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FIDIC 2005 Beijing Workshop 13 Design - Build

FIDIC 2005 Beijing Workshop 13 Design - Build. Opportunities and Challenges in Australasia. Tony Barry, President Association of Consulting Engineers Australia Director Connell Wagner Pty Ltd. Project Delivery. Traditional Construct Only Design & Construct (D&C)

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FIDIC 2005 Beijing Workshop 13 Design - Build

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  1. FIDIC 2005 BeijingWorkshop 13 Design - Build Opportunities and Challenges in Australasia Tony Barry, President Association of Consulting Engineers Australia Director Connell Wagner Pty Ltd

  2. Project Delivery • Traditional Construct Only • Design & Construct (D&C) • Design, Construct & Maintain (DCM) • Build Own Operate (BOO) • Build Own Operate & Transfer (BOOT) • Public Private Partnerships (PPP) • Alliances

  3. Design & Construct • Design-Build = Design & Construct • There is a D&C Contract embedded in every PPP, BOOT, BOT, DCM contract • D&C is the most common form of project delivery in the Building, Urban Infrastructure and Power Generation Markets in Australia • Construct Only Contracts most common in NZ, D&C increasing

  4. Roles for the Consulting Engineer in D&C • Owner’s Planner and Engineer • Banker’s Engineer • Contractor’s Designer • Contractor’s Verifier • Proof Engineer (Principal & Contractor) • Construction Verifier (Principal & Contractor) • Independent Reviewer (Principal & Contractor)

  5. Why Design & Construct ? Initially • Reduce claims by contractors against Principals • Innovation without risk • Larger projects – contractors perceived with greater capacity to manage than government • Speed of Delivery • Cost and program, both risks to politicians

  6. Why Design & Construct ? Now • Total risk transfer from Principal to Contractor – very few claims • Innovative Solutions • Successful delivery, great projects • Even larger projects • Speed of Delivery • Projects delivered in one political term

  7. The Risk Environment for Consultants • Legal framework – Common Law, Contract Law, Trade Practices Act, Occupational Health & Safety Acts • Onerous Agreements • Contractors capacity • Contractors plan to deal with commercial loss

  8. The Risks • Client risk dumping • Risks inherent in Design & Construct • Tender process suppresses risk $ • Client Information risk • The risks are commercial risks • Losses crystalise in the D&C team • Contractor has no avenue to claim against client • Claim against consultant • PI cannot support commercial risks

  9. Onerous Terms • High standards of care • Responsibility for client supplied information • Absolute Fitness for Purpose warranties • Strict compliance • Open ended Indemnities • Duty of Care to multiple parties • Liability for delays outside control • Disclosing terms of PI Policy

  10. The Solution • Don’t accept unreasonable terms – walk away • Negotiate a good contract to maintain a good relationship and a good business • Use Limits of Liability above which Clients carry the risk • Adopt commercially sustainable PI Insurance levels and guidelines • Negotiate scope carefully and exclude others’ responsibilities

  11. The Future • More Design & Construct • Bigger projects • Fewer contractors • Higher cost to Principals • More work and more opportunity for Consulting Engineers • More claims and litigation • Better risk management by all parties

  12. Better Risk Management • Open identification and pricing in tenders • Risk sharing with agreed specified outcomes • Limitation of liability for contractors and consultants • Risk management record and tender evaluation criteria

  13. Design & Construct Business Model Principal Total Risk Transfer D & C Contractor Risk Transfer Risk Transferred or Managed Subcontractors Consultant

  14. Contractor–Consultant Liability Transfer Model • Master – servant relationship • Head contract conditions passed down • Risk transfer through onerous terms • Impossible and impractical notice requirements • Representations designed to create TPA breaches • Certify compliance or breach contract • Excessive and protective administration • Aggressive and manipulative behaviours • Designers site role suppressed / limited • Post-contract claims and disputes • Careers destroyed

  15. Contractor–Consultant Liability Managed Model • Co-operative integrated relationship • Methods of managing Head contract conditions agreed without transfer to consultant • Consultant carries negligence risk • Consultant assists Contractor to identify and manage risks • Contractor to certify compliance or non-conformance • Consultant to retain independent judgement • Consultant uses Contractor administrative systems • Co-operative behaviours and excellent performance • Designers site role expanded and integrated • Post-contract awards • Careers enhanced

  16. Tony Barry Connell Wagner Pty Ltd on behalf of Level 12, 75 Miller Street | North Sydney NSW 2059(02) 99224711 | www.acea.com.au | acea@acea.com.au

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