An interview with Director of KEREY Engineering Group Ltd.
In modern construction sector, the contracts made on the basis of FIDIC standards are actual and high-demand. The Republic of Kazakhstan is not an exception, Rakhimberdi Ibragimovich, please tell us what is FIDIC and by which principles are standards formed?
The reality of modern construction industry - there is a big number of concluded construction contracts based on international financial assistance and characterized by various aspects and conditions: sector profile, regional and geographical location, complexity and specific features of construction, conditions for financing and supply, etc. This, especially in the context of globalization and widespread internalization, requires the development of common standards of contract conditions. The aim is effective regulation of relationships between the participants of international investment construction activity, beginning from tender documentation to the acceptance certificate.
International Federation of Consulting Engineers – FIDIC created more than a century ago is just the most effective international structure, which over the last few decades is engaged in development and realization of typical contracts based on the unified conditions of international finance for the construction of various facilities – from residential buildings to infrastructure facilities and roads.
In my opinion, the growing demand for FIDIC contracts is due to their fair equation – the responsibility for risk is on that side which competence includes the control of risks, the responsibility during the making of appropriate decisions. Despite the fact that all typical forms of FIDIC have a completed appearance and create a certain system of relationships between participants of construction process, they are characterized by boundary flexibility – each form, reflecting the main requirements is easily changed when it is needed for sides of the contract. In addition, the long-standing best practice of usage of FIDIC contracts in different jurisdictions all around the world is another sufficient reason for the acceptance of these typical forms by the experts.
From what you have said can one conclude that there is another system for construction relationships, different from the traditional "customer-contractor"?
FIDIC significantly expands the boundaries of system for construction relationships. Unlike the traditional construction process characterized by the relationships between the customer-developer and the designer-builder, from territorial planning to almost commissioning of the facility, the typical forms of FIDIC are functional from the moment of thinking about business-idea by the investor. The contracts developed by the federation manage the relationships between the investor and profile engineers already at the stage of an assessment of potential technical, environmental, logistical, cost features, the forecast of future expenses, which will be reflected in the investment plan undoubtedly.
FIDIC contracts cover the engineers’ tasks consisting not only from construction and commissioning of facility, but also from provision to the investor of professional services for the formation of the most comprehensible variant of investments, which guarantee a payback of investments. In other words, the engineer is responsible not only for the construction with the completion at the stage of commissioning, but also for the certain period of operation – till the payback of investments and transfer to the stage of getting the profit.
Not less important – it is known that progressive introduction of innovative technologies and irreversible modernization of construction process make the process more universal and uniform that is equally realized in all countries. The essential difference is mainly in features of regulation process, which reflected in FIDIC contracts and not affects the main requirements of the document.
I would like you to pay attention that in FIDIC contracts it is specified that the main party in construction process is not the customer-developer but the investor. That is very important – In close cooperation with the civil engineer and engineer-consultant.
What does it mean?
You have to agree that for the investor it is difficult to be an expert in all aspects of construction and, in general, it is not required. In accordance with FIDIC contracts, all special engineering works can be and should be performed by the professionals and that is a requirement - the absolute standard and essential condition for the investment effectiveness. As we say in Kazakhstan - "Tog’ay soysada, qassap so’ysin"(Even little bird should be slaughter by the butcher). In the world, these services are known as engineering consulting or engineering, but the essence is same – a comprehensive engineering support of investment and construction process.
Today, the services of highly specialized engineer-consultants, as a rule, tailored to the interests of investors, are more and more used by the other entities involved in investment process, in particular – financial institutions. By now, the majority of them interact with engineering companies, which on their behalf, study and analyze the construction and investment proposal of investors for the engineering feasibility and guaranteed optimality.
It should also be noted that the consulting engineer, supporting the construction process in investor’s interests could be in the relationships with Construction Company a representative of the investor without becoming the party to the contract.
In internet, you can find the opinion of some experts-builders on "difficulty" of FIDIC contracts
I understand what you mean ... yes, FIDIC contracts have a significant number of specific cases, notes and reservations that externally, as you said make the contracts quite "difficult" to understand by the audience. In fact, it is logically justified, I would even say - noble, because these special cases reflect some historical facts, which were characterized by serious difficulties in implementation of projects, so the experts of FIDIC had considered it appropriate to mention them in order to avoid in future the similar problems in other projects.
I think that there is a significant reason for setting the organization of projects according to FIDIC requirements as the unconditional requirement by financial institutions as World Bank, European Bank for Reconstruction and Development, Asian and Islamic Development Banks, being the project donors in national road program of our country.
Nevertheless, the experts of our company believe that we should not adhere to categorical decisions and refuse old, gained experience. There are plenty of budget construction projects, especially in regions where the use of FIDIC contracts and associated practices, in technical terms, with low efficiency – the medium-sized facilities can be built by the traditional methods.
Rahimberdi Ibragimovich, KEREY Engineering Group is a young engineering company. What is your mission?
There are no longer highly specialized design institutes and research entities in developed countries. There are multi profile organizations in construction market that can perform all kinds of work and provide engineering support of investment process, as I said before – from the development of investment "ideas" to the stage of investment payback. Accordingly, one of the main tasks for our company is to participate actively in introduction of innovative principles and methods in Kazakhstan.
Once again, I would like to draw your attention: FIDIC contract, to the certain extent, it is a set of innovative and effective management practices in construction sphere, the appliance of which can provide the guaranteed impetus to the construction sector of the country. Life is like a running track - you can stay in sustainable state only by moving forward ... without denying, in this case, the existing experience and just enrich and expand it with new international knowledge.
We have very informative interview. Thank you, Rahimberdi Ibragimovich for such interesting thoughts. At the end, could you identify the most priority goals of your company for near future?
I must admit that despite the fact that we are active in the engineering services in the market of Kazakhstan, we are not sufficiently active in all regions of the republic. That is our perspective goal - to strengthen our position everywhere in our great country, as the supplier of highly qualified services for engineering, construction supervision and expertise. About the size of our preparatory works, you can know by going to our website www. kerey.info.
We wish You good luck and prosperity to Your company