International Consulting Engineering Conference 2006 Where the Roads Meet

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International Consulting Engineering Conference
2006 Where the Roads Meet 

• Workshop Reports

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Conference Objectives

• 1. To define the trusted advisor who is an
  essential player in prudent infrastructure
  investment.
• 2. To determine what is required to offer quality
  services in a sustainable way.
• 3. To explore the following key themes
• Emerging issues
• Project implementation
• Procurement Best Practice

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Emerging Issues The Consulting Engineering Firm
Tomorrow ______________________________________
Chair Dr Martin Güldner (Germany) Facilitato
rs Kok King Min (Singapore) Richard
Stump (USA)
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The Consulting Firm of Tomorrow

• How are markets evolving?
• Main trends and drivers
• PPPs are of growing importance
• Financial engineering services
• Engineers need to be able to work in both the
  real and virtual worlds
• Increase in mega-projects often social or soft
  sciences are needed

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The Consulting Firm of Tomorrow

• How are markets evolving?
• Main trends and drivers
• Adopt a proactive approach to the marketplace
• Teaming arrangements for larger projects should
• be carefully considered
• There is a role for small and medium companies in
  the future (SMEs)

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The Consulting Firm of Tomorrow

• What is the Role of Innovation?
• Observations
• Large and small firms can be innovative
• Innovation culture is the most important pillar
• Profit center-culture can harm innovation
• Young professionals are often the innovators
• Incentives must exist for staff to innovate
• Mix of skills and professions needed

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The Consulting Firm of Tomorrow

• What is the Role of Innovation?
• Observations
• Role of process vs. product innovation
• Partnering with universities / research centers
• Low fees are barriers to innovation

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The Consulting Firm of Tomorrow

• Recommendations for the Federation
• Federation and the MAs should be proactive in
  identifying and responding to market trends
• Federation should share market knowledge, success
  stories, and lessons learned between MAs
• Federation should promote and share innovative
  project and process solutions by member firms
• Federation can assist MAs and member firms with
  guidelines for growing innovative cultures

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• Questions and Comments

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Emerging Issues Business Opportunities New
Markets ______________________________________
Chair Peter Heil (Hungary) Facilitators
Patrick Batumbya (Uganda) Dusan
Samudovski (Slovakia)
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Business Opportunities New Markets

• 1. Strategy for Developing Business Opportunities
• Question what sorts of things are necessary to
  facilitate investors / businesses / engineers
  coming in?
• Understand what must be done for the projects
  that have been developed to be accepted?
• Help consulting companies to develop capacity, to
  exchange people, and address their gaps. Being
  able to form and work in teams.

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Business Opportunities New Markets

• 2. Issue of Capacity Development
• Capacity - Local knowledge - Ability to meet
  local expectations
• You need co-operation with local companies that
  understand the applicable laws, selection
  procedures and requirements.
• The selection process has to be totally separate
  from price. It has to be quality based (QBS).
• The federation can help by developing better
  selection procedures, by developing best
  practices, with education, by improving Clients /
  Consultants relations.

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Business Opportunities New Markets

• 3. Partnerships
• Need to develop balanced and equal partnerships
  of international and local firms.
• Networking through the federation for the member
  associations to develop local, regional and
  international partnerships.
• Federation Policing to support Clients and
  CEs to follow the rules and procedures.

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Business Opportunities New Markets

• 4. Opportunities in all infrastructural sectors
• The issue of a shortage of skills is present in
  all countries. This is an opportunity for joint
  ventures of international and local companies to
  solve the tasks.
• Local partners have a better view of the local
  culture, the legislation, the client.
• Challenge to attract young engineers and keep
  them in the CE industry.
• Federation can offer a platform for training, and
  networking.

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Business Opportunities New Markets

• 5. Partnerships for Knowledge Transfer
• Huge opportunities developing e.g. in Africa. For
  consulting engineers and engineers in general.
• Partnerships are needed with international firms
  to develop capacity

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Business Opportunities New Markets

• 6. Profitability of companies
• Most profitable companies are management
  companies. CE firms want to come in there.
• In order to attract governments to hire CEs, you
  need in-house capacity better turn ourselves
  into also providers of other kinds of
  consultancy.
• How do we sell services? Business relations to
  higher levels of management will help increase
  the perceived positive impact of the services
  provided.
• Federation, as an integrated professional
  organisation could help to develop a bridge
  between the two consultancy worlds.

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Business Opportunities New Markets

• 7. How can the Federation assist MAs?
• Help re-define the issue of conflict of interest,
  which is often laid out too restrictively.
• Help delineate needs of large medium and small
  firms, which are different.
• Federation cannot assist in business
  opportunities, but it can help develop the rules,
  and Human Resources.

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Business Opportunities New Markets

• 8. The Market for CEs
• Market conditions there should be a decent and
  transparent legal framework (procurement,
  intellectual property)
• Framework to be developed in co-operation with
  the clients.
• Clients not fulfilling those rules to be put on a
  Black list of Clients an idea hotly debated.
• Engineers should not just wait for the Client,
  but be active in promoting their services in
  order to create opportunities.
• Developing opportunities
• Do work with locals (applies either way)
• Change /improve profile, be able to take more
  risk.
• Increase the ratio between fees and risk assets
• Educate clients (involve Federation)
• Involve in non-engineering advice (Soft
  engineering)

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Business Opportunities New Markets

• 9. Necessity for Good ToRs
• The subject of the contract must be understood
  Interpretation will be different in different
  parts of the world
• Dialogue with the clients, governments, and
  capacity building are of key importance.
  Federation can help a lot there
• Nothing of this can be achieved, without
  partnerships with local firms.

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Business Opportunities New Markets

• 10. Available Business Opportunities
• Hungarys case exemplifies the generic
  opportunities in developing and developed
  countries.
• What is important is to find the ideal
  partnership and mix of local and international
  competencies.
• Federation should develop guidelines to develop
  MAs and engineers skills in non-engineering
  consultancy areas.

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• Thank You !
• Asante Sana

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• Questions and Comments

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Emerging Issues The Role of Consultants
Tomorrow ______________________________________
Chair William Howard (USA) Facilitators
Han Lin Toh (Singapore) Andrzej
Michalowski (Poland)
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The role of Consultants Tomorrow

• Will the role of consultants fundamentally
  change? If so, how?
• Should independent advisors be engaged by clients
  and, if so, under what circumstances? Who will
  they be? Will we serve in these roles?
• What will consultants do differently in the
  future and why? Will we have to use engineers
  differently to meet global needs?
• Will project management be considered an integral
  part or independent service from consulting
  engineering firms?

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The role of Consultants Tomorrow

• Most believe that our role will change, but not
  all agree it will be fundamental.
• The biggest desired change will be to move up the
  food chain.

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The role of Consultants Tomorrow

• Moving up the Food Chain
• Client alliances understanding what they do
  Trusted Advisor
• Thinking ahead involvement in embryonic stage
  of projects create projects
• Consult and not just comply
• Developing total solutions
• More trust
• More innovation and less disputes

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The role of Consultants Tomorrow

• Future Projects
• More complex
• Multiple stakeholders
• Sustainable
• Global Teams with diverse skills
• Large firms multi-skilled
• Small firms niche/local expertise

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The role of Consultants Tomorrow

• Conflict of Interest
• Should we redefine?
• Education
• What is important/real and what is not?
• The Federation can help redefine COI much better
  than individual consultants

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The role of Consultants Tomorrow

• Human Resources
• Need more engineers and scientists baby boomers
  retiring and more complex projects
• Advertise the benefits that engineering brings to
  society can the Federation play a role?
• Do more with less
• Need multi-skilled engineers and scientists
• Technical
• Social
• What will the Federations role be in executive
  education?

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The role of Consultants Tomorrow

• Project Management
• Develop excellence in PM and leadership
• Some independent project management will exist
  depending upon the nature of the project and
  philosophy of the client

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The role of Consultants Tomorrow

• Closing Thoughts
• We must change or we will become more of a
  commodity, lower in the food chain, working for
  firms who have become our clients trusted
  advisors

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• Questions and Comments

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Qualiy Project Implementation Funding Mechanisms
- PPPs ______________________________________
Chair Wilhelm Reismann (Austria) Facilitator
s Aki Hirotani (Japan) Flemming
Pedersen (Denmark)
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Project Mechanisms

• PPP is a matter of trust.
• Create trust.
• Develop partnership.
• Trust and professionalism are required.
• Professionalism creates trust.
• PPP is subject to political risk.
• Make sure government is committed.
• Central government support is essential.
• Legal framework must be firm and clear.
• Government often has too many faces.

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Project Mechanisms

• PPP needs mature partners
• Public side has to be prepared.
• Private sector has to be mature enough.
• Adequate insurance must be available.
• Knowledge must be on all sides, with all project
  participants.

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Project Mechanisms

• Lessons have been learnt
• Sufficient lessons are available in the world.
• Lets discuss failures openly.
• Develop tailor-made PPP models. A role for
  consultants.

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Project Mechanisms

• Transparency and integrity are essential.
• Involve independent consultants. A role
• Support adequate selection procedures. A role
• Do not leave public employees alone with the
  selection risk.
• Prepare public comparators before tendering. A
  role for consultants.

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Project Mechanisms

• Risk management is the key.
• Assess all the risks in the early project stage.
  A role for consultants.
• Risk shall not be transferred only. It must be
  reasonably allocated. A role for consultants.
• Read the small print in tenders and contracts.
• Focus on the end user. In the end he pays.

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Project Mechanisms

• Why use PPP only for large and complex projects?
• Solve local, regional problems.
• Find models for municipal, regional
  infrastructure projects.
• Develop adequate structures for different
  projects.
• Find innovative income generating models
  reasonable split P/P.
• A role for consultants.

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Project Mechanisms

• Great need for PPP in transition countries,
  emerging markets.
• Institutional learning from each other.
• Education and training, case studies.
• A role for the Federation, for consultants

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Project Mechanisms

• The role of consultants
• We shall be very clear who our employer is, who
  is paying us.
• We are afraid of losing our role.
• We are afraid of being squeezed.
• Lets define all possible roles.
• Lets define scope, responsibility, contract
  models.
• Why dont we consider taking the leading role? In
  smaller projects?

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• Questions and Comments

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Quality Project Implementation The Design Build
Operate Contract _________________________________
_____ Chair Michael Mortimer Hawkins
(UK) Task Force Des Barry, Erica Lund
(Ireland) Axel Jaeger, Toni Bauer, Christophe
Theune (Germany)
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• Design Build Operate
• The New FIDIC Form of Contract
• Advantages of DBO
• Time Minimizing delays and optimizing
  construction activities
• Financial Single point responsibility and
  long-term commitments
• Quality Fitness for purpose and long-term
  reliability
• Optimization of life-cycle cost

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• Principal Parties Employer
• Contractor
• Employers Representative
• Principal Stages Design and Planning
• Build and Construction
• Operate and Maintain

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• New Terminology in the DBO Document
• Design-Build and Operation Service
• Cut-Off Date
• Cost plus Profit
• Financial Memorandum
• Licence Agreement
• Auditing Body
• Commissioning Certificate
• Asset Replacement Fund
• Maintenance Retention Fund

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Risks and Insurance Sequence

• The flow from Risk to Insurance is
• Risk
• Responsibility
• Liability
• Indemnity
• Insurance

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• Questions and Comments

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Quality Project Implementation Risks
Responsibilites in Infrastructure
Development ______________________________________
Chair John Roberts (USA) Facilitators
Ewan MacGregor (UK) Michel Ray (France)
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Risks and Responsibilities in Infrastructure
Development

• QUESTION 1
• Should the Federation establish a task force to
  address inappropriate risk transfer to consulting
  engineers?

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Risks and Responsibilities in Infrastructure
Development

• GROUP RESPONSE
• There is a critical need, especially in
  developing countries, for a comprehensive
  (federation) document that provides guidelines
  for all parties involved in infrastructure
  development projects for the following gt
• Risk factors (including definitions)
• Logical mechanism of risk sharing
• Education on the transferability of risk and
  compensation for risk acceptance
• Risk controls
• Risk management

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Risks and Responsibilities in Infrastructure
Development

• QUESTION 2
• If the risk transfer movement continues from the
  owner to the consultant, how can consultants
  manage this risk, and price for it?

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Risks and Responsibilities in Infrastructure
Development

• GROUP RESPONSE
• Risks should be listed and allocated to the party
  best able to evaluate, control, bear cost of, and
  benefit from risk
• Some risks are not transferable to the engineer
• For some unknown risks, contracts should include
  clauses addressing the issue, and including a
  process to address and allocate the unknown risk
• The Federation would be of great service to
  engineers if they produce a risk mapping and
  transfer guide
• Pricing of risk transfer should be possible
  provided risks are properly listed and
  appropriate limits are negotiated

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Risks and Responsibilities in Infrastructure
Development

• QUESTION 3
• Under what circumstances should the engineer
  accept guarantees, warranties, liquidated
  damages, and other similar contract provisions?

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Risks and Responsibilities in Infrastructure
Development

• GROUP RESPONSE
• Determine total risk on a project
• With low profitability, unforeseen circumstances,
  owners may pay for something that may never
  happen
• Risk allocation should take account of
  clientsprojects and the engineers own projects
• Insurance may not be there when you need it and
  may not be adequate to cover risk
• Engineers could accept terms if they can limit
  the overall liability on the project
• Consulting engineers can learn from contractors,
  who are less risk averse. This may be a role for
  the Federation
• Can the Federation help with a formula or
  approach for evaluating risk vs reward?

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Risks and Responsibilities in Infrastructure
Development

• QUESTION 4
• How could we influence the way risk assignment
  enables us as consultants to take on our
  value-added role in project innovation?
• How can the Federation assist in this process?

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Risks and Responsibilities in Infrastructure
Development

• GROUP RESPONSE
• There is now a unique opportunity and necessity
  for the consulting engineering industry to
  develop a proactive role on innovation and
  project optimisation in that respect, we must
  avoid those risk assignments which would kill the
  incentives for this evolution
• Our industry should develop the creative
  leadership which enables multi-disciplinary
  brainstorming
• At project level
• And also by anticipating challenges to be ready
  for future projects, and effectively take
  opportunity of existing co-financing

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Risks and Responsibilities in Infrastructure
Development

• The Federation should improve the contract
  documents on how consulting firms could be
  selected also on a basis of their capacity of
  innovation, pertinent for a given project
• Possibly, a special committee on
  innovation/project risks/and appropriate
  anticipation of future challenges could help
• Identify the most interesting examples of good
  practice
• Convince members about the necessary evolution of
  our role

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• Questions and Comments

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Best Practice Procurement Developing Utilising
Skills ______________________________________
Chair Bayo Adeola (Nigeria) Facilitators
Subhash Mehrotra (India) Andras Rev
(Hungary)
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SESSION BACKGROUND

• Changing Business Environment
• Different procurement approaches
• Greater roles of the private sector
• New clients emerging
• Globalisation and New World Order
• Emerging Economies

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SESSION BACKGROUND

• Changing scope of consulting engineering services
• New products such as sustainability, integrity
  and disaster management
• Broadening scope to include marketing, finance,
  human resources management

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SESSION BACKGROUND

• Operational Challenges
• Attracting and Retaining Competent Staff
• Remuneration, excitement and image
• Career Prospects
• Training scope, form and finance
• Work opportunities for experience management

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SOME FIDIC TOOLS

• Guide to Practice
• Business Integrity Management
• Sustainability Management
• Quality Management
• Contracts Training
• Training Partnership with MAs
• Lobbying IFIs for Private Sector Training

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SESSION BACKGROUND

• Building appropriate competences in the work
  force is one of the ways of addressing these
  issues.
• Four main questions are to be addressed at this
  workshop

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TOPIC 1

• Identify the competences needed for modern day
  consulting engineering practice and suggest ways
  of acquiring such competences

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TOPIC 2

• Beyond the university degree and professional
  registration, there is no other standard method
  of measuring consulting engineering competences.
  Should the Federation embark on a certification
  process to fill this gap? How should it be
  structured?

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TOPIC 3

• Consultants from developing countries complain
  that they are caught in the experience trap. They
  do not get choice projects because they do not
  have experience. They do not have experience
  because they cannot get the job. What is the way
  out of this dilemma?

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TOPIC 4

• The challenges of recruiting and retaining
  competent staff in consulting engineering have
  been reported by several firms. Identify the key
  issues involved and how training and work
  experience can improve the situation

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• Questions and Comments

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Best Practice Procurement Liability and
Insurance ______________________________________
Chair Adam Thornton (New Zealand) Facilitato
rs Martin Hohberg (Switzerland) Jac
que Robert (France)
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• Do we as Consultants understand enough about our
  risk environment? If not should FIDIC/EFCA have a
  role in promoting greater understanding?
• Mixed response
• Consultants working in mature insurance/risk
  environment generally understand their local
  environment well
• Very few have a good understanding of global
  variances and cultural differences
• FIDIC/EFCA actions ?
• Prepare proforma risk registers per
  discipline/region
• Survey of regional/cultural risk environments
• Prepare guidelines to assist Consultants educate
  their clients on appropriate risk mitigation and
  management
• Prepare guidelines that clearly spell out where
  risks can best be managed (Client/Consultant/Contr
  actor/Funder)

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• Are there enough similarities between the
  different risk environments around the world for
  FIDIC/EFCA to develop some common policies and
  guidelines?
• Simple answer yes to generic policies, no to
  detailed common guidelines
• Regional and cultural differences are currently
  too great to allow common detailed guidelines
• However generic guides and definitions are
  required to promote better understanding and
  detail guides are required on a local basis
• Dont create a problem in immature markets
  where one doesn't currently exist.
• Let risk/insurance environment develop at its
  own pace but provide advice/guidelines so
  developing markets can avoid the pitfalls that
  others have been through.

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• Is there value in tackling the issue of unlimited
  liability globally?
• Simple answer yes
• Definitions and implications of unlimited
  liability required
• FIDIC/EFCA have important role to publish
  information/guidelines on risk and liability
  management to enable MAs and Consultants to act
  as effective advocates for change
• EFCA and FIDIC need to front up with MAs to the
  EU and central governments to influence
  consultant procurement policy in relation to
  risk/liability management

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• What is the best way to engage in meaningful
  dialogue with the insurance industry?
• No easy answer as the real risk carriers are
  obscured by layers of brokers, primary insurers
  and re-insurers (multi-headed monster!)
• Maturity of insurance industry also varies
  greatly
• Defer the question to the risk committee!
• Need accurate data before engaging in debate
  survey of MAs required

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• Should FIDIC/EFCA take a position on uninsurable
  risk?
• Short answer yes
• Consultants generally dont have a good idea of
  what they are covered for!
• Definition and schedule of uninsurable risks is
  required
• FIDIC/EFCA to produce rationale of why client
  is most appropriate/best placed to carry
  uninsurable risk
• Need to work with funders and clients

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• Overall Key Points
• Federations need to think (understand) globally
  but act locally.
• MAs and Consultants need the tools to act as
  effective advocates
• Federations need to lobby at the highest level
  for changes to procurement policy (risk and
  liability management)

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• Questions and Comments

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Best Practice Procurement Quality
Procurement ______________________________________
Chair John Gamble (Canada) Facilitators
Panos Panogopoulos (Greece) Xie
Shaozhang (China)
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Quality Procurement

• For our consideration
• How to promote the benefits of QBS
• Identifying expertise/resources required by
  clients to use QBS successfully
• Adapting qualifications to specific client needs
• Demonstrating transparency and fairness (in both
  selection process and negotiations)

QBS is our objective - but we need to work within
(and hopefully improve) current realities
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Quality Procurement

• FIDIC/EFCA must be an active advocate for and a
  resource to their members

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Quality Procurement

• A clear and consistent definition of Q
• Quality vs Qualification
• Q is more than resumes and brochures
• Local knowledge or specific experience
• Allowance for staff development or innovations
• Allowance for new firms or new technologies

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Quality Procurement

• A QBS resource library for members
• Facilitate information exchange between member
  associations and firms
• Develop a Federation institution memory
• Develop case studies that illustrate successful
  implementation of QBS
• All FIDIC/EFCA documents should be mutually
  supportive

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Quality Procurement

• Create resources to assist client capacity to
  implement QBS
• Best practice for developing terms of reference
• Best practice for establishing criteria and
  evaluating submissions
• IMS/due diligence document to address concerns
  over subjective criteria
• Training programs?

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Quality Procurement

• Create an implementation strategy
• Identify priority clients and organisations
• Receptiveness to QBS (potential for success)
• Influence
• Third party support
• Collaborate with local associations and members
• Review progress and revise strategy on a regular
  basis
• Never lose sight of our ultimate goal - QBS

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• Questions and Comments