CEI Summit Economic Forum 2006

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23 November 2006  

9th CEI Summit Economic Forum in Tirana  

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CEI Summit Economic Forum 2006 

IBA 05 

00he Contractor00 View on

Quality Procurement00/b> 

Gian Alfonso Borromeo

(EIC President)

 

23 November 2006  

9th CEI Summit Economic Forum in Tirana  

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Part I: Basic Facts about EIC  
Part II: EIC Position on Procurement

Part III: Conclusion  

Structure of the Presentation

 

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9th CEI Summit Economic Forum in Tirana  

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1 - Basic Facts about EIC 
Structure 

European International Contractors (EIC) is an industry association based in Berlin that represents the interests of the European construction industry in all questions related to its international activities.  The EIC Members are construction trade federations from 16 European countries. The international managers from the leading European contractors meet twice per year for Business Workshops in connection with the EIC General Assemblies. The EIC Board, which decides the policy of the association, consists of 10 senior company executives. The EIC Positions Papers and Publications are elaborated by the most competent experts delegated by the EIC member companies and, therefore, reflect the opinion of the world-wide leading international contractors.  

23 November 2006  

9th CEI Summit Economic Forum in Tirana  

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1 - Basic Facts about EIC:  
Board Members 

Gian Alfonso Borromeo  
(President), Astaldi (I) Johan Beerlandt 
(VP), Besix (B) Lefty Panayiotou 
(Treasurer) Costain Int. (U.K.) Thomas Alm  
SKANSKA (S) Michel D茅marre 
Colas (F)  
Ebbe Malte Iversen 
Per Aarsleff (DK) Norbert Hoffmann  
Bilfinger Berger (D) Alcib铆ades L贸pez Cer贸n 
FCC (E) Antonio Mota   
Mota-Engil (P) Gerrit Witzel 
Strukton Groep (NL)  

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9th CEI Summit Economic Forum in Tirana  

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International & European Institutions European Commission (DG Trade, DG Development, EuropeAid) OECD + ECAs / EBRD / EIB International Financial Institutions World Bank Group (IBRD, IFC, MIGA) / IADB / AsDB EBRD / EIB Engineering Consulting Associations FIDIC / EFCA Civil society NGOs (TI, ECA Watch, etc.)  

1 - Basic Facts about EIC:  
Institutional Contacts

 

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9th CEI Summit Economic Forum in Tirana  

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1 - Basic Facts about EIC:  
Goals 

Bigger Market International Financing Institutions must allocate sufficient funding for infrastructure investments in developing countries Promotion of Public-Private Partnerships Better Market Innovative tender procedures introducing Quality-Based International Competition  
Fair Market Balanced contract conditions Effective Dispute Settlement International Arbitration  
 
Ethical Market Corruption-free environment Environmentally sustainable projects  

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9th CEI Summit Economic Forum in Tirana  

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1 - Basic Facts about EIC:  
International Statistics 2005 

With an aggregated international turnover in 2005 of over 100 billion 00 European international contractors are still the most important players in the international construction business.

 

23 November 2006  

9th CEI Summit Economic Forum in Tirana  

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2 00EIC Position on Procurement:  
Trend Analysis on supply side 

There is a clear trend amongst European contractors to focus their international business on industrialised markets. The 10 largest European contractors are particularly successful in expanding their international presence. Nowadays, in the global village, nationality is difficult to identify 
(00ll business is formally local00/b>).  

Source: EIC

 

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9th CEI Summit Economic Forum in Tirana  

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2 00EIC Position on Procurement: 
Trend Analysis on demand side 

On a global level, client needs are growing towards more complex contracts, i.e. from construction-only contracts to Turn-key, Design & Build (+ Maintenance & Operation) contracts, up to Public-Private Partnerships. For instance, the operational responsibility for the management of the Tirana International Airport  has been handed-over to a private airport company within the framework of a BOOT concession for 20 years. European contractors are ready to provide both know-how and finance for such contracts and are internationally competitive if project award criteria consider the project00 life-cycle cost. However, most multilateral donor agencies still tender construction works on the basis of the lowest evaluated construction cost. This has lead to a decrease in the quality of works!  

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9th CEI Summit Economic Forum in Tirana  

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2 00EIC Position on Procurement: 
European Court of Auditors Special Report (8/2003) 

Recommendation No.1: 00b>Quality controls should be increased for studies and consultants should be held financially liable for any professional negligence on their part.00/font> Recommendation No.2: 00dministrative orders should always include a numerical estimate of quantitative and financial impact. Changes that entail a reduction in the scope or quality of the works should be subject to a reasoned authorisation.00/font> Recommendation No.3: 00upervisors should immediately call on experts needed to resolve implementation problems. The practice of deferring claims to the end of the contract should be abandoned.00/font> Recommendation No.4: 00evolution of responsibility to the delegations should go hand-in-hand with a reorganisation that allows central departments to provide delegations with back-up in the form of sectoral expertise. Recommendation No.5: 00ccompanying measures that have a decisive impact on the viability and durability of the works should receive extra attention.00/font> Recommendation No.6: 00he general conditions relating to the implementation of works contracts have not changed since 1990. They should be re-examined in the light of the experience acquired.00/font>  

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9th CEI Summit Economic Forum in Tirana  

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2 00EIC Position on Procurement: 
Full-scale MDB control of the project cycle 
 

Donor agencies should maintain the Project Approach for infrastructure projects (vs. Budgetary Aid) Clients should avoid splitting up large projects in smaller pieces Contracting Authorities should improve the Quality of feasibility studies & technical specifications International (FIDIC) standard forms of contract should be applied without re-allocating the risks in Part 2 Disputes should be settled by a Dispute Board and finally by International Arbitration  

Project  
Approach 

Effective

Dispute

Resolution 

Fair

Contract

Conditions 

Innovative

Forms of  
Procurement 

Sizeable

Projects 

Quality

Studies 

Virtuous circle of Quality Procurement

 

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9th CEI Summit Economic Forum in Tirana  

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2 00EIC Position on Procurement 
EIC Guides on FIDIC contract forms 

To assist its member companies, EIC Contractor00 Guides on the FIDIC 1999 00ew Books00were produced between 2000 and 2002 and all published in the leading magazine (ICLR). 

EIC Blue Book on 00ustainable Procurement00was published in 2004 

EIC will publish in early 2007 a Contractor00 Guide to the 2006 MDB Harmonised Edition (FIDIC New Red Book)

 

23 November 2006  

9th CEI Summit Economic Forum in Tirana  

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2 00EIC Position on Procurement 
EIC Comments on FIDIC documents 

All Multilateral Development Banks, including the EBRD and EuropeAid, should prescribe the 00006 MDB Harmonised Edition of the FIDIC New Red Book00/b> for construction projects designed by the Employer. The Particular Conditions (Part 2) should only be amended to accommodate the specifics of the project or the country, but should not be abused to  
re-allocate the construction risks (as, regrettably, it is often the case). Since translation are sometimes incorrect, FIDIC should take due responsibility to provide official versions of translated standard documents. The Conditions of Contract should contain binding Dispute Boards and a mandatory International Arbitration clause. EIC welcomes the fact that FIDIC is about to publish a DBO form of contract.  

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9th CEI Summit Economic Forum in Tirana  

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3 - Conclusion 

    EIC strongly suggests that the European financial institutions (EBRD, but also EuropeAid) enter into a structured dialogue with the international contractors (represented by EIC) and the international consultants (represented by FIDIC and EFCA) to discuss the possibilities of introducing Quality-Based Procurement in the field of infrastructure works. 

    EIC is more than ready to share the expertise of its member companies in the course of such a process.

 

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EIC Contact 
 

Address: EIC Secretariat 
  Kurfuerstenstrasse 129,  
  D - 10785 Berlin, Germany  
Phone: ++49 (0)30 /21286-244  
Fax:   ++49 (0)30 /21286-285  
E-mail:  eicontractors@compuserve.com  
Internet:  www.eicontractors.de

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