EIC Annual Report 2020 - Excerpt

In 2019, the EIC Working Group “Contract Conditions” undertook a “friendly review” of a proposed new FIDIC standard form for “DBO Projects for the Upgrading of Existing Facilities” (Draft “Bronze Book”). Given that the industry standard currently provides for separate forms of contracts, one covering Design-Build and the subsequent form covering the operations and maintenance phase of a project, EIC feels a certain degree of uneasiness with the proposed form in that the “Bronze Book” assigns to the Contractor a strict responsibility for the quality, or any loss or damage to the asset, or loss of production of the facility for a period of 20 years or more. EIC criticises that the contractor needs to assume a concessionaire’s role, however, exposing it to a much higher degree of financial liability, which might be unacceptable for most contractors.

During the FIDIC Users Conference in December 2019 in London, EIC announced its upcoming publication of the EIC Contractor’s Guide to the FIDIC 2017 Yellow Book. In preparing this first EIC Guide on the FIDIC 2017 Conditions of Contract for Plant and Design Build, EIC continues the tradition of the EIC Guides to the FIDIC 1999 edition and shares its comments on matters of importance and only at length where there are issues at stake.

EIC teamed up with the European industry umbrella federation, BusinessEurope, and contributed substantial input for a Position Paper titled “The EU and China – Addressing the Systemic Challenge”. The chapter on ensuring fair competition in third markets incorporates several recommendations made in EIC’s Position Paper on Africa (see above under Chapter III). Furthermore, EIC developed together with FIEC and EuDA a comprehensive Plan of Action on how to protect the EU services industry against unfair competition from third country companies which was submitted to the President of the European Commission in June. The three federations published a joint Policy Paper titled “Fostering a Level Playing Field in Construction Services”, which documents elements of unfair competition both inside the EU and in overseas markets. Last but not least, EIC lobbied together with FIEC the EU Institutions asking them to enshrine the reciprocity principle of the Government Procurement Agreement into the proposed Regulation for an International Procurement Instrument.

EIC has initiated a discussion on OECD level to modify the OECD Consensus regarding the threshold for the insurance of local costs. In 2019, the European Union adopted a common standpoint to increase such threshold from 30 to 50% of the export contract value and submitted its position for discussion within the OECD Work Group on Export Credits. Whilst such an amendment might be a step forward for most exporting industries, it will still be insufficient for the construction sector. Hence, EIC collaborated with the BIAC Secretariat in producing a comprehensive Position Paper for the OECD consultations in mid-November 2019 in Paris. The BIAC paper rightly emphasises that the nature of construction services is such that building or infrastructure “products”, e.g. roads, railways, ports, dams, hospitals, etc. are provided locally and that it is therefore necessary for construction exporters to source construction materials, labour force and sometimes equipment locally.

The EIC Spring 2019 Conference took place in Madrid, Spain. Its workshop treated the very current issue of “Disruptive Innovation in Society and the Built Environment – Impact on the Activities of International Construction Companies”. As a follow-up, EIC has started to set up a new Working Group on “Digital Transformation” together with FIEC and ENCORD. The Autumn Conference was held in Helsinki, Finland with a workshop revolving around “Challenging Political and Economic Future – Construction as a Catalyst for Urban Concentration and Low-Emission Transport”.