50 MEP Middle East | N o v e m b e r 2 0 1 8 http://www.mepmiddleeast.com
FOOTNOTE
F
IDIC is more abused than used in the
region”, a couple of over 40 year’s indus-
tr y veterans in our company have long
maintained this expression and several
of us may agree with this.
One is all too familiar with the pattern of de-
lays (both in progress and payments), disputes,
protracted and expensive resolution processes,
with the Middle East earning the dubious dis-
tinction of rapidly moving up league tables on
these matters.
This article is not intended to point fi ngers or
blame anyone in a construction project. It intends
to express concerns that we share. It attempts to
seek consensus on issues, possible root causes,
potential solutions and, importantly, the collective
and individual roles that all players, from the
developer through to the last link of the supply
chain, play in contributing to improvements.
We are, on the one hand, blessed to be in a
region that continues to see the announcement
and award of several projects of substantial
values. On the other hand, we continue to hear
of projects being stalled, delayed and all partici-
pants being severely impacted. Arguably, when
things go wrong, no-one wins and, the biggest
loser is the project itself. Of course, there are
several positive instances and we will do well to
learn from these too.
Economic cycles and geo-political factors
make for a challenging business environment
and the construction industr y is not immune to
this. These are macro-factors and there is not
much that we can do other than adapting to the
‘new normal’ and focusing our energy and effort
on things that we can control.
Some thoughts below on matters in our minds,
with a suggestion that these are discussed and de-
bated in an appropriate industr y forum towards,
even if gradual, changes and improvements:
- All of us will agree on the need for a pro-
ject to have a viable business case for it to be
eventually successful in all aspects. Faced with
the unenviable task of dealing with an ever-
evolving and dynamic environment, developers
and funders will be conscious of having to ensure
a disciplined approach to their feasibility studies,
budget and funding arrangements. Clause 2.4
of the FIDIC Red Book (1999 edition) allows
for the contractor to request and obtain proof
of fi nancing arrangements from the employer.
Against current practice of this clause being
deleted, adaptation of a balanced version of the
sion of time without costs even for reasons out
with the Contractor’s control’ and ‘termination
for convenience’. In fact, even where FIDIC
Conditions are issued as General Conditions,
the Particular Conditions are quite often longer
than the GCOC! Employers’ legal advisors will
be aware of the need to advocate the use of a
balanced set of contract conditions with logical
allocation of risks. Contractors, while, perhaps,
needing to accept part responsibility for past
actions leading to a hardened stance from em-
ployers, could be fi rm while polite in pushing
back against some conditions. As contractors,
we are open to accepting requirements where
they can be priced in with reasonable certainty
or insured and also minimizing qualifi cations in
bids, to facilitate an easier and quicker process.- Contractors’ focus should be on ‘execu-
tion, execution and execution’! This starts with
contractors avoiding taking on projects beyond
their capacity, price under-cutting, unnecessar y
RFI/Cs to buy time and frivolous or exaggerated
variation and other claims. This also includes
ensuring trained and adequate staff and work-
force, improved productivity, automation and
timely payment of salaries and fair treatment
of the supply chain down the line. - Last but not the least, is the need for a col-
laborative approach with objectives of problem
avoidance and solving. Some of these are: a
clear Schedule of Attendances between vari-
ous contractors; workshops with consultants
for quick approval of engineering drawings,
material submittals and variations; RFI/Cs from
contractors along with suggestions for solutions
and; NCR/Site Memos/Defects IR signoffs
by the engineer’s representatives during site
walks. Establishing and maintaining good re-
lationships among all project participants, with
agreed ground rules, pulling together in the
same direction and avoidance of blame games
will be of benefi t to all. The establishment of
an appropriate Industr y forum including an
‘ombudsman’ role within it, akin to those in
advanced environments, will be a step in the
right direction.
We are all in the construction industr y for the
long run and are responsible to our Investors
and Boards for sustained profi table growth.
The region offers plenty of opportunities and
so working together in a collaborative way to
improve the contracting environment will benefi t
all players in the industr y.
Prabhakar Kesavan, commercial director, Voltas.clause may go towards improving discipline and
providing assurance to all.- We know that the design, or pre-construction
phase, is critical for smooth execution of a project.
With ‘Build Only’ contracts more prevalent in
our region, architects and design consultants
play a crucial role by ensuring the availability
of an adequately complete design prior to issue
of tender. This will allow for refi ning budgets,
arranging funding to suit, competitive bidding,
apple-for-apple pricing comparison, quick engi-
neering drawings and material approvals and
smooth construction progress with fewer changes
and related impact. - Possibly in response to past disputes, con-
tract documents and conditions issued by em-
ployers are increasingly onerous in an apparent
transfer of risks to contractors. It is not uncom-
mon that even in ‘Build Only’ contracts, one can
now see requirements such as ‘contractor to verify
design and take responsibility for errors’, ‘price to
allow for both stated and implied requirements’,
‘installations to be fi t for purpose’, ‘Contractor
to be responsible for workmanship and material
quality issues well beyond Defects Notifi cation
Period’ and ‘Priority of Documents does not de-
termine scope and the highest requirement in of
the documents will apply’. We also come across
clauses such as ‘no compensation for changes in
legislation after tender’, ‘no fi nancing charges or
suspension rights for delayed payments’, ‘limit-
ing non-responsibility for Consequential Losses
to the Employer only’, ‘Employer’s assignment
and novation rights without consent’, ‘exten-
Prabhakar Kesavan, commercial director for Voltas, provides
solutions on working collaborativelyCOLLABORATIVE CONTRACTING