42THE CIVIL ENGINEERING May 2014

CONTRACTOR

The launch of the FIDIC Users’ Guide 3rd Edition in South Africa – the first global presentation of the edition – couldn’t come at a better time. Munesu Shoko caught up with authors Leo Grutters (LG) and Brian Barr (BB) to get to grips with the revised edition.

tion projects into a more international arena, and incorporated the current industry’s thinking and understanding of the FIDIC terms and conditions, making the book an all-encompassing volume for readers. The proper use of these standard forms of contract significantly reduces the inherent risks contained within development projects.

Q: Besides the lack of industry experiences in the Users’ Guide 2nd Edition, what are the other major issues you have addressed in the third edition?BB: The book acknowledges the growing ten-dency for projects to be administered by local employers, consultants and contractors, as well as by experienced international organisations. Thus, this new edition aims to improve working relationships between all contract parties. Some major issues it tackles include evaluation of the Pink Book, incorporating the latest 2010 update; evaluation of the newly published Subcontract 1st Edition 2011 in view of its objective to be a back-to-back contract for use in conjunction with the Red Book; reviews of the selection, prepar-ation and use of the contracts, including project management, preparation and response to claims and dispute resolution, flow charts, full text and clause-by-clause commentaries on the Red, Yel-low, MDB and Subcontract books; as well as an independent review of the benefits, procedures and problems that may arise in the use of the FIDIC Conditions of Contract.LG: The new edition offers clear advice to practitioners on how to mitigate and avoid con-tractual problems. Over the years, it became even more clear that the day-to-day users of FIDIC forms of contract were trapped within the complexity of these forms of contract. This stems from predominantly a significant interlink of the various sub-clauses. The need for clarity and transparency was established and the book aims at providing this for all users legally trained or not. In that regard, we have transformed the book in such a way that there are now separate parts focusing on each book, for example, Part

About GruttersLeo Grutters is an independent

expert in dispute resolution in

many prestigious international

projects with about 30 years

experience. A Dutch civil

engineer, Grutters previously

worked and lived in South

Africa for 10 years. He holds

an MBA and is a fellow of

the Chartered Institute of

Arbitrators. As a member of

the FIDIC President’s List of

Approved Dispute Adjudica-

tors, he has been involved

in numerous international

engineering projects as a

neutral expert or dispute

board member. He is a for-

ensic analyst focused on the

logical and fair resolution to

contractual disputes.

Q: You have just launched the International Federation of Consulting Engineers (FIDIC) Users’ Guide 3rd Edition. What are the major improve-ments to Brian Totterdill’s second edition?BB: The new FIDIC Users’ Guide 3rd Edition is a reference book which conveys professional insights and practical solutions for the more con-tentious and controversial issues when dealing with FIDIC contracts. Essentially this book is a practical guide to the Red, Yellow, Multilateral Development Bank (MDB) Harmonised (Pink Book) and Subcontract books. It focuses on the practical administration of the FIDIC Conditions of Contract for Construction and the Conditions of Contract for Plant and Design-Build, a revised family of Conditions of Contract published in 1999 to address the increasing size and com-plexity of construction projects. The predecessor was the industry recognised best practical advice on the FIDIC forms of contract for the Red and Yellow books. However, it lacked real industry experiences and examples of how to tackle con-tracts processes. LG: Brian Totterdill was a widely respected colleague in the FIDIC construction world. His book was the most comprehensive at the time. However, what Totterdill didn’t have at the time of publication in 2006, not because he didn’t want to do it, was the industry experience. There simply wasn’t industry experience on the use of the then new 1999 Rainbow Suite forms of contract available in the world. So he did his own assessment of the forms of contract in terms of potential risks without real life terms. We are now seven years on since Totterdill’s 2nd Edition and we don’t have the luxury of saying there is no industry experience in the use of FIDIC forms of contract. So we took the issues that were highlighted by Totterdill in the 2nd Edition and expand on this with practical experience and encountered solutions.

We took into account newly published forms of contract, case studies, the increased use of the 1999 FIDIC Conditions of Contract on construc-

Names: Leo Grutters and Brian BarrPrimary role: Leo Grutters and Brian Barr are members of the exclusive FIDIC president’s list of approved dispute adjudicators – just 59 of them worldwide. Of the 59 experts globally, the two were tasked with authoring the third comprehensively revised edition of the FIDIC Users’ Guide 3rd Edition to stimulate better construction contract administration and address contentious issues with pertinent pointers towards dispute avoidance rather than dispute resolution.

profile

“Nothing is more

dangerous than

expecting a

construction boom

for which you are

not prepared. It’s

disastrous.”

Playground levellers

2 deals with the Red and Pink Books, while Part 3 tackles the Yellow Book. We realised that this is a reference book, the person who wants to use it doesn’t start reading from page 1, he has a specific issue that he wants to contend with and wants to find it easily. It is a book by book, clause by clause structure and that makes it more different to Totterdill’s second edition.

Q: I understand that this is the first launch of the edition globally. Why in Africa, and particularly South Africa?BB: One of the most popular FIDIC forms of con-tracts to be used is the Pink Book and it is in Afri-ca where it is extensively used. This is promoted by many development agencies leading to lots of work in Africa. LG: We started in South Africa because of GibConsult’s initiative. The managing director

Mun

esu

Sho

ko

of GibConsult South Africa, Stefan Müller, and I go way back to founding GibConsult in 2000 in Germany. This consultancy company specialises in contract, claims, dispute management and administration, and founded a subsidiary in South Africa in 2010. I have previously stayed and worked in South Africa and I am aware that it is a jumping board into the rest of southern Africa. What starts here usually gets across the borders. So I can safely say this will get into Botswana, Namibia, Zimbabwe, Zambia and Mozambique.

Q: The launch of the FIDIC Users’ Guide 3rd Edition coincides with Africa’s growing trend towards the use FIDIC forms of contract on its projects. How will this address the continent’s poor track record of delayed projects?LG: In my experience, every project, if run effi-ciently in terms of what the contract provides for as agreed between parties, there is always high

Brian Barr (left) and Leo Grutters (right) are the authors of the FIDIC Users’ Guide 3rd Edition.

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probability of success. However, there is always need to have the most efficient form of contract, but it will only succeed if both parties work in tan-dem with the contract. It means that both parties need to be fully aware of what they have signed for. If there is lack of understanding of the mechanisms or procedures that you have signed for, it normally points to delayed projects. FIDIC forms of contract are designed for the most efficient project execu-tion and adoption of these forms of contract is a first step in the right direction for the continent.

Q: You mentioned that adoption of FIDIC forms of contract is the first step. What is the next step?LG: The next step should be the training of the people using these forms of contract. For example, in South Africa, there is need to implement this training through industry organisations such as the Consulting Engineers South Africa (CESA), the South African Institution of Civil Engineering (SAICE) and the South African Federation of Civil Engineering Contractors (SAFCEC). By doing this you will get an industry that is geared up for the large construction boom that I think will happen. Now is the time to get it done, get to grips with it because trying to do that once projects are on stream will be too late. Nothing is more dangerous than expecting a construction boom which you are not prepared for. It’s disastrous.

Q: From your experiences on the continent, just how bad is this knowledge gap in the forms of contracts?BB: For example, I am involved on projects in Ethiopia and Mozambique. On these projects, I am working with inexperienced main contractors, engineers and even project owners themselves in terms of FIDIC contract administration. The development of training programmes in contract administration is essential for successful com-pletion of projects. Training in this subject needs to be greatly expanded. Many failed and delayed contracts are a result of lack of contract adminis-tration knowledge.LG: I was recently appointed on a dispute reso-lution case on a project in west Africa. The pro-ject is funded by the World Bank. It was being mismanaged by a local Liberian entity acting as the employer to such an extent that the World Bank said either you pull your socks up or we withdraw funding. I was appointed to step in and help get the project on its feet. The contractor is a renowned international company but the employer is not versed with FIDIC forms of contract but was compelled by the World Bank to use them. In this case, the problem wasn’t gross mismanage-ment as such, but it was the lack of knowledge. I stepped in and started educating relevant people and all of a sudden the project is back on track, all parties are happy.

Q: What is the main driver of the increased adoption of these forms of contracts on African projects?LG: Because the World Bank is financing many

profile

About BarrBrian Barr is a civil engineer

with over 40 years

experience in the United

Kingdom, eastern Europe,

Africa, the Caribbean and

the Far East. He has been

involved on many inter-

national projects in positions

ranging from dispute review

expert, adjudicator, mediator,

conciliator, engineer, claims

advisor to technical auditor.

He is an expert in

construction design, contract

administration, supervision of

major infrastructure works,

particularly projects funded

by international financing

institutions.

African infrastructure projects, usage of the FIDIC forms of contract has rocketed. The World Bank has adopted the FIDIC forms of contract on its worldwide loan agreements. If there is a World Bank project, or funded by its development banks, for example by the African Development Bank and other MDBs, there is a 99% likelihood that the project will adopt the FIDIC forms of contract.

Africa is at a threshold of a construction boom and more likely governments don’t have the funds to finance these projects. Most of them will be financed by international loans and funding is more likely to come from development banks or the World Bank than it is likely to come from private funders. The chances are very high that you will see FIDIC forms of contract used on many of these projects.

Q: Some believe Africa has a chance to learn from mistakes made by the developed world in such issues. Can FIDIC forms of contract help it avoid the mistakes made by the developed world?LG: Just to give a sound example, a country like Japan has just set up its own rules and regula-tions in dealing with FIDIC contracts. The Japan International Cooperation Agency recently pub-lished a document setting out precise guidelines for how contractors and project owners should manage the projects. However, this only hap-pened after years of frustration of things going

wrong. They learnt from that. Africa has a unique experience and situation of

not having to go through those pitfalls by simply taking on board what has happened in the rest of the world and implement solutions without having to learn from its own mistakes. There is a wealth of experience available internationally for Africa to learn from.

Q: The World Bank is calling the shots on its preferred forms of contracts. Chinese contractors also have a sizeable piece of the cake backed by China’s financial muscle and bring their own terms. How does Africa balance the playing field in terms of preferred forms of contracts and skills development? LG: More importantly, infrastructure is needed and therefore, whoever brings it is welcome. However, there is need to carefully balance infra-structure delivery and development of your own country in terms of training and expertise. Africa should allow the Chinese to come, and despite whose forms of contract are implemented, Afri-ca’s concern should be a quality build in time and within budget. In terms of skills development, Africa should not force China to impart because they are never going to, but just copy what they do. China became a developed country in a short space of time by bringing overseas contractors to its borders and simply copied what they did. Why doesn’t Africa do the same? ■

44THE CIVIL ENGINEERING May 2014

CONTRACTOR