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8/9/2019 FIDIC Power Point

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Best PracticeProcurement of

Engineering Services


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2

World Trade Center 2

Box 311

CH-1215 GenevaSwitzerland

Tel: +41 22 799 49 00

Fax: +41 22 799 49 01

[email protected]

www.fidic.org

International Federation ofConsulting Engineers

Fdration

Internationale desIngnieurs-Conseils


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International Federation of Consulting Engineers

FIDIC is the recognized global

voice for the consultingengineering industry

Fdration Internationale des Ingnieurs-ConseilsWorld Trade Center 2 CH-1215 Genve 15 www.FIDIC.org

Founded in 1913

with headquarters inGeneva, Switzerland


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84 Member Associations representing over 1 million professionals

THE SUN NEVER SETS ON FIDIC

Member Associations


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The FIDIC Mission

To promote the business

interests of membersproviding technology-

based intellectual

services for the built and

natural environment.


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FIDIC Policy

FIDIC believes that infrastructure should be

sustainable and, to this end, it is the policyof FIDIC that during all phases of the project

life-cycle, the overriding concern should be the

quality of the services provided by all parties.


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FIDIC stresses the pre-eminence of quality in the

selection process. The fees paid to a consultantare invariably a small fraction of the total project

life-cycle cost, and yet the consultants work is

key to the project success.

FIDIC Best Practice


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Results of Poor Quality Outcome

Hyatt Regency Hotel, Kansas City, Missouri

In July of 1981, two elevated walkways over thelobby of the Kansas City Hyatt Regency Hotelcollapsed during a party, killing 111 people andinjuring 188 others.

Engineering services for these structureswere awarded on the basis of price.

In 1995 a pedestrian bridge collapsed at theMaccabiah Games in Israel causing the deaths bydrowning of about 40 athletes.


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World Bank Study Findings

To evaluate the effectiveness of its guidelines on selection of

consultants, The World Bank examined the projects which it

funded in FY2003/2004. Major findings of the examination:

In 92% of all projects, QCBS is adopted because

characteristics of other selection methods are

disregarded or because WB recommends QCBS

too strongly.

Too much attention is paid to price competition

and too little to the quality of services in the

selection process.

While QCBS contributes to increasing of

participation of local consultants, it discourages

them to focus on quality under low revenue

level.


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World Bank Study Recommendation

Therefore, the Study recommends:

To stop recommending only QCBS sincethe cases for QBS is on the increase,due to requiring complexity and

specialization of consulting in manycases.

To clarify the cases for recommendingother methods than QCBS.

To balance the cases in such ratio asQCBS 40%, QBS 35%, CBS25% asinitially intended by the Guidelines.


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Best Practice Procurement

Maximizing Benefits to Clients


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Principles of Best Practice Procurement

FIDIC Guidelines for Selection:

Quality Transparency

Capacity building

Integrity

Fair competition

Harmonization

Liability

Independent monitoring of outcomes


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Clients Key Decision

Selecting a consultant is one of the most

important decisions a client makes in the life

of a project; its success often depends upon

obtaining the most able, experienced and

dependable expertise available, at an

appropriate cost.


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Representation of Typical Life-Cycle Cost and Impact on Project Success

ConstructionEngineering Operation & Maintenance

Life-Cycle Cost

Impact on Project Success

Quality in Selection of Consulting Engineers

The procurement of consulting engineer services

has the greatest impact on the life-cycle cost of

the project, yet is the least costly component.

The owners challenge is to get a good return on

investment in design services.


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The Parties to Procurement

The purchaser (client or employer)

The professional service provider The financier

The contractor

The public-end users


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Informed Purchaser

An informed purchaser is an owner who either has

the in-house technical expertise or engages outside

experts necessary to:

clearly convey project vision

evaluate and select consultants

understand the risks and procedures inherentin project execution

follow through with proper O&M proceduresand monitoring of outcomes

I f d P h


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Informed Purchaser

The informed purchaser will be better equipped to

incorporate other Quality-Based Principles at the

project development phase, including:

capacity building

sustainability

monitoring of outcomes

Th I


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Quality of infrastructure, or rather, decreasing

quality, has been identified worldwide, and by allstakeholders, as a serious concern.

The Issues

Th I
http://enr.ecnext.com/free-scripts/comsite2.pl?page=enr_document&article=febiar060424-1


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General observation that the quality of theconstructed project has been deteriorating

The Issues

This observation is confirmed by the MDBs project

managers, executing agencies and internationalconsultants

It is also perceived that good internationalconsultants are losing interest in MDB-fundedprojects

Why has the quality of theconstructed project deteriorated?

C f D t i ti i Q lit


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Causes of Deterioration in Quality

A major cause is the diminished quality of design

Lower quality design results when engineeringservices are procured as a commodity

The procurement of engineering services inwhich cost is a factor (QCBS) promotesengineering services as commodity services

Fewer top firms pursuing MDB-financedprojects

Other factors contribute as well, including:

Corruption

Incompetent contractors

Poor project management

Lack of resources to manage contractors

Th Ch ll


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The Challenge

Lack of sustainability, potential health and safety

problems, cost overruns, delays, an increase in the

number of disputes, and a failure to provide value

for money in completed projects are obvious

outcomes of the lack of quality in infrastructure.

FIDIC B t P ti


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FIDIC Best Practice

FIDIC advocates the

Quality-Based Selectionmethod (QBS) as the best

practice for selecting

a consulting firm.

Th QBS M th d


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In Quality-Based Selection the client selects

the consultant on the basis of:professional competence and

experience

managerial ability

availability of resourcesprofessional independence

integrity

quality management systemfairness of fee structure

The QBS Method

B t P ti


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QBS encourages clients to view

consultants as trusted advisors whoshare their priorities and interest in

achieving the best outcomes for their

project.

Best Practice

FIDIC B t P ti


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FIDIC Best Practice

The best project results

are achieved when

there is a professional

relationship of trust

between the client

and the consultant.

Quality


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Quality

Low cost and lack of integrity inevitably

lead to poor design and poor quality in thecompleted project.


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FIDIC


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FIDIC

selection of an Architect or Engineer solely

on price-competition basis provides the potential

for reductions in quality due to initial

underestimation of the costs and resources

required to adequately perform the work.U.S. House of RepresentativeSubcommittee Report on Structural Failures

selection of an Architect or Engineer solely

on price-competition basis provides the potential

for reductions in quality due to initial

underestimation of the costs and resources

required to adequately perform the work.

Capacity Building


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Capacity Building

Improves the quality outcome of theconstructed project.

Fee competition is detrimental to capacitybuilding.

As a result of fee competition, local firms are notadequately compensated.

Banks may want to examine the need forset-asides of projects for local consultants.

The procurement for such set-asides should bebased on quality principles.

Sustainability


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Sustainability

Sustainability integrates the environmental, economic,

and social dimensions of development, and is

therefore fundamental to a quality outcome.

The FIDIC Project Sustainability Management (PSM)

process provides a framework for the owner and

engineer to balance project vision against cost andavailable alternatives, and select appropriate project

goals and indicators for sustainable development.

The indicators are linked back to higher level goals

such as global warming, biodiversity, access to freshwater, and materials and energy use.

Quality Based Project Management


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Quality-Based Project Management

FIDIC recommends that consulting engineersadopt a Quality Management System, and that

owners have regard to this policy during selection.

A Quality Management System is a formalizedproject management structure that incorporates:

Customer-focused leadership and organization

Employee involvement

A process and factual approach to decision making

Continuous improvement

Mutually beneficial supplier (sub-consultant)relationships

FIDIC and Integrity


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To operate successfully in an

increasingly global world, the operationsof a firm will have to conform to generally

accepted best practices. In particular,

ethical behavior toward all the firmsstakeholders must be key and visible.

FIDIC and Integrity

Business Integrity Management


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Business Integrity Management

Corruption undermines the achievement of a

quality outcome, and the practice of business

integrity is crucial to fighting corruption.

FIDIC recommends that consulting engineers

adopt the FIDIC Business Integrity Management

System (BIMS), and that owners have regard tothis policy during selection.

A FIDIC Policy


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FIDIC believes that quality and integrity

management are intimately related.For that reason, it advocates that member

firms should engage in integrity management

as an extension of their quality managementsystems.

A FIDIC Policy

Conclusions


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Conclusions

Quality-Based Selection (QBS) is the preferredway to select an engineer as the trusted

advisor to the Client in many developedcountries. It should be no different in the lessdeveloped countries on projects financed by theMDBs.

Major clients in some developed countries haverecently migrated from QCBS to QBS (New YorkCity is a good example). MDBs should be doingthe same.

FIDIC and the MDBs need time for greatercollaboration between all parties on how topromote Best Practices Procurement.

Conclusions


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Conclusions

A re-examination of the impacts of the current

procurement method preferred by the MDBs

(QCBS) on the diminished quality of the

constructed project.

The World Bank study (mentioned at earlier

pages) is a good first step, but other studies on

the impacts of QCBS on a projects life-cycle cost

and variation orders during construction are

needed.

MDBs and borrowers need to ensure that

engineering services are not procured as if they

are commodities.

Conclusions


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Conclusions

The incorporation of quality-based principles

in the execution of projects is essential to the

achievement of the stated goal:

This reversal can be accomplished by

reverting to Best Procurement PrinciplesQuality-Based Selection.

A reversal of the trend of diminished

quality outcomes on projects.

Quality


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Quality

It is unwise to pay too much, but its worse to pay too

little. When you pay too little, you sometimes lose

everything because the thing you bought was incapable

of doing the thing you bought it to do.

The common law of business balance prohibits paying a

little and getting a lot it cant be done.

John Ruskin (1819 1900)British Poet, Scientist and Philosopher

Price has no meaning except in terms of the quality of theproduct.

Dr. W. Edward Deming (1900-1993)

Quality


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I told you to use QBS to Select the Engineer for the

Design of this bridge.

Quality


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