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26 March, 2009
By Paul Taylor is a partner in HBJ Gateley Wareing in Dubai

Dubai’s construction market has suffered significant slowdown in recent weeks and months, with suspension and cancellation of some of the most prestigious projects in the region having been widely reported. The situation has been increasingly difficult for many contractors and consultants. Liquidity and cash-flow dominate the boardroom agendas, nevertheless, many projects are still progressing, albeit at a less frenetic rate than previously and with revised programmes and budgets. It is clear that issues such as non-payment have dented confidence and reputations. It is therefore crucial that those projects move forwards on a sensible, reasonable and transparent basis.

However, one of the inherent problems of the past has not been addressed and will continue to cause difficulties – that is, the role and impartiality of the engineer.

The most widely used form of construction contract in this part of the world is the FIDIC form, either the 1987 or new 1999 version. As a form of contract drafted and promoted by the one of the world’s largest engineering representative bodies, it is entirely to be expected that the engineer under that contract form holds a key role, crafted to allow professional and impartial decisions to be made with integrity.

However, such has been the erosion of that theoretical position, that many in the industry now see the engineer as nothing more than an extension of the employer’s organisation and accordingly, all decisions are viewed as have been influenced or instructed by the employer.

The original FIDIC contract intended engineers to be impartial when making any decisions, however, over time with a series of employer-instigated amendments, this role has been altered and the engineer is now required to seek employer approval before making any decisions of substance, particularly in relation to extension of time, additional costs, valuation and claims. Moreover, certain functions have been transferred across in some cases to the project manager or employer’s representative, leaving the independent engineer little more than a toothless tiger. In addition, the fact that engineers are employed and paid by the employer and the fact that they presumably wish to continue to be employed, means they have a very different role to those with more cyclical jobs.

In this climate of non-payment and non-certification, moving the role of engineers beyond their current position, confidence and credibility could be a major factor in restoring the balance that those who drafted the FIDIC contracts intended.

It could be argued that these concerns about the role of the engineer have been recognised by FIDIC and the introduction of dispute adjudication boards and replacement of traditional engineer’s decisions in the standard forms are evidence of that change of mindset. However, as long as employers continue to fetter the engineer’s discretion by insisting on a variety of scenarios in which he cannot act without express approval, the engineer will continue to be viewed in certain quarters as nothing more than a puppet on a string.

A step in the right direction might be to hand back to the engineer the role that was originally intended under most standard forms of contract and try to rebuild trust and confidence in the role of the engineer. In the current market, a credible certified payment certificate from an impartial engineer would seem very much more persuasive in unlocking payment issues and ultimately would be very much more convincing if the matter ever ended up before a judge or arbitrator.

But then, that scenario pre-supposes that those employers who are obliged to make such payments are also happy to release or relax the current controls that they have over the engineer under the heavily amended contract forms that at presently used. Changing that mindset is perhaps the starting point of the whole exercise.

http://www.building.co.uk/story.asp?storycode=3137230

Some very interesting and valid points are raised in this article. When I arrived in Dubai, I was shocked to see how the contractors were being treated by engineers. I am an Engineer worked for the government back home i-e we were the owners. Here I've been working for the Owner (called Employer here) as a consultant. Generally speaking the Employer's Representatives are clueless and incompetent. They only care about the bottom line. Its very common for Engineers to strong arm the contractors. All claims are to be rejected without judging their merit. Dubai was an unusual market for a long time. The contractor knew a 10,000 loss wouldn't mean anything. He could easily make it up and then some on the next project. They kept their mouth shut.
FIDIC conditions are not as black and white as what we are used to in the US. When we hired consultants they were strict set of rules to work within and the contractors knew it too. My goal at the start of any project was "zero claims" and we worked with a concept called "partnering". There was money set aside in the contract for partnering meetings and workshops. I won't go into details of this concept but it was originally introduced by the Army Corps of Engineers and now used by most agencies in the US. When I tried to introduce it here in Dubai I was given wierd looks and was told it would never work here in the Arab World.
The market has chaged now. The contractors will no longer be intimidated. Another factor was a cultural difference. I was talking to a Japanese Contractor's director and told him how there were a lot of grey areas in the contract compared to what I'm used to. He in turn told me that the contract here is a lot more defined for him than in Japan. In Japan they mostly work on honor system. Anyway enough of my rant.

K-Dog wrote:Some very interesting and valid points are raised in this article. When I arrived in Dubai, I was shocked to see how the contractors were being treated by engineers. I am an Engineer worked for the government back home i-e we were the owners. Here I've been working for the Owner (called Employer here) as a consultant. Generally speaking the Employer's Representatives are clueless and incompetent. They only care about the bottom line. Its very common for Engineers to strong arm the contractors. All claims are to be rejected without judging their merit. Dubai was an unusual market for a long time. The contractor knew a 10,000 loss wouldn't mean anything. He could easily make it up and then some on the next project. They kept their mouth shut.
FIDIC conditions are not as black and white as what we are used to in the US. When we hired consultants they were strict set of rules to work within and the contractors knew it too. My goal at the start of any project was "zero claims" and we worked with a concept called "partnering". There was money set aside in the contract for partnering meetings and workshops. I won't go into details of this concept but it was originally introduced by the Army Corps of Engineers and now used by most agencies in the US. When I tried to introduce it here in Dubai I was given wierd looks and was told it would never work here in the Arab World.
The market has chaged now. The contractors will no longer be intimidated. Another factor was a cultural difference. I was talking to a Japanese Contractor's director and told him how there were a lot of grey areas in the contract compared to what I'm used to. He in turn told me that the contract here is a lot more defined for him than in Japan. In Japan they mostly work on honor system. Anyway enough of my rant.

It is unfair to tar every engineer with the same brush though.

As an engineer I can tell you, every contractor I have ever dealt with here has been totally incompetent with the exception of Multiplex. They are the only ines I have seen that know what the heck they are doing.

maximusprime wrote:As an engineer I can tell you, every contractor I have ever dealt with here has been totally incompetent with the exception of Multiplex. They are the only ines I have seen that know what the heck they are doing.

That may have been your experience but I completely disagree. Dubai has some of the World's finest Contractors from Europe, Japan, Korea and N. America. Most of them highly qualified. We may be talking about different fields. I've only dealt in infrastruture. And "Engineer" is what FIDIC defines as "Engineer"not just any graduate engineer

Interesting article and speaking as a Contracts/Commercial Manager, what Engineer's do here do a perfectly good Form of Contract i.e. FIDIC is bordering on stupid.

When are they going to learn that the more you play around with this standard, proven and well recognised Form, the more loop-holes you leave?

In 99% of the Contracts here, the Engineer's role, as defined by FIDIC, is removed by the Employer in that the Engineer has to firstly obtain the Employers approval to instruct the Contractor to do anything (except in matters related to Safety). Employers here are at fault, not the Engineer, as they do not "trust" the companies they employ to act on their behalf - crazy.

Contractors here in the UAE are in a far, far stronger position when it comes to their rights/entitlements under the FIDIC.