Transcript FIDIC FRI Generalforsamling 7marts2002

Fédération Internationale des Ingénieurs-Conseils
FIDIC
FIDIC Annual Conference
Quality Procurement Workshop
Beijing, China
September 7, 2005
BEST PRACTICE PROCUREMENT
OF ENGINEERING SERVICES
Gregs G. Thomopulos, P.E., FACEC
Executive Committee Member
FIDIC
07/09/2005
1
Fédération Internationale des Ingénieurs-Conseils
FIDIC’s Mission:
To promote the business interests of
members providing technology-based
intellectual services for the built and
natural environment, and while so doing,
accept and uphold our responsibilities
to society.
07/09/2005
2
Fédération Internationale des Ingénieurs-Conseils
Selection Guide –
Best Practice Principles
 FIDIC emphasizes that quality is
paramount in the selection of consultants,
and that Quality Based Selection is the
recommended method.
 FIDIC emphasises the need for integrity,
clarity and quality in the Inviting and
Evaluation of Proposals for Consultant
Selection.
07/09/2005
3
Fédération Internationale des Ingénieurs-Conseils
Guide to Quality Management
Guide to ISO 9001:2000
FIDIC has published:
 Guide to Quality Management in the
Consulting Engineering Industry
 Guide to the Interpretation and
Application of the ISO9001:2000
Standard for the Consulting Engineering
Industry
 Training Kit: Quality Management in the
Consulting Engineering Industry
07/09/2005
4
Fédération Internationale des Ingénieurs-Conseils
FIDIC
BEST PRACTICE PROCUREMENT
MAXIMISING BENEFITS
TO CLIENTS
07/09/2005
5
Fédération Internationale des Ingénieurs-Conseils
The Issue

General observation that the quality of the
constructed project has been deteriorating.
 This observation is confirmed by the Banks’
Project Managers, Executing Agencies and
International Consultants.
 It is also perceived that good International
Consultants are losing interest in Bankfunded projects.
 The current trend in diminished Quality
Outcome of the constructed project needs to
be reversed.
07/09/2005
6
Fédération Internationale des Ingénieurs-Conseils
Causes of Deterioration in Quality

A major cause is the diminished quality of design.

Lower quality design results in lower quality
construction and increased variation orders, resulting
in increased cost of the project.

Other factors contribute as well, including:

Corruption;

Incompetent Contractors;

Poor Project Management;

Lack of Resources to Manage Contractors.
07/09/2005
7
Fédération Internationale des Ingénieurs-Conseils
Selection Guide –
Best Practice Principles
“Consultant selection is highly critical to the success of
the entire project; to save a small percentage, perhaps
1% or less of project cost, is not worthwhile,
considering the potential risks.”
07/09/2005
8
Fédération Internationale des Ingénieurs-Conseils
Selection Guide –
Best Practice Principles
Quality in the process of selection of engineering
consultants refers to those factors which will enable
the consultant to produce the best value solution to
the Client’s Terms of Reference: and includes the
Firm’s relevant professional competence and
experience, managerial ability, financial capability,
availability of resources, capability of designated
staff, quality and integrity management systems,
and demonstrated understanding of the Project and
the Client’s Brief.
07/09/2005
9
Fédération Internationale des Ingénieurs-Conseils
The Parties to Procurement
 The Purchaser (Client or Employer)
 The Professional Service Provider
 The Financier
 The Contractor
 The Public – End Users
07/09/2005
10
Fédération Internationale des Ingénieurs-Conseils
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
inherent in project execution; and
 follow through with proper O&M
procedures and monitoring of outcomes.
07/09/2005
11
Fédération Internationale des Ingénieurs-Conseils
Informed Purchaser
The Informed Purchaser will be better equipped
to incorporate other Quality-Based Principles at
the project development phase, including:
• Capacity Building;
• Sustainability; and
• Monitoring of Outcomes.
07/09/2005
12
Fédération Internationale des Ingénieurs-Conseils
Quality – Who Needs It?
“It is unwise to pay too much, but it’s 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 can’t be done.”
John Ruskin (1819 – 1900)
British Poet, Scientist and Philosopher
“Price has no meaning except in terms of the
quality of the product.”
Dr W. Edward Deming (1900-1993)
07/09/2005
13
Fédération Internationale des Ingénieurs-Conseils
Quality – Who Needs It?
Client: Public Sector
 Spend public money wisely
 Obtain best value, (which is not least cost);
 Have regard to operating and life cycle costs;
 Have regard to environment and sustainability
 Encourage innovation
 Encourage development of viable industry:
capacity building
 Avoid disputes, delays, non-productive costs
07/09/2005
14
Fédération Internationale des Ingénieurs-Conseils
Quality – Who Needs It?
Client: Private Sector
 Spend shareholders money wisely
 Obtain best value, (which is not least cost);
 Have regard to operating and life cycle costs;
 Have regard to environment and sustainability
 Encourage innovation
 Develop partnerships
 Avoid disputes, delays, non-productive costs
 Protect investment by the purchase of quality
product
07/09/2005
15
Fédération Internationale des Ingénieurs-Conseils
Quality – Who Needs It?
Client: Design Build Contractor
 Need to win the project;
 Encourage innovation
 Need to satisfy Clients Brief (needs expert
advice)
 Need to be able to construct for the price
tendered
 Avoid disputes, delays, non-productive costs
 Develop partnerships
07/09/2005
16
Fédération Internationale des Ingénieurs-Conseils
Quality
Low cost and lack of integrity
inevitably lead to poor design and
poor quality in the completed
project.
07/09/2005
17
Fédération Internationale des Ingénieurs-Conseils
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 Owner’s
challenge is to get a good “return on investment” in
design services.
Representation of Typical Life Cycle Cost and Impact on Project Success
Life Cycle Cost
Impact on Project Success
Engineering
Construction
Operation & Maintenance
07/09/2005
18
07/09/2005
19
Fédération Internationale des Ingénieurs-Conseils
Fédération Internationale des Ingénieurs-Conseils
FIDIC – Principles of
Best Practice Procurement
FIDIC Guidelines for Selection
 Quality
 Transparency
 Capacity Building
 Integrity
 Fair Competition
 Harmonisation
 Liability
 Monitoring Outcomes
07/09/2005
20
Fédération Internationale des Ingénieurs-Conseils
The Steps in the Procurement Process
 Announcement and Pre-qualification (long
listing)
 Short List
 Request for Proposal









07/09/2005
Letter of Invitation
Terms of Reference
Information to Consultant
The Proposed Agreement
Preparation and Submission of Proposal
Receipt and Opening of Proposals
Evaluation
Negotiation and Award
De-Briefing
21
Fédération Internationale des Ingénieurs-Conseils
Proposals
It is essential that the consultant addresses the
TOR and the evaluation criteria faithfully and
accurately.
07/09/2005
22
Fédération Internationale des Ingénieurs-Conseils
Evaluation
This is a key feature of the Procurement
Process which is so often carried out in a
questionable way, thus frustrating quality
consultants and penalising the end client.
07/09/2005
23
Fédération Internationale des Ingénieurs-Conseils
Recommended Criteria
for the Selection of the
Evaluating Committee Members




Professional Experience
Familiarity with Selection and Evaluation
Objectivity
The Client Decides on the
Number of Members
 Independence
07/09/2005
24
Fédération Internationale des Ingénieurs-Conseils
The Contract Agreement
The recommended form of agreement is the FIDIC
Client – Consultant Model Services Agreement (White
Book) or at least a recognised standard contract, with
appendices filled in as appropriate, reflecting the scope
of work. The final TOR and the agreed methodology
shall be incorporated in the scope of work. The selected
firm should not be allowed to change the key staff or any
major items included in its proposal, unless both parties
agree that undue delay in the selection has made it
necessary.
07/09/2005
25
Fédération Internationale des Ingénieurs-Conseils
Result of Good Quality Outcome






Quality in Selection produces quality designs.
Quality designs produce quality projects.
Quality projects have fewer variation orders
during construction.
Fewer variation orders result in lower
construction costs.
Quality designs and lower construction costs
result in lower life-cycle costs.
Quality in Selection is in the Owner’s best interest.
07/09/2005
26
Fédération Internationale des Ingénieurs-Conseils
Result of Poor Quality Outcome
Hyatt Regency Hotel, Kansas City, Missouri
In July of 1981, two elevated walkways over the
lobby of the Kansas City Hyatt Regency Hotel
collapsed during a party, killing 111 people and
injuring 188 others.
In 1995 a pedestrian bridge collapsed at the
Maccabiah Games in Israel causing the deaths by
drowning of about 40 athletes.
Engineering services for the structures were
awarded on the basis of price.
07/09/2005
27
Fédération Internationale des Ingénieurs-Conseils
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 Representative
Subcommittee Report on Structural Failures
07/09/2005
28
Fédération Internationale des Ingénieurs-Conseils
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 to this policy during
selection.
07/09/2005
29
Fédération Internationale des Ingénieurs-Conseils
Capacity Building

Improves the Quality Outcome of the
constructed project.
 Fee competition is detrimental to Capacity
Building.
 As a result of fee competition, local firms are
not adequately compensated.
 Banks may want to examine the need for
“set-asides” of projects for local consultants.
 The procurement for such “set-asides” should
be based on quality principles.
07/09/2005
30
Fédération Internationale des Ingénieurs-Conseils
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 and
available 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 fresh
water, and materials and energy use.
07/09/2005
31
Fédération Internationale des Ingénieurs-Conseils
Quality-Based Project Management
FIDIC recommends that consulting engineers adopt
a Quality Management System, and that Owners have
regard to this policy during selection.
A Quality Management System is a formalized project
management structure that incorporates:
 Customer-focused leadership and organization;
 Employee involvement;
 A process and factual approach to decision making;
 Continuous improvement; and
 Mutually beneficial supplier (sub consultant)
relationships.
07/09/2005
32
Fédération Internationale des Ingénieurs-Conseils
Quality-Based Construction
Quality principles extend to the tendering and
construction phase. Means to incorporate
quality principles include:

Prequalification of contractors;
 Quality-based construction management
procedures; and
 Documentation of contractor performance.
 Selection of Contractors to include quality
elements
07/09/2005
33
Fédération Internationale des Ingénieurs-Conseils
Conclusion – A Working Partnership
The consulting engineering industry remains
largely responsible for the planning, design,
construction, inspection and management of the
infrastructure needed to meet the world’s everincreasing demand for food, water, sanitation,
shelter, health services, transportation and
energy. It tackles on a daily basis the problems of
how to improve peoples’ lives while preserving
natural resources in a world with a growing
population.
07/09/2005
34
Fédération Internationale des Ingénieurs-Conseils
Conclusion
The incorporation of Quality-Based
Principles in the execution of projects
is essential to the achievement
of the stated goal: a reversal
of the trend of diminished
Quality Outcomes on projects.
07/09/2005
35
Fédération Internationale des Ingénieurs-Conseils
Quality
“I told you to use Quality Principles to build this bridge.”
07/09/2005
36