Employer and an adjudicator of disputes between the Employer and the Contractor. • confusion in civil law countries - the Engineer, is empowered to give instructions binding on the parties not being the contract party. • It works if the participants understand Engineer's role and respect the rules. • Lack of experience and knowledge in CR. • The solution, where the position of the Engineer is provided by the employees of the client brings a lot of problems. • Clear position of the Engineer could help solve the hazy allocation of responsibility. Lukáš Klee for BCC in CR

  9. Smart Public and Private Procurement Stimulation of Contractor´s Invention • Public procurement competition in construction - the price prevails. • Lack of platform for Contractor´s alternative proposals and invention. • Possibility to submit value engineering proposal. • Value engineering is something that is positive and it should be stimulated by the Employer and the public procurement act as well. Lukáš Klee for BCC in CR

  10. Smart Public and Private Procurement Best practice Dispute Resolution • FIDIC documents contain a well-considered three-phase system of dispute resolution. • First instance deciding a dispute is the Engineer. • Second instance is the Dispute Adjudication Board as a permanent or ad hoc panel. • Third instance, which is Arbitration with an Amicable Settlement that must precede. • This system is seriously damaged within Czech public infrastructure construction projects because the Dispute Adjudication Board and Arbitration are erased out of the conditions of contracts. Lukáš Klee for BCC in CR

  11. Smart Public and Private Procurement Conclusion • Use of Yellow Book - Design/Build system with the new projects with shortcomings in the preparation stage. • Necessary clarification and determination of the Engineer’s role with help of education or with help of some detailed regulation. • Lack of stimulation of Contractor´s Invention that could be solved by specific Value Engineering rules. • FIDIC Dispute Resolution system that is damaged mainly by the lack of Dispute Adjudication Board. Lukáš Klee for BCC in CR

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