PROCUREMENT BEST PRACTICE

& the Millennium Development Goals FIDIC/GAMA CONFERENCE Durban, 16 March, 2009
Enrico Vink FIDIC Managing Director.

Overview

Who is FIDIC? The MDGs Status Report The links to FIDIC and its members Key issues impacting on MDG progress Conclusion

FIDIC Today

FIDIC 1913 3 Member Associations FIDIC 2009 - 81 Member Associations. FIDIC Members represent some 45,000 firms and some 2 million professionals in the consulting engineering business. FIDIC speaks with ONE voice. It represents ALL the private sector consulting engineers (approx 3m)

FIDIC Objectives

What FIDIC Does?

- represent globally the consulting engineering industry

What FIDIC offers?

- best business practice and tools to promote a sustainable industry: documents, guides, training etc

What are FIDIC Principles?

- quality, integrity and sustainability

Global Infrastructure Market

Annual investment in construction - $5,100 billion Average impact on GDP 9% Significant Economic Value implied Annual consultant fees - $310 billion Annual Investment by MDBs - $80 billion? (ODA Spending - $105 billion)

The Millenium Development Goals

1. 2. 3. 4. 5. 6. 7. 8.

Eradicate extreme poverty & hunger Achieve universal primary education Promote gender equality & empower women Reduce child mortality Improve maternal health Combat HIV/Aids, Maleria & other diseases Ensure Environmental Sustainability Develop a global partnership for development

The MDG Scorecard Mixed Results

1. Poverty & hunger:

1 billion less than $1/day (down 20%) 800 million under nourished Mixed results since 1990, but also some successes Enrolments up 8%, but 115 million children no schooling Slow progress in many countries (only 3% improvement) Politics and Societal changes Good progress, but 11 million under 5 die each year

2. Primary education 3. Gender equality

4. Child mortality

The MDG Scorecard

5. Maternal health
Some progress, but 200 million unsafe High risk of death during child birth Still major problem - 20 million deaths Huge impacts on economic growth Maleria affects 350-500 million people Deforestation, urbanisation, water, fisheries etc still significant problem. The carbon trade scandal. Governments, private sector, NGOs, Civil Society

6. HIV/Aids, Maleria etc

7. Environmental Sustainability

8. Global partnerships

The Millenium Development Goals - Upsides

Agricultural training for self sufficiency Better irrigation schemes Expanded transport infrastructure Water supplies improved Power supplies increased Waster water treatment enhanced Institutional reforms Integrity, transparency More health/education facilities

The Millenium Development Goals - Upsides

Numerous reports on Infrastructure & MDGs

1. 2. 3. 4. 5. http://www.oecd.org/dataoecd/22/31/36567911.pdf http://www.new-rules.org/docs/epiam/lofgren-bonilla.ppt http://pse.litbang.deptan.go.id/ind/pdffiles/Thestudyofeffieciency.pdf http://www.unece.org/commission/MDGs/Brochure_MDG_E.pdf http://businessfightspoverty.ning.com/group/mdgsatthemidpoint/foru m/topics/2014886:Topic:10751

Message clear development needs good infrastructure!!

The Millenium Development Goals - Downsides

Natural Disasters floods, droughts etc Politics Corruption (see also politics) Lack of Infrastructure Global versus local Poor policies and procedures Lack of support Inappropriate support Weak procurement

Procurement Issues

Price dominated ie competition at all cost encourages corner cutting. Influenced by political and economic factors. Huge negative impact of corruption Lack of focus on core objectives end users ,and suitability of outcomes (life cycle issues,MDGs)

Fair Procurement & FIDIC

Quality paramount Capacity Building priority Sustainability Integrity IFIs important

Project Scope

Investment priorities Political & legal considerations - MDGs, Intl Conventions etc Sustainability Issues: social, environmental, economic, cultural

Quality Tools

Quality Management System Guide ISO9001:2000 interpretation guide Training kit

Business practice guides Quality of Construction Quality Based Selection Forum Quality Management Forum

Sustainability Tools

Environment Management Systems Industry resource kit Urban resource kit

Project Sustainability Management Guide Business practice Guide Strategy Sector report

PSM Methodology

Anchored in core indicator list arising from UNCSD/Agenda 21/Millennium Development Goals Process for transparently customizing to project needs
Includes Client-specific objectives/commitments Stakeholder involvement Equator principles/IFI Safeguard Principles/financing issues Local Agenda 21 activities/MDG priorities

PSM Uniqueness

Covers all kinds of projects Compatible with GRI, other sustainability systems, client policies Selection of performance targets for every issue ranging from compliance to SD Continuous improvement focus

Integrity Tools

Business Integrity Management System Guide Training kit

Business practice Code of Ethics Policies - Conflict of Interest - Anticorruption Model Representative Agreement

Integrity Tools

FIDIC Policy 0 tolerance Products BIMs, GPIMs Influence IFIs, others MAs and firms

Business Integrity Management System (BIMs)

Compatible with most global conventions. Based on Quality Management System. Can be Third Party Audited Encourages Training & Education Being implemented, but

Other FIDIC Tools

HIV/AIDs policy 2004: http://www1.fidic.org/about/statement19.asp FIDIC Contracts and Agreements Defining Services of Consultants Risk Management Guides Capacity Building programmes 81 Voices worldwide

Conclusions

Procurement:
- Governments and clients need good advice on:
Investment options and scope Politicial, economic and social priorities Procurement options Contract options

Integrity
- what are the real issues and their impact? - how to tackle the root causes?

Sustainability
- what is it, and how can it be defined? - where and when to discuss? By whom? - national law/conventions/procurement/contracts?

Conclusions

Consulting Engineers:
Talk to ALL stakeholders Offer real solutions Humanise what you do and spread the word

Associations
- Raise profile
- Promote the industry - Seek to influence decision makers

Funders
- Utilise more the skills of the consulting sector - Support and encourage capacity building - Promote best practice procurement

FIDIC contacts

International Federation of Consulting Engineers

President: President-Elect Treasurer Secretariat John Boyd, Canada Gregs Thomopulos, USA Adam Thornton, NZ World Trade Center 2 Geneva Airport Box 311 CH-1215 Geneva 15 Switzerland Tel: +41 22 799 49 00 Fax: +41 22 799 49 01 fidic@fidic.org www.fidic.org Enrico Vink Peter Boswell

Managing Director General Manager

Thank you