FIDIC AFRICA CONFERENCE DELIVERS PRACTICAL INSIGHTS
The well-attended FIDIC Africa Contract Users’ Conference held in Johannesburg recently produced some useful insights, not only about practical contractual matters but also about some trends and the take-up of FIDIC in Africa generally and South Africa in particular. Here are five interesting highlights from the Bowmans attendees.
1. SA is the second-largest FIDIC market
After the United Kingdom, South Africa is the second-largest FIDIC user country worldwide, according to statistics made available during the conference. FIDIC (and in particular, the Pink Book) is also widely used in the rest of Africa.
However, FIDIC pointed out that despite being widely used on the African continent, the standard documents are not always well understood. As one of its planned focus areas, FIDIC intends to put more emphasis on creating opportunities to train people on the use of the books and the application of the five ‘golden principles’ of FIDIC.
2. New FIDIC will take time to gain momentum
Approximately a year has passed since the launch of the new FIDIC books, but the rate of take-up has been slow. This is not unexpected. When the 1999 books were published, it took four or five years before a critical mass of users adopted that version. The 2017 versions are likely to take a similar length of time to gain widespread traction. Over time, users will start to ‘cherry pick’ aspects of the new FIDIC that they find useful and momentum is expected to pick up from there. In the meantime, the 1999 FIDIC will continue to be more widely used.
3. Concurrent delay stance confirmed
Shortly before the FIDIC conference, we sent a client newsflash on concurrent delay, mentioning that the new FIDIC leaves concurrent delay risk allocation to the parties. This position was confirmed during the conference, when FIDIC reported that they had considered coming up with a more prescriptive concurrent delay clause, but had decided against this given the complications of formulating a default position suitable for multiple jurisdictions.
4. Strong stance on Dispute Adjudication Boards
FIDIC strongly recommended that parties consider the benefits – including the cost benefits – of using Dispute Adjudication Boards (DABs) to avoid or resolve disputes. FIDIC reported the availability of hard-and-fast data showing that the negative cost impact of omitting DABs from contracts (i.e. bids tend to be higher as a result) far outweighs the costs the parties actually incur if DABs are used. Despite this, there appeared to be mixed views among conference participants as to whether DABs are worthwhile.
5. Construction technology
Construction technology and the use of Building Information Modelling (BIM) is a topic of considerable interest in the global construction industry. The FIDIC chairman mentioned this trend in his opening remarks at the Johannesburg conference, but the topic did not get much air time at the event beyond that. This was not a surprise given the lack of detail on BIM in the new FIDIC. Although the FIDIC drafting committee considered including a BIM protocol in the updated suite, they ultimately decided against it because others (NEC in particular) are already spearheading market developments in this area and so FIDIC’s preference is to adopt a ’wait and see’ policy. While there is no doubt that Africa is behind other regions of the world in the development and use of construction technology, it is certainly a subject worth keeping an eye on in the future.