Topics covered
The latest developments on the FIDIC form of contract Partnering and Framework contracts using the NEC form
MDB Form
FIDIC published a Guide to the Gold Book this summer Contrary to expectation, the Gold Book was not extended to brownfield sites The Gold Book therefore still applies only to greenfield sites FIDIC has stated its intention to publish a separate document for the brownfield scenario
Cl 1.3. Where Main Contract Provisions apply to Sub Contract , Sub Contract Clauses are to be interpreted as if amended appropriately
Cl 1.8 Sub Contract adopts Law and Language of Main Contract
No provision that Sub Contractor will not place Main Contractor in breach in performing its Sub Contract Works
NEC Overview
UNDERLYING PRINCIPLES A clear division of functions and responsibility helps accountability and motivates people to play their part Foresight applied collaboratively mitigates problems and risks
CLARITY
FLEXIBILITY
Compensation events
NEC approach is very different: encourages early communication entitlements based on forecasts no final account process in NEC
But this requires a very different approach and mindset
Core clause 1
10.1 The Employer, the Contractor, the Project Manager and the Supervisor shall act as stated in this contract in a spirit of mutual trust and co-operation
Structure - flexibility
Modular Nine Core Clauses Six main options (pricing) Two dispute resolution secondary options Sixteen secondary options Total design flexibility Separate contracts for consultancy services (PSC), term maintenance (TSC), framework agreement, subcontracting
Essential information
Partnering
Design Responsibility
Sectional Completion
Changes in Law
Limitations of Liability
Additional conditions
Framework contract
Introduced in 2005 when the NEC3 contract was launched Can be used in conjunction with any of the contracts from the NEC suite Designed to allow the Employer to invite tenders from suppliers to carry out work on an as instructed basis over a set term. Normally, the Employer will appoint a number of framework suppliers to carry out work within the defined scope.
Framework Contract
The Employer provides data: the framework information Scope Selection procedure Quotation procedure The Employer selects a supplier for a work package under the framework contract The supplier submits a quotation If the quotation is accepted the Employer issues a package order
Emphasis on project management, and successful project outcome, e.g. early warning, programming, communications
You must watch Cl. 13 when giving notices
Programming obligations - onerous! Read the contract carefully. Its different! Do not make assumptions about what it says! It wording is not always clear and is not tested in the Courts.
PROJECTCO SPV
CONSTRUCTION CONTRACTOR
CONSTRUCTION CONTRACTOR
Project/Concession Agreement
HOLDCO
Subscription Agreement
PROJECTCO SPV
BANK
Construction Agreement
Operations Agreement
Maintenance Agreement
CONSTRUCTION CONTRACTOR
OPERATING
MAINTENANCE
Projects need to be well-structured to be attractive to private sector and to satisfy private sector investors that PPP is the right approach for this project
Investment is largely in the form of direct loans to Project Companies (but some grant funding is available too)
Examples of current PPP investment:
Metro de Barcelona Estaciones (Spain) rail loan value EUR400 million Douro Litoral (Portugal) motorway toll concession loan value EUR600 million A2A Servizi Idrici Brescia water/waste loan value EUR70 million
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