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Alina Oprea, Romania; alina.oprea.v@gmail.com - Drbfconferences ...

Alina Oprea, Romania; alina.oprea.v@gmail.com - Drbfconferences ...

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DRBF European Regional Conference, November 17-18, 2011<br />

A l i n a O p r e a , <strong>Romania</strong>; a l i n a . o p r e a .v @ g m a i l . <strong>com</strong>


DRBF European Regional Conference, November 17-18, 2011<br />

My experience related to this subject <strong>com</strong>es from:<br />

•Employee of The <strong>Romania</strong>n National Company of<br />

Motorways and National Roads<br />

� Since 1993<br />

• FIDIC trainer in <strong>Romania</strong><br />

� Since 2008<br />

� DRBF Country Representative for <strong>Romania</strong><br />

� Since 2006


DRBF European Regional Conference, November 17-18, 2011<br />

<strong>Romania</strong>n Infrastructure Projects are Financed by:<br />

� EU<br />

� IFI (EBRD, EIB, IBRD, JBIC…)<br />

� National Budget<br />

...


DRBF European Regional Conference, November 17-18, 2011<br />

EU finances <strong>Romania</strong>n infrastructure projects through:<br />

� PHARE (in the past)<br />

� ISPA (in the past)<br />

� SOP-E:<br />

Sectoral Operational Project – Environment<br />

� SOP-T:<br />

Sectoral Operational Project – Transport


DRBF European Regional Conference, November 17-18, 2011<br />

EU funding in <strong>Romania</strong>:<br />

The biggest project of a Central Public Authority:<br />

� The <strong>Romania</strong>n National Company of Motorways and<br />

National Roads :<br />

The construction of the<br />

Motorway Arad-Timisoara<br />

(126 MEUR EU funds)


DRBF European Regional Conference, November 17-18, 2011<br />

EU funding in <strong>Romania</strong>:<br />

The biggest project of a Local Public Authority:<br />

� Cluj County Council:<br />

Integrated Management System<br />

of The Wastes<br />

(37 MEUR EU funds)


DRBF European Regional Conference, November 17-18, 2011<br />

E-Road Network over 1990 borders


DRBF European Regional Conference, November 17-18, 2011<br />

The <strong>Romania</strong>n National Road and Motorway Network<br />

Out of the total<br />

length of<br />

198,589.0 km<br />

of roads,<br />

The <strong>Romania</strong>n<br />

National Company<br />

of Motorways and<br />

National Roads<br />

(RNCMNR)<br />

•administrates,<br />

• mainains,<br />

•rehabilitates, and<br />

•develops<br />

15,934.0 km<br />

of national roads<br />

262.9 km<br />

of motorways


DRBF European Regional Conference, November 17-18, 2011


DRBF European Regional Conference, November 17-18, 2011<br />

We are using various works contracts:<br />

� FIDIC 1999<br />

� FIDIC 1987<br />

� Other forms of contracts<br />

The conditions of contract are imposed or re<strong>com</strong>mended<br />

by EU, or by the financing institutions, or chosen by the borrower


DRBF European Regional Conference, November 17-18, 2011<br />

Dispute prevention mechanism within contracts:<br />

� FIDIC 1999:<br />

� Engineer<br />

� Dispute Adjudication Board<br />

� FIDIC 1987<br />

� Engineer<br />

� Other forms of contracts<br />

� Prevention...?


DRBF European Regional Conference, November 17-18, 2011<br />

Dispute Adjudication Boards in <strong>Romania</strong>n contracts:<br />

� contracts without DAB in the general conditions of<br />

contracts (FIDIC 1987, other types of contracts):<br />

� without DAB<br />

� contracts with DAB in the general<br />

conditions of contracts<br />

(FIDIC 1999 contracts):<br />

�with DAB – those that were not<br />

disturbed by the lack of funding<br />

for DAB or by other reasons<br />

�DAB removed


DRBF European Regional Conference, November 17-18, 2011<br />

FIDIC 1999 Contracts without DAB...<br />

Why<br />

the DAB is removed<br />

from the contracts?


DRBF European Regional Conference, November 17-18, 2011<br />

Why the DAB is removed from contracts?<br />

� DAB expenditures declared non-eligible for EU funding by CE services<br />

� even after the contracts were endorsed by EU services (changing<br />

the rules during the game...)<br />

� explanation provided: DAB expenditures are “litigation<br />

expenditures” (in fact, DAB is about contract management, since<br />

it prevents the disputes and solves the disputes within the<br />

contract, like the Engineer does; the delegates from different<br />

<strong>Romania</strong>n ministries did not succeed to convince the EU services<br />

about this)<br />

� Lack of information (at the Contracting Authorities’ level) about the<br />

benefits of having DAB, because:<br />

� Lack of funds for training<br />

� Staff fluctuation


DRBF European Regional Conference, November 17-18, 2011<br />

The effect of CE services declaring the DAB<br />

expenditures as non-eligible for EU funding:<br />

� lack of necessary funds for DAB<br />

� the Contracting Authorities are disoriented and<br />

misleaded , because the perception is:<br />

“non-eligible” = “incorrect”<br />

= “illegal”<br />

=“bad”<br />

• removal of DAB from the contracts


DRBF European Regional Conference, November 17-18, 2011<br />

Consequences of not having/removing the DAB<br />

from the works contracts:<br />

1. Bigger risks in the contracts (a DAB moderates and<br />

improves the contractual knowledge and behaviour<br />

of the parties and of the supervising Engineer)<br />

2. Bigger tender prices, in case of experienced<br />

contractors


DRBF European Regional Conference, November 17-18, 2011<br />

Consequences of not having/removing DAB in the works<br />

contracts:<br />

3. The experienced contractors (for whom big risk = big<br />

price) have the financial offer too big, and cannot be<br />

declared winners of the tenders.<br />

The non experienced contractors, declared winners,<br />

cannot deal with the contracts difficulties; it results<br />

delays, increase in costs, abandoning the works or<br />

termination of contracts<br />

4. Or the experienced contractors <strong>com</strong>e with lower financial<br />

tender for winning the tender, and fight, after the contracts<br />

are signed, to reach the correct contract price by notifying<br />

and serving lots of claims and disputes


DRBF European Regional Conference, November 17-18, 2011<br />

Consequences of not having/removing DAB in the works<br />

contracts:<br />

5. Bigger costs and human resources involved in the claims<br />

settlement:<br />

• Own staff and external lawyers/consultants involved in law<br />

courts’ trials, with unforeseeable results (not specialized<br />

courts)<br />

• Own staff and external lawyers/consultants involved in long<br />

and expensive arbitrations (statistically, the arbitral awards<br />

confirm the DAB decisions in 98% of cases – but the DAB<br />

process is 84 days long, and an arbitration exceeds 1 year – up<br />

to 3-4 years and more); sometimes, in the end, the cost of the<br />

lawyers/consultants exceeds the amount won or lost from the<br />

dispute itself


DRBF European Regional Conference, November 17-18, 2011<br />

Consequences of not having/removing DAB in<br />

the works contracts:<br />

6. Bad contractual relationship<br />

7. “litigation history” – restrictions or interdiction<br />

for the contractors to participate at future tenders<br />

8. Increased corruption or suspicion of corruption


Therefore,<br />

DRBF European Regional Conference, November 17-18, 2011<br />

main purpose, energy and resources of the<br />

Contracting Authorities :<br />

• sustainable development of the<br />

infrastructure,<br />

or<br />

• litigation…?


DRBF European Regional Conference, November 17-18, 2011<br />

C o n c l u s i o n ( 1 ) :<br />

The EU directives and instructions' effect on<br />

the implementation of Dispute Boards in<br />

<strong>Romania</strong>:<br />

1. the DAB entered in <strong>Romania</strong>,<br />

through FIDIC 1999 re<strong>com</strong>mended or<br />

imposed by EU financing memoranda


DRBF European Regional Conference, November 17-18, 2011<br />

C o n c l u s i o n ( 2 ) :<br />

The EU directives and instructions' effect on<br />

the implementation of Dispute Boards in<br />

<strong>Romania</strong>:<br />

2. The DAB was removed from<br />

contracts, because EU services<br />

declared the DAB expenditure non-<br />

eligible for EU funding


DRBF European Regional Conference, November 17-18, 2011<br />

Proposals for EU services:<br />

to recognize the DAB contribution to improving the<br />

management of contracts and therefore to improving the<br />

sustainability of the development obtained through the projects<br />

to declare the DAB eligible for EU funding<br />

to encourage the use of standing DAB from the begining of<br />

the contract for avoiding disputes within contracts<br />

This way, the energy and resources<br />

of the Contracting Authorities, Governments and EU<br />

will be used for sustainable development


se of<br />

anding<br />

AB<br />

om the<br />

gining<br />

DRBF European Regional Conference, November 17-18, 2011<br />

the contract<br />

=><br />

The energy<br />

and resources<br />

are used for<br />

sustainable<br />

development


DRBF European Regional Conference, November 17-18, 2011<br />

to<br />

standing<br />

DAB<br />

used from the<br />

beginning of contact<br />

A l i n a O p r e a , R o m a n i a a l i n a . o p r e a . v @ g m a i l . c o m

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