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About us Members Positions Issue December 2016
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Dear Reader,

As 2016 is coming to a close we would like to thank you for your involvement active participation in EIC's Working Groups, Conferences and Discussion Groups.

The entire EIC Team wishes you happy holidays and a peaceful, healthy and prosperous new year.

Sincerely,
Your EIC Team

Headlines
FIDIC presents pre-release of “Yellow Book” Update at annual Users Conference
Headlines

FIDIC presented a special pre-release version of its “Yellow Book” Update, allocating more risk to contractors, at the 2016 International Users’ Conference on 6-7 December in London. Read more...

Joint FIEC/EIC Working Group “Poland” analyses requirements of road and railway infrastructure tenders
Headlines

The joint FIEC/EIC Working Group on “Poland” convened for the first time since the new Polish government took office to analyse current state of affairs as regards road and railway infrastructure tenders. Read more...


News from Bruessels
EIC holds presentation at Seminar on Water in EU External Action Instruments 

EIC was invited to share its experience in a Seminar on “Water in EU External Action Instruments”. Read more...

EIC presents its view at DG GROW Meeting on “Competitiveness of the Construction Sector”

EIC presented its propositions on the New Partnership Framework under the European Agenda on Migration at the meeting of the Thematic Group “International Competitiveness” on 24 November 2016. Read more...

EU sets out priorities for achieving Sustainable Development in Europe and around the world 

The European Commission set out its strategic approach for achieving sustainable development in Europe and around the world. Read more...


Multilateral & International Issues
EIC President presents European perspective at ICAK International Construction Conference in Seoul

EIC President Philippe Dessoy presented the European perspective on “The Transformation of the Construction Industry” at the inaugural International Construction Conference organised by EIC’s Korean counterpart, ICAK. Read more...

Brief Notices

FIDIC-ACES-EFCA
European Regional Infrastructure Conference

FIDIC-ACES-EFCA will be jointly holding the European Regional Infrastructure Conference on 9-10 March 2017 in Belgrade, Serbia. The two-day conference will focus on “The Road to Smart Infrastructure”. More details will be available online shortly.


Members' Corner

Aebi Schmidt UK and Vintage Consulting join EIC as Associated Company Members in 2017

Aebi Schmidt UK and Poland's Vintage Consulting are joining the EIC network as Associated Company Members as of January 2017. Aebi Schmidt is a leading provider of winter maintenance, street sweepers, municipal technology, airport, agricultural and rail technology. Vintage Consulting is one of the first engineering consulting companies with Polish capital only and focuses on engineering and contract management advisory.

 
Headlines

FIDIC presents pre-release of “Yellow Book” Update at annual Users Conference 

London   FIDIC presented a special pre-release version of the “Yellow Book” Update, Conditions of Contract for Plant and Design-Build”, allocating more risk to contractors, at the 2016 International Users’ Conference on 6-7 December 2016 in London. EIC was represented by Mr. Mathias Fabich, member of the Working Group “Contract Conditions”, who contributed a presentation on the functioning of Dispute Adjudication Boards (DAB) under FIDIC contracts.

New risk allocation highly controversial

In the course of the conference, the updated version of the FIDIC 1999 “Yellow Book” triggered a lively and at time controversial discussion, in particular with respect to the new risk allocation between the Employer and the Contractor which substantially deviates from the current international standard. Under the revised Clause 17 the Contractor presumably has to assume all risks not specifically allocated to the Employer and the Contractor and can no longer rely on a Limitation of its Liability for any indirect or consequential loss or damage in case of errors in its design.

Whilst FIDIC expressed a certain reluctance to accept further comments on the pre-release version, EIC will once again submit its critical arguments as regards the revised Clause 17 and call upon the organisation to maintain a fair and balanced risk allocation in the future.

Friendly Review of “Red & Silver Books” to commence in January 2017

FIDIC further announced at the conference that it had almost finalised the update versions of its “Red & Silver Books” which shall be circulated for comments at the beginning of 2017. FIDIC confirmed that EIC shall be invited to participate in the “friendly review” of these two standard forms of contract. FIDIC intends to publish the update edition of its so-Called “Rainbow Suite” in the first quarter of 2017.

Links:

EIC Presentation on Dispute Adjudication Boards (DAB) under FIDIC Contracts

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Headlines

Joint FIEC/EIC Working Group “Poland” analyses requirements of road and railway infrastructure tenders 

Warsaw   The Joint FIEC/EIC Working Group “Poland” convened for the first time since the new Polish government took office in November 2015. Construction and consulting firms from six countries analysed the current state of affairs as regards infrastructure tenders in the road and railway sectors.

Some progress achieved, but not yet sufficient 

During the meeting it was established that some progress had been achieved during the last twelve months on contract administration issues in connection with the tenders issued by the Polish Road Agency, the General Directorate for National Roads and Motorways (GDKKiA). The Working Group also acknowledged the respective efforts undertaken by the Polish government which had launched experts’ meetings in July in order to gather input from all stakeholders on how to improve performance of the road construction sector.

It was hoped that the recent appointment of Krzysztof Kondraciuk by the Polish Prime Minister, Beata Szydło, as the new head of GDDKiA, replacing Jacek Bojarowicz, who helmed GDDKiA since December last year, would further contribute to solving the large volume of construction claims still under consideration by Polish courts.

Concerns shift to the Polish railway sector

By contrast, the group observed an imminent risk that previous mistakes made by GDKKiA were about to be repeated by the Polish Railway Agency, PKP/PLK. The combination of poorly prepared tenders, in particular incomplete and flawed technical specifications, and unfairly modified FIDIC contract conditions, which do not comply with generally accepted international standards, were likely to result in low efficiency of the national construction investment programmes in the railroad sector.

Therefore, the Joint FIEC/EIC Working Group once again voiced its support to the calls of the Polish construction and consulting federations to eventually launch a National Construction Forum to deal with all the unresolved questions which have been identified by so many expert reports over the last years.

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News from Bruessels

EIC holds presentation at Seminar on Water in EU External Action Instruments 

Brussels   EIC was invited to share its experience in a Seminar on “Water in EU External Action Instruments” on 15 November 2016 in Brussels. Twice a year, the Permanent Representations and Trade Promotion Organisations of 24 Member States of the European Union organise sector seminars on the EU External Aid Programmes.

PRAG not to be reviewed in 2017

The representative of the EU Commission highlighted in his presentation some of the main changes in the EU Practical Guide to Contract Procedures for EU External Actions (PRAG) 2016, such as the new terminology concerning the award criteria, with “best price-quality ratio” replacing the “best value for money” award criteria, and the increase of the reference period to 8 years in case of works. In addition, the EU Commission included for the first time a definition of “subcontractors” into the PRAG. It was further announced that the PRAG would be revised in the future only every second year.

EIC favours prequalification criteria in the tender process

Bertrand Hanauer, Business Development Director at SOGEA-SATOM and member of the EIC Working Group “Africa”, participated on behalf of EIC in the panel discussion on “Experience in EU Funding from the field”. He called upon the EU Commission and the EIB to apply the Design-Build approach for complex projects, to promote the economically most advantageous offer (versus the lowest cost approach) and to introduce additional sustainability prequalification criteria in the tender processes.

Links:
EIC Presentation by Bertrand Hanauer
EU Commission Presentation on PRAG main changes

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News from Bruessels

EIC presents its view at DG GROW Meeting on “Competitiveness of the Construction Sector”

Brussels   EIC presented its propositions on the New Partnership Framework with third countries under the European Agenda on Migration [COM (2016) 385] at the meeting of the Thematic Group “International Competitiveness” on 24 November 2016. In the context of this initiative, the European Commission proposes a new EU External Investment Plan to encourage more investment in Africa and the EU.

Design of the EU External Investment Plan to be finalised by mid-2017

The EU Commission explained that the EU External Investment Plan (EIP) would not overlap with the existing financing instruments. The purpose of the EIP was to mobilise additional private sector investment by combining the existing investment facilities with new first-loss guarantees within the so-called European Fund for Sustainable Development (EFSD). In order for private companies to become eligible for such guarantees they would need to comply with a specific assessment beforehand. The final EFSD design shall be published by mid-2017.

EIC perspective on the EU External Investment Plan

EIC supports the goals set out in the New Partnership Framework, in particular the long-term objective to address the root causes of irregular migration. EIC concurs that private investment in Africa and European Neighbourhood countries is an important component to boost economies in these regions and to create decent employment opportunities for the local population.

At the same time, EIC holds that the “portfolio approach” advocated in the EIP is not appropriate for infrastructure projects which typically require middle and long-term financing on a single transaction basis. Against that background, EIC recalled during the meeting its “Blending 2.0” proposal to strengthen the links between European Development Finance Institutions and Export Credit Agencies for “non-commercially viable” infrastructure projects.

Links:
EIC Presentation

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News from Bruessels

EU sets out priorities for achieving Sustainable Development in Europe and around the world

Brussels   The European Commission has set out on 22 November 2016 its strategic approach for achieving sustainable development in Europe and around the world. The EU aims at mainstreaming the UN 2030 Sustainable Development Goals in the European policy framework and current Commission priorities. Furthermore, it will reflect on developing a longer-term vision on its sectoral policies after 2020.

Towards a new Partnership with ACP Countries

The EU Commission also released a Communication on a renewed partnership with African, Caribbean and Pacific (ACP) countries. This publication sets out the vision for the future relationship between the EU and ACP countries and aims at taking into account the latest international commitments on climate change, private sector involvement in financing development policies as well as the new Sustainable Development Goals.

Financing of the new European Consensus on Development yet unclear

A third Communication on a new European Consensus on Development proposes a new framework for development cooperation, aligning the EU's development policy with the 2030 UN Agenda. The Commission will further investigate ways of pooling together resources of the 28 Member States and invest more in joint programming such as under the future External Investment Plan.

Links:
EU Communication on the next steps for a Sustainable European Future
EU Communication on a renewed partnership with ACP Countries
EU Communication on European Consensus on Development

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Multilateral & International Issues

EIC President presents European perspective at ICAK International Construction Conference in Seoul 

Seoul   EIC President Philippe Dessoy presented the European perspective on “Industry 4.0: The Transformation of the Construction Industry” at the inaugural International Construction Conference organised by EIC’s Korean counterpart International Contractors Association of Korea (ICAK), on 7 December 2016, in Seoul. The objective of the conference was to share the experience from various world regions regarding the ongoing transformation of the global construction industry.

Innovation in construction lags behind other industries

In his presentation, Mr. Dessoy mentioned that the construction sector, compared to other industries, is currently one of the least digitalised industries and not yet capitalising sufficiently on the corresponding opportunities. Whilst the automotive and the aerospace industries are spending around 4% of its annual turnover on research & development, the construction industry hardly invests 1%. With the increasing importance of BIM, especially in its 4D, 5D and 6D variants, however, the construction industry has started to eventually develop a corporate culture of innovation.

Paul Cartuyvels, European Affairs Director at Bouygues Europe, explained in his presentation how the innovative construction technologies can be combined for a more sustainable urban regeneration. He set out the vision that the construction industry’s future task is to build with the highest possible quality for a maximum of people with minimum environmental impact.

Insights from the UK, US and China

Speakers from the UK, US and China provided interesting outlooks about the construction sectors in their countries. Prof Roger Flanagan from the University of Reading observed that the bidding process on national and international level had not developed in line with the increasing complexity of the projects. ENR’s Deputy Editor, Scott Blair, mentioned that with the US$ 1 trillion infrastructure investment plan of President-elect Trump the prospects for privately financed infrastructure might weaken. At the same time, “hybrid-style P3 models”, e.g. DBOM models possibly including also a finance component, could be used in the U.S. transport sector.

Prof Fang Dong Ping from Tsinghua University reported that the international expansion of the Chinese construction industry via the traditional construction export model, which had worked well in Asia and Africa, was probably less suitable for more developed markets. Consequently, the leading Chinese international contractors had acquired local contractors in the U.S. and Australia and were also looking for opportunities throughout Europe.


Links:
EIC Presentation by President Dessoy
Presentation by Paul Cartuyvels of Bouygues

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Picture Credits: candy1812 / fotolia.com; FIDIC, FIEC

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