FIDIC Contract Application In An International Infrastructure Project: A Case Study Of Ho Chi Minh City Water Environment Improvement Project

In Vietnam, international projects are required to follow the international standard/ rules or the Standard FIDIC Form of Contracts through a lager infrastructure projects. The problem that the Employers usually face is that, Vietnam has its own rules which are different from the international standard. Differences in practices and thinking could not be avoided. Sponsors always reminded that when there is a difference between the rules of Vietnam and regulated by Sponsors, they must follow the Sponsor’s.

Therefore, in the process of implementing projects and preparing tender documents, the Employer works with the Consultant about General Conditions and Conditions of Particular Application of FIDIC Conditions of Contract. Ensure that all the conditions for construction contract have formed to fit as specified by the Sponsor, the FIDIC Conditions of Contract, and the rules of Vietnam law construction. General Conditions and Conditions of Particular Application of Contract as well meaning as easy to apply the project smoothly success and minimize the risk or controversy in the process of implementing projects. All General Conditions and Particular Conditions of Contract have shown in full tender dossier, during the period of negotiations and signing of the contract and attachments as part of construction contract.

Mr. Dang Ngoc Hoi made a case study which three main objectives were to: (1) study FIDIC Forms of Contract application in a project; (2) study problems occurred and implement process for application General Conditions and Particular Conditions of FIDIC Forms of Contract in this project; and (3) Analyse the strengths, weakness, and proposal a procedure for solution

Conclusion

Using the FIDIC Forms of Contract with ODA loans, it needs to meet the regulatory requirements of sponsors such as the World Bank, JICA, ADB, etc. through international competitive bidding and is usually carried out by international Contractors. To implement the project according to the terms stipulated in the loan agreement between the Government of Vietnam with Sponsors, these guidelines apply to the FIDIC Conditions of Contract or the Sponsor's policies and regulations on project management of Viet Nam Government. Owner Units (Employers) in Vietnam face big opportunities and challenges. Minimising the risks, controversial claims in the process of implementing a construction Contract. the Employers often require design Consultant (or Employer) to draft Contractual terms according to the forms regulated by the Sponsors or FIDIC Conditions of Contract, technical specifications, and other agreements in accordance with regulations on management of ODA capital projects of the Government of Viet Nam, and be reflected in the Particular Conditions of the Contract, and ensures that the Particular Conditions and General Conditions of FIDIC Contract including the binding of the Employer, Engineer, and the Contractor with full rights and responsibilities of all Parties in the process of implementing the project. In the event that the Parties understand and perform the full duties and responsibilities in the Contract, they will mitigate or can avoid controversial action.

Based on the author’s observation, applying the Forms of FIDIC Contract in international projects on infrastructure construction in Vietnam is very useful. It binds the specific rights and responsibilities, represents the equity and risk sharing for the Parties (Employer, Engineer, and Contractor). However, users also anticipate difficulties and always active to improve the understanding when applying this Form of FIDIC Contract such as:

+ Language differences also affect the Countries which are not using English communication. This is also a limitation for Users who cannot fully understand the terms or legal in the FIDIC Contract.

+ Improving the General Conditions of FIDIC Form of Contract and the additional terms through Particular Conditions or Special Conditions and over time of usage between the Employer, the Engineer and the Contractor, it will increase the compliance made between the Parties under the Contract.

+ Because the FIDIC General Conditions of Contract clauses varied from time to time or improved, the Users need to be trained to improve the User’s knowledge and capability to apply FIDIC Form of Contract performance, it is very important in the process of implementing a international infrastructure investment and construction projects.

+ Success of using FIDIC Form of Contract often depends on the experience of People who have used similar FIDIC Conditions of Contract in infrastructure construction projects.

+ Several Conditions of Particular Application of the FIDIC Conditions of Contract for Works of Civil Engineering Construction, the Fourth Edition in 1987 have been adopted in the project is also attached to this report (Appendix No.1).

This report also focused to describe the advantages and disadvantages in the process of applying the General Conditions and Conditions of Particular Application (COPA) in FIDIC Conditions of Contract of large scale infrastructure construction projects in Vietnam, in particularly, the Ho Chi Minh City Water Environment Improvement Project, to resolve the major problems occurred in the process of implementation the project.

His thesis abstract is copied and pasted below.

ABSTRACT

In recently, Viet Nam has mobilized more resources to develop the infrastructure construction system, the budget are including the domestic resources, Foreign Direct Investment (FDI) capital, and official development assistance (ODA) loans from Organizations and Countries in the World. More international projects will be built in Vietnam based on international competence it necessity will have to use the international standard/ rules or the Standard FIDIC Form of Contracts through a lager infrastructure projects.

To perform the role and mission of the Employer, the Employer have to implement project management and make it meet all requirements of FIDIC Forms of Contract and Vietnam’s rules these jobs are not easy, because there are still differences between the rules of the international Sponsors with the rules of Vietnam. Differences in practices and thinking could not avoid. Therefore, in the process of implementing projects and preparing tender documents, the Executing Agencies or the Employer has requested to amend and apply widely adding special conditions to General Conditions to disputes arising among the parties in Contract, the amendments and additions shall be set out on pages headed Particular Conditions. Ensure that all the conditions for construction contract have formed to fit the specified by the Sponsor (or Sponsor’s policies). The FIDIC Conditions of Contract, and the rules of Vietnam law construction which are combined as well meaning as easy to apply the project smoothly success and minimize the risk or controversy in the process of implementing projects. They also have shown in full tender dossier, during the period of negotiations and signing of the contract and attachments as part of construction contract.

This report focuses to describe the advantages in the process of applying the General Conditions and Conditions of Particular Application in FIDIC Forms of Contract (special on Part II – Conditions of Particular Application) to resolve the major problems occurred in the process of implementation the project. Analysis on strengths, weakness, proposal a procedure for solution, and recommendations of construction contract for improvement in future that are applied FIDIC Form of Contracts.