How a Consultant Engineer Can Support Effective Project and Contract Management in Poland
Our problems in infrastructure projects are not new. Marcus Vitruvius Pollio, a Roman author, architect, and civil engineer wrote about the importance of keeping project costs within budget and to ensure that additional work not exceed 25% over budget. He stated: ”When an architect/engineer accepts the charge of a public work, he has to promise […]
Our problems in infrastructure projects are not new. Marcus Vitruvius Pollio, a Roman author, architect, and civil engineer wrote about the importance of keeping project costs within budget and to ensure that additional work not exceed 25% over budget. He stated:
”When an architect/engineer accepts the charge of a public work, he has to promise what the cost of it will be. His estimate is handed to the magistrate, and his property is pledged as security until the work is done. When it is finished, if the outlay agrees with his statement, he is complemented by decrees and marks of honor. If no more than a fourth has to be added to his estimate, it is furnished by the treasury and no penalty is inflicted. But when more than one fourth has to be spent in addition on the work, the money required to finish it is taken from his property.”
This quote, from Vitruvius’ “Book 10”, is as timely now as it was two thousand twenty six years ago when it was written during the Roman Empire.
A consultant engineer must know the current issues and be politically savvy to be successful in project management. I want to share some quick thoughts on what brought us to our current situation in Poland and then discuss the strides that are being made today by FIDIC, EFCA and SIDIR (EFCA – European Federation of Consulting Engineers, SIDIR – Polish FIDIC Member association) in an attempt to force normality into our every day life, and then focus on what consultants can do to help their employers on their projects.
1.5 Billion Euro Lawsuit
According to Minister Jerzy Szmidt in a statement he made in January 2016, contractors have sued the General Directorate for National Roads and Motorways for 1.5 billion euro for issues including additional works, changes and variations and are currently in court today to resolve their differences.
We have to ask ourselves why did this happen and how can this litigious scenario be prevented in the future.
Is it FIDIC’s fault?
Some consultants have given up on FIDIC contracts claiming they just don’t work in Poland.
I beg you to ask yourself the following question: Can we still call a contract “a FIDIC contract” if we change or remove 10 out of the 20 clauses that constitute a FIDIC contract? If we modify or delete these clauses, the fundamental balance of risk allocation is altered and the impact on the consultant engineer’s obligations is significant.
For example, some common changes to FIDIC contract clauses may include:
- 1.9 and 2.1: The removal of the payment clause to a contractor related to delayed instructions or site access places the burden of cost on the contractor and in the long run, increases costs to both parties along with schedule delays.
- 4.4: Strict restrictions to the written scope of subcontractor’s works, this limits who the contractor can contract outside of his expertise
- 8.7: Introduction of penalties for delays, e.g. delayed program update, subcontractor’s approval application, subcontractor’s payments, removal of defects,etc., is neither tenable nor a wise business practice.
- 12.3: The possibility of provisional rates/prices for Interim Payment Certificates is removed and results in new costs for the contractor and increases project costs
- 13.2: Value Engineering clause is removed.
- 13.6: Dayworks clause removed.
- 14.5: Payments for materials was recently changed and removed. This leaves the ConsultantEngineer responsible for materials costs.
- 16.1: The possibility to recover costs for suspension of work caused by Employer’s actions isremoved. This leaves the responsibility for these costs to the Consultant Engineer’s and
removes any accountability by the Employer.
- 20.1: The claim notification is shortened to 14 days.Further, clauses on Dispute Adjudication and Arbitration are now removed, eliminating protections and conflict resolution alternatives for Consultant Engineers. A national client recently told me: ”Adam, do you want to know why we don’t want to go to arbitration? Because we lose.” Consequently, disputes are now resolved in courts which adds to everyone’s cost. Litigation is time consuming and resource intensive.
This logic is very common these days. For example, if our child is doing poorly at school, the easy explanation is it must be the teacher’s fault, and the easy solutions are let’s fire the teacher, or change the “system”. No effort is taken to determine why the student is doing poorly and how to remedy it one-on-one with the child. Carte-blanche changes do not provide adequate fixes. In some instances, the solution may exacerbate the situation, cause more problems and increase complexity.
So no, it’s not FIDIC’s fault or EFCA’s fault or SIDIR’s fault (as some officials say in private conversations).
Maybe it’s the consultant’s fault?
Just recently, clients have added other criteria other than priced based selection. In some contracts now the additional criteria is “amount of on-site presence”, which is nothing other then a new form of price based selection. We are spending money now to have auditors check to see whether the site inspector is at his desk on-site because the criteria other than price was “amount on-site presence per week”. My question is this, has this improved the quality of consulting? Is this what the EU directive intended by forcing employers to use criteria other than price?
Consulting Engineering contracts on many major projects in Poland are signed at the same time or right before contractor’s signature (often after design (red book) or after employer’s requirements are written (yellow FIDIC), which limits the consultant input into formulating the employer’s requirements! This is a limitation in arriving at the most effective solutions and satisfactory project deliverables.
Some real life examples of clauses in consultant contracts that are hindrances:
- Paid in proportion to accepted and/or paid for works (Is this a conflict of interest? The thought must have crept in: “Hey, so the more the contractor gets paid this month the more I will get paid”).
- Taking away important contract tools of the Consulting Engineer, e.g. modifying FIDIC clause 3.1 (Engineer’s duties and authority).Some quotes from consulting contracts that are problematic:
- “…in order to reject or approve a claim the Consultant Engineer will receive approval from the client.”
- “…any Engineer’s instructions require client approval and acceptance.”
- “…the Engineer will not under any circumstance accept a project plan that exceeds theoriginal date of completion.”
One client once asked us: “Why do I need an engineer, when the only thing I will have to do is convince him to my beliefs, i.e. I’d rather use ”my way of running the project?”
Paraphrasing an old saying my response is: “If you are not wise enough to buy a dog, bark by yourself.”
Pretending that by allocating risk to other parties, the risk disappears…
If I was to point to one single reason for these conflicts, it is the art of covering up risk by changing who owns the risk. Not actively seeking ways to reduce and mitigate the overall risks just shifts the financial burden to another party. Unforeseen circumstances and impediments to timely and quality project completion can be reduced with careful planning and risk identification. Ineffective methods/work processes can be improved with proper procedures and good communication between parties before any work is started. Reduction of risk should be the mutual goal for the Consultant Engineer as well as the Employer as this also reduces costs while improving quality and timeliness of a project. This is an issue no matter what contract we use.
When I was a teenager, my father, an engineer, would not allow me to go out on weekends before I had cleaned my desk. So what did I, the thrifty teenager do? I would open my cabinet and throw all my piles from my desk into the cabinet…This is what we attempt to do with risk today — it is childish, it is immature and it does not get rid of the situation. It only defers it and sometimes can make the situation worse…
How can the Consultant Engineer help?
Once a client understands that success is not achieved by crossing out arbitration clauses, or by reducing engineering consultants to site inspectors, there is quite a lot we can do.
We can learn from what consultants have done and what we should continue doing. Here are some positive examples and recent developments.
There has been progress, after years of banging our head against the wall, thanks and kudos to SIDIR, EFCA and FIDIC.
There is a chance that BIM (building information modeling) might catch on in Poland. Recently we have seen two tenders where designers are given additional criteria for selection when they demonstrate BIM capacity.
Other developments include:
- Best Value Procurement/Quality Based Selection
- Dispute resolution boards on projects where the public client is not a national agency
- Arbitration court in SIDIR
- Road authority new criteria for selecting consultants
- The new public procurement law draft guidelines state that price should not be morethan 40% of the consultant selection criteria
How a Consultant Engineer’s input can lead to successful projects:
- Be involved from the very beginning, to help the client develop scope, identify problems, identify risk and help the client do his/her homework required before the start of the project.
- Convince our clients not to change FIDIC more than is required to adjust to local law.
- Act as a mediator, attempt to be independent and fair. – Clients often rather have theEngineer enforce the Client’s ”vision”, even if disadvantageous for the project. The consultant should be able to act as an independent advisor to the employer. (Which we as consultants might want to revisit – separate subject).
- Establish one list from the beginning — that is the bill of quantities/items in the project plan/items in monthly payment certificate.
- Build cultural bridges when dealing with international parties.
- Educate the clients during the project’s course.
- Establish solid methods/procedures for communication and information flow/storage.
- Maintain a team approach for all parties involved – instead of promoting an adversarialrelationship.
- Facilitate the client and the contractor to actively and constructively participate in initialand ongoing, regular risk analysis.
- Introduce and establish modern tools of communication.
- THE TIME OF PAPER IS OVER!!!
- The world is changing, so are ways we can effectively and seamlesslycommunicate on projects.
- Basecamp with access for each side of the process – everybody!Collaborative tools include Primavera, Microsoft SharePoint, BST Global
There is a very well known song in Poland by Wojciech Młynarski. The title of which is “Róbmy swoje” which roughly translates to: “Let’s do what we should do!” Professionalism, educating clients, and fostering relationships, have always been and still remain the key to successful and effective projects.