Frank Kehlenbach, DE
European International Contractors (EIC) has as its full members construction industry trade associations from fifteen European countries, which are directly or indirectly affiliated to FIEC, and represents the interests of the European construction industry in all questions related to its international construction activities. Internationally active European contractors associated with EIC members collectively recorded in 2017 an annual international turnover of more than €176 billion.
EIC was founded in 1970 and is registered since 1984 as a legally independent business association under German law. Its mandate is to promote the interests of the European construction industry in relation to its international business activities.
The mission of EIC to advocate fair international competition based on sustainable, quality-based procurement and fair contract conditions, to promote effective development and export finance schemes for construction services and to provide a unique networking forum between the industry and other stakeholders.
At the end of 2019, the composition of the EIC Board was as follows:
■ President: Philippe Dessoy (Besix, Belgium)
■ Vice President: Wouter Remmelts (BAM International, The Netherlands)
■ Treasurer: Juha Kostiainen (YIT Corporation, Finland)
■ Nils Bjelm (NCC, Sweden)
■ Selim Bora (Summa, Turkey)
■ Lars M. Carlsen (Per Aarsleff, Denmark)
■ Benoît Chauvin (Colas, France)
■ Matteo d’Aloja (Ghella, Italy)
■ Juan Elizaga (Ferrovial Agroman, Spain)
■ José Pedro Freitas (Mota Engil Group, Portugal)
■ German Grueniger (Implenia, Switzerland)
■ Zoe Lysaridou (J&P Avax, Greece)
■ Karl-Heinz Strauss (PORR, Austria)
■ Jörg Wellmeyer (Strabag International, Germany)
President Dessoy also represents EIC as Vice-President on the FIEC Steering Committee and as Vice President on the CICA Board.
FIDIC Standard Forms of Contract
In 2019, the EIC Working Group “Contract Conditions” undertook a “friendly review” of a proposed new FIDIC standard form for “DBO Projects for the Upgrading of Existing Facilities” (Draft “Bronze Book”). Given that the industry standard currently provides for separate forms of contracts, one covering Design-Build and the subsequent form covering the operations and maintenance phase of a project, EIC feels a certain degree of uneasiness with the proposed form in that the “Bronze Book” assigns to the Contractor a strict responsibility for the quality, or any loss or damage to the asset, or loss of production of the facility for a period of 20 years or more. EIC criticises that the contractor needs to assume a concessionaire’s role, however, exposing it to a much higher degree of financial liability, which might be unacceptable for most contractors.
During the FIDIC Users Conference in December 2019 in London, EIC announced its upcoming publication of the EIC Contractor’s Guide to the FIDIC 2017 Yellow Book. In preparing this first EIC Guide on the FIDIC 2017 Conditions of Contract for Plant and Design Build, EIC continues the tradition of the EIC Guides to the FIDIC 1999 edition and shares its comments on matters of importance and only at length where there are issues at stake.
EIC’s Working Group “Africa” continued its collaboration with the European Commission throughout 2019 as a stakeholder for the private sector in the Transport Connectivity Task Force under the new EU-Africa Alliance, which has the goal to unlock private investment and explore opportunities that produce benefits for African and European economies alike. EIC participated in a Task Force Meeting in Leipzig in July and called on the EU to close the current gap in EU external financing programmes for non-viable public infrastructure in Africa.
In October, EIC published its own report entitled “The Case for an EU-Africa Partnership for Sustainable Infrastructure”. Based on the lessons Learned from China’s infrastructure delivery model in Africa, the report explains the distorted competition in Africa with Chinese state-owned contractors and proposes to establish an “EU-Africa Partnership for Sustainable Infrastructure” in the context of its new comprehensive strategy with Africa under the umbrella of the Partnership for Sustainable Growth and Jobs. EIC calls upon the European Commission to:
■ Put a stronger emphasis on the infrastructure sector and re-design the European development finance architecture in a way that it is capable of providing the full set of available financial instruments, including grants, loans, and guarantees, with varying degrees of concessionality;
■ Create an international level playing field by untying European ODA to other OECD and to non-OECD countries on a reciprocal basis only;
■ Establish a more sustainable tender process by incorporating all environmental and social health and safety (ESHS) standards and practices used currently by the World Bank as prerequisite for disbursement of EU ODA grants.
Fair international competition
EIC teamed up with the European industry umbrella federation, BusinessEurope, and contributed substantial input for a Position Paper titled “The EU and China – Addressing the Systematic Challenges”. The chapter on ensuring fair competition in third markets incorporates several recommendations made in EIC’s Position Paper on Africa (see above under Chapter III). Furthermore, EIC developed together with FIEC and EuDA a comprehensive Plan of Action on how to protect the EU services industry against unfair competition from third country companies which was submitted to the President of the European Commission in June. The three federations published a joint Position Paper titled “Fostering a Level Playing Field in Construction Services”, which documents elements of unfair competition both inside the EU and in overseas markets. Last but not least, EIC lobbied together with FIEC the EU Institutions asking them to enshrine the reciprocity principle of the Government Procurement Agreement into the proposed Regulation for an International Procurement Instrument.
EIC met with the World Bank’s Procurement Department in the context of a CICA mission in mid-April to discuss the application of FIDIC’s new “Golden Principles”. EIC urged the World Bank to implement the new rules on all future infrastructure projects it is financing after having entered into a bilateral agreement with FIDIC to use the FIDIC 2017 suite of contracts for its major infrastructure projects.
At the autumn EIC Conference in Helsinki, EIC welcomed the World Bank’s Chief Procurement Officer, Enzo de Laurentiis, who discussed with EIC delegates the World Bank’s new approach for strengthening contractors’ performance in preventing gender-based violence (GBV) and sexual exploitation and assault (SEA). In future, all Bank-financed major civil works contracts associated with a high GBV/SEA risk, would use the Dispute Avoidance/Adjudication Board (DAAB), a FIDIC-based contractual mechanism, for monitoring contractors’ compliance with GBV/SEA contractual obligations.
OECD Local Costs rule in relation to Construction Services
EIC has initiated a discussion on OECD level to modify the OECD Consensus regarding the threshold for the insurance of local costs. In 2019, the European Union adopted a common standpoint to increase such threshold from 30 to 50% of the export contract value and submitted its position for discussion within the OECD Work Group on Export Credits. Whilst such an amendment might be a step forward for most exporting industries, it will still be insufficient for the construction sector. Hence, EIC collaborated with the BIAC Secretariat in producing a comprehensive Position Paper for the OECD consultations in mid-November 2019 in Paris. The BIAC paper rightly emphasises that the nature of construction services is such that building or infrastructure “products”, e.g. roads, railways, ports, dams, hospitals, etc. are provided locally and that it is therefore necessary for construction exporters to source construction materials, labour force and sometimes equipment locally.
Corporate Responsibility (CR)
The EIC Working Group “Corporate Responsibility” drafted a first consolidated version of an EIC Toolkit on Sustainable Procurement. Its key objective is to facilitate the inclusion of sustainability criteria in the procurement of civil works and to assist contracting authorities globally in overcoming uncertainties and obstacles in incorporating sustainability elements in tender documents for major works contracts. When finalised, the toolkit will highlight the distortive effects of abnormally low tenders and provide guidelines and examples for the selection of the most economically advantageous tender based on a comprehensive prequalification process which is dedicated to scrutinising the sustainability performance of bidders.
The EIC Spring 2019 Conference took place in Madrid, Spain. Its workshop treated the very current issue of “Disruptive Innovation in Society and the Built Environment – Impact on the Activities of International Construction Companies”. As a follow-up, EIC has started to set up a new Working Group on “Digital Transformation” together with FIEC and ENCORD. The Autumn Conference was held in Helsinki, Finland with a workshop revolving around “Challenging Political and Economic Future – Construction as a Catalyst for Urban Concentration and Low-Emission Transport”.