Training Programme on Procurement for End Recipients

1. Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey Training Programme on Procurement for End Recipients Trainer: Aslı Gülgör Procurement of Contract Management Non Key Expert

2. Works Contracts

3. PRAG in Procurement • FIDIC in Implementation(execution)

4. Vision in Tendering

5. Vision • Rugged (Reliable) High Performance (Short Life) Basic (Cheap) Luxury (Expensive) Long Life

6. Short Lists

7. Performance • Loading (Hydraulic/Chemical/Biological) • Temperature (Process Kinetics, Plant) • Compactness • Reliability • Design Life • Operability • Compatibility

8. Conditions of Contract

9. Fédération Internationale des Ingénieurs- Conseils

10. Founded in 1913 • An umbrella organization with the membership of national associations • Has more than 70 members • Represents the consulting industry

11. FIDIC Documents • Contracts • Agreements • Procedures • Consultancy Documents • Information Documents

12. Standard Contracts • FIDIC • NEC • ICE (The Institution of Civil Engineers) • AIA (American Institute of Architects) • Engineering Advancement Association of Japan • Construction Industry Development Board Singapore • Kreditanlage für Wiederaufbau, Germany • Joint Contracts Tribunal for the Standard Form of Building Contracts

13. FIDIC • ATCEA – Association of Turkish Consulting Engineers and Architects • (TMMMB - Türk Müşavir Mühendisler ve Mimarlar Birliği) • is the only representative body of FIDIC in Turkey; • Established in Ankara in 1980 and has over 200 members; • ATCEA is a member of FIDIC since 1987; • Sells and distributes its own publications as well as FIDIC’s • In EU funded projects, ATCEA is requested to appoint the DAB • www.tmmmb.org.tr / www.atcea.org.tr

14. FIDIC • Standardisation both in technical and administrative matters is essential for the successful completion of projects of civil engineering constructions; • FIDIC is known throughout the world for producing standard forms of contract for civil engineering construction, and mechanical and electrical plant to govern international contracts; • In 1999, FIDIC standardised its model contracts, with the publication of first editions of a new family of contracts comprising four new standard forms of contract: • Conditions of Contract for Construction (“Red Book”) • Conditions of Contract for Plant and Design-Build (“Yellow Book”) • Conditions of Contract for EPC/Turnkey Projects (“Silver Book”) • Short Form of Contract (“Green Book”)

15. Why FIDIC • BALANCED fair apportioning of risks, rights and obligations between the parties • WELL TRIED long case history for earlier contracts • ACCEPTED known and recognised; in wide use for international contracts • SUPPORTED recommended or required by development banks, International Financial Institutions, large development funds, etc. • EFFECTIVE clear and complete conditions; time limits; provisions for adjudication

16. FIDIC New Red Book FIDIC New Yellow Book FIDIC Green Book FIDIC Silver Book FIDIC Orange Book FIDIC New White Book FIDIC Standard Form of Contracts

17. The New Red Book • The Client carries out all the engineering services and copes with the risks. • The Consultant is responsible for the management and supervision. • Checking and supervision of the design and Works, approval of those or rejection are Consultant's responsibilities • The Contractor is paid per production and based on unit prices, risk of cost overrun is the risk of the Client. • During the implementation of the Works detailed tests are performed. Usually tests are simpler during the Handover Period and Start-up. • Disputes are caused are due to unexpected extra Works and increase of Cost. • There is usually a cost overrun • Consultant works as a daily Arbitrator.

18. The New Yellow Book • The Contractor carries out all the detail engineering services. • The Contract deals not with "HOW TO DO" but with "WHAT TO DO" • The main document is the "Employers Requirements" and explains what performance and quality is expected. • The Contractor takes most of the risks including the overrun in quantity and cost. • The Client may hold the authority to approve the design. • Management and supervision of the contract is carried out by the Consultant. • Checking and supervision of the design and Works, approval of those or rejection are Consultant's responsibilities • The Contractor is paid on a calendar basis at on some milestones. • During the implementation of the Works simpler tests are performed. Usually tests are more complicated during the Handover Period and Start-up. • Disputes are caused are due to different interpretation of the "Employer's Requirements" • Consultant works as a daily Arbitrator.

19. The Silver Book • The contractor is the designer • The main document is the Client requisition and it defines the products. • The contractor is the complete risk taker for the cost and price increases. • All the work is done on turn key basis by the contractor. • Design authorization is not necessary. • Consultant is not needed. The Contractor has the control. • The payment is made according to the calendar or per product. • Tests are not carried out during work. The tests carried out for the products are highly detailed. • Problems appear at the end of the work. • Conflicts are mostly solved by arbitration.

20. The Green Book • Client's Representative replace the Consultant • Design may be carried out by the Client or the Contractor. • Work may be implemented and paid on unit price or lump sum • The design made by the Contractor may be approved by the Client or by the Client's Representative. • The Client has the right to supervise the design and the Works. • Quality assurance is in Contractor's responsibility. • Cost overrun may occur due to poor cost monitoring. • Whoever is liable for the design is also take the risk of quantity and cost overrun.

21. WHICH BOOK ? Is it a straightforward and simple project? Is there any risk on design or process? no no yes yes Are the market and the unprecedented risks high? Fixed price – turn key Restricted client contribution High market risks yes no no DETAILED EXAMINATION Correct according to Client`s requisitions and then create a modified contract

22. Other Documents

23. PRAG The Practical Guide demands some particularisations of FIDIC and some usage of non-FIDIC forms. Primarily EU wants a ”say” in:- • The acceptance of the selected bidder • Origination of Goods • The powers of the Engineer to commit money • Avoidance of Corrupt Practices • Joint Ventures

24. PRAG Letter of Acceptance ”No Letter of Acceptance will be issued under this contract. Only the signing of the Contract Agreement by the Employer will constitute formal acceptance of the Tender. Any activities referred to in the Contract which relate to the date of issue of the Letter of Acceptance shall be construed as being determined from the date of signing of the Agreement by the Employer”

25. PRAG • Eligibility Rule • Also for Works Contracts

26. PRAG Limitation of Engineer’s Powers • The phrase “particular conditions” in the General Conditions of Contract shall be synonymous with the phrase “Special Conditions” used in latest edition of the EU Practical Guide. • The Engineer shall obtain the specific approval of the Employer before taking action under the following Sub-Clauses of these Conditions: • (a)Sub-Clause 3.5: agreeing or determining any matter which will increase the Contract Price. • (b)Sub-Clause 8.4: agreeing or determining an extension of the Time for Completion; • (c)Clause 13: Instructing a Variation which is expected to change the Contract Price or change the scope, character or quality of the Works. • Notwithstanding the above inserted sub-clauses the Engineer may act in isolation to alter the Contract Price in a matter which urgently affects the safety of the site, the workers and the public.

27. PRAG - FIDIC Integration

28. Advanced Training PRAG Works 5-7 April 2011 PRAG Works This project is co-financed by the European Union and the Republic of Turkey • PRAG & FIDIC integration • PRAG; Practical Guide to Contract Procedures for EU ExternalActions • FIDIC; conditions of contract • FIDIC replaces/changes certain documents of PRAG, but • Mainly they complement each other. • It is important to understand what each stands for in practice…

29. Works Contracts • Work Contract Types by nature • Construction (Employer’s Design FIDIC RED BOOK) • Plant and Design – Build (FIDIC YELLOW BOOK) • Design Build Operate • (FIDIC YELLOW BOOK) • (FIDIC GOLD BOOK – still not finalized) • EPC (Engineer Procure Construct) /Turnkey Projects (FIDIC SILVER BOOK)

30. Advanced Training PRAG Works 5-7 April 2011 Procurement Procedures This project is co-financed by the European Union and the Republic of Turkey

31. Advanced Training PRAG Works 5-7 April 2011 Single Tender This project is co-financed by th European Union and the Republic of Turkey • ≤ € 10.000 • PRAG 2.4.8 defines the procedures • Single tenderer is sufficient • Basic principles should be met (eligibility rules, capacity, exclusion criteria, etc.)

32. Advanced Training PRAG Works 5-7 April 2011 Competitive Negotiated Procedure • 3 contractors are invited (InvitationLetter + Tender Dossier) • 30 days for submission of proposals • Tenders are evaluated by a committee of 3 • 1 compliant tender is sufficient to award • After 2 successive failures CA may proceed with negotiated procedure • Subject to prior approval of the EC

33. Advanced Training PRAG Works 5-7 April 2011 Local Open Tenders • No forecast notice • Not published on the OJ of EC but on the OJ of the Beneficiary Country or equivalent media • PN must also be published on the Europeaid website • Give 15 days for translation • Equal opportunities for the eligible contractors located outside the Beneficiary Country

34. Advanced Training PRAG Works 5-7 April 2011 International Open Tenders • FN must be published on the Europeaid website • Give 15 days for translation • PN must be published in OJ of EC and on the OJ of the Beneficiary Country or equivalent media • PN must also be published on the Europeaid website • Give 15 days for translation

35. Sequence of Events • Time planning is crucial for successful tendering & contracting • Supervision and Work Tenders have to run in parallel; • Relevant contracts should be signed after securing the other, • Supervision contract should commence before the relevant works contract (ideally1 month)

36. Advanced Training PRAG Works 5-7 April 2011

37. Advanced Training PRAG Works 5-7 April 2011 Works Procurement Sequence ERAs • RED BOOK • Meetings with End Users and Suppliers for a proper TS • Preparation of the Design Concept / Note • Alternative Conceptual Designs (2 to 3) • Presentation and discussion on conceptual designs • Revisions and approval of the conceptual design • Engineering calculations • Detailed Execution Designs (Volume 5) • Technical Specifications (Volume 3) • Bill of Quantities & Financial Proposal (Volume 4) • Volume 1 & 2

38. Advanced Training PRAG Works 5-7 April 2011 Do not forget • Please note that; • This is a team’s work • It is not simply a works tender dossier; • There is design of a building/facility from scratch • There are laws and regulations that have to be addressed • Design responsibility / indemnity insurance should be confirmed • It takes time minimum 5 months

39. Dividing Lots • When and why do we need them? • Not for artificial splits to lower thresholds and shorten tendering periods • To secure contracting • To ease implementation (fewer contracts areeasier to manage) • To assign appropriate contractors • To have a sector focused approach • Supervision contract(s) should also be assessed accordingly

40. Particular Conditions of Contract • The Particular Conditions take priority over the General Conditions • Are the instrument for the Contracting Authority/ Beneficiary, for introducing the particular aspects of the local legislation, or of the project. • The General Conditions can be applied for any project, anywhere in the world, but will never be able to deal with the specific issues related to a specific project, nor to the legislation of a certain country

41. Particular Conditions of Contract • The PC should provide all relevant conditions that relate to the projects and the laws of the contract, which add, complement, or amend the General C • In drafting the PC, one must pay particular attention to cross-reference with all other interconnected Clauses that may be affected. • Make sure you don’t create ambiguities with other Clauses, or provisions of other documents • Major exercise in cross referencing PC with: • GC • Technical Specifications • Schedule/ Annexes (e.g. delivery schedule)

42. Particular Conditions of Contract • Examples should be only used after verifying they are suitable for your specific case and adapted accordingly • The guidance is to assist writers of the special conditions, by giving options for various sub-clauses where appropriate • It is recommendable that suitably-qualified engineers (technical staff) to prepare documents and a review by a suitably-qualified legal advisers • There is no specific Clause in the General C requiring additional data to be included in the PC, this is done only when and as much as necessary • Any modification of existing Clauses, or insertion of a new Clause, must be made for a clear reason and only in conjunction with the other Clauses • PC will only contain modified Clauses, without repeating the ones from GC that are not modified

43. Main aspects to be addressed in PC • Applicable law and language • Contractor’s obligations • Performances/ Insurances • Timetable/ Schedules • Documents/ Drawings/ Specifications/ Manuals • Patents and licences • Variations of contracted quantities

44. Main aspects to be addressed in PC • Quality levels • Inspection/ Testing at the delivery, Testing after installation • Acceptance • Payments methods/ schedules • Delivery – place, risks, related documents and procedures • Warranty/ After-sales services • Disputes resolution

45. Bill of Quantities-BoQs The objectives of BoQs are; • to provide sufficient information on the quantities of Works to be performed toenable Bids to be prepared efficiently and accurately • when a Contract has been entered into, to provide a priced (BOQ) for use inthe periodic evaluation of Works executed. In order to attain these objectives, Works should be itemized in the (BOQ) in sufficientdetail to distinguish between the different classes of Works, or between Works of thesame nature carried out in different locations or in other circumstances which may giverise to different considerations of cost. Consistent with these requirements, the layout andcontent of the (BOQ) should be as simple and brief as possible.

46. Bill of Quantities-BoQs The Bill of Quantities should be divided generally into the following sections: • a. Preamble; • b. Work Items (grouped into parts); • c. Daywork Schedule; and • d. Summary.

47. BoQs Preamble The Preamble should indicate the inclusiveness of the unit prices, and should state the methods of measurementthat have been adopted in the preparation of the Bill of Quantities and that are to be used for themeasurement of any part of the Works.

48. BoQs Work Items The items in the Bill of Quantities should be grouped into sections to distinguish between those parts ofthe Works that by nature, location, access, timing, or any other special characteristics may give rise todifferent methods of construction, phasing of the Works, or considerations of cost. General items commonto all parts of the Works may be grouped as a separate section in the Bill of Quantities. When a family ofPrice Adjustment Formulae are used, they should relate to appropriate sections in the Bill of Quantities.

49. BoQs Work Items The Bill of Quantities usually contains the following part Bills, which have been grouped accordingto the nature or timing of the work: • Bill No. 1-General Items; • Bill No. 2-Earthworks; • Bill No. 3-Culverts and Bridges; • Bill No. 4-etc., as required; • Daywork Schedule; and • Summary Bill of Quantities.

50. BoQs Daywork schedule Daywork Schedule should be included if the probability of unforeseen work, outside the items includedin the Bill of Quantities, is relatively high. To facilitate checking by the Employer of the realism of ratesquoted by the bidders, the