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QualityOutcomes–TheFIDICPerspectivePresentedatBIMILACI2005Washington,DCApril7,2005GregsG.Thomopulos,P.E.,FACECTheIssue•Generalobservationthatthequalityoftheconstructedprojecthasbeendeteriorating.•ThisobservationisconfirmedbytheBanks’ProjectManagers,ExecutingAgenciesandInternationalConsultants.•ItisalsoperceivedthatgoodInternationalConsultantsarelosinginterestinBank-fundedprojects.•ThecurrenttrendindiminishedQualityOutcomeoftheconstructedprojectneedstobereversed.WhatarethecausesofdeteriorationinQuality?•Amajorcauseisthediminishedqualityofdesign.•Lowerqualitydesignresultsinlowerqualityconstructionandincreasedvariationorders,resultinginincreasedcostoftheproject.•Otherfactorscontributeaswell,including:–Corruption;–IncompetentContractors;–PoorProjectManagement;–LackofResourcestoManageContractors.Background•Forseveraldecades,FIDIC,theBanksandtheconsultingindustryachievedgoodQualityOutcomesbyfocusingonthelife-cyclecostoftheconstructedprojects.•Thisalignmentwasachievedthroughtheuseofqualityprocurementprocedures.•Morerecently,thefocusoncosthasshiftedfromtheproject’slife-cyclecosttothecostofdesign.•Thefocusonthecostofdesignhasresultedinlesserqualitydesign.“Itisunwisetopaytoomuch,butit’sworsetopaytoolittle.Whenyoupaytoolittle,yousometimesloseeverythingbecausethethingyouboughtwasincapableofdoingthethingyouboughtittodo.“Thecommonlawofbusinessbalanceprohibitspayingalittleandgettingalot–itcan’tbedone.”“Itisunwisetopaytoomuch,butit’sworsetopaytoolittle.Whenyoupaytoolittle,yousometimesloseeverythingbecausethethingyouboughtwasincapableofdoingthethingyouboughtittodo.JohnRuskin(1819-1900)BritishPoet,ScientistandPhilosopher“Pricehasnomeaningexceptintermsofthequalityoftheproduct.”Dr.W.EdwardsDeming(1900-1993)WhatisaQualityOutcome?•AQualityOutcomeisacompletedprojectthat:–SuccessfullyachievestheOwner’svisionfortheproject;–Incorporatesthelong-termdevelopmentalneedsofthelocalpopulaceandtheglobalenvironment;–Accomplishestheaboveatthelowestpossiblelife-cyclecost.•AQualityOutcomeissignificantlymorelikelywhenaprojectisexecutedusingQuality-BasedPrinciples.TheFIDICStrategy“Duringallphasesoftheprojectlife-cycle,theoverridingconcernshouldbethequalityoftheservicesprovided.”Quality-BasedPrinciples•InformedPurchaser;•Quality-BasedSelectionofConsultants;•Employer/Consultant&Employer/ContractorContracts;•BusinessIntegrityManagement;•CapacityBuildingandSustainability;•Quality-BasedProjectManagementandConstruction;and•MonitoringofOutcomes.InformedPurchaserAnInformedPurchaserisanOwnerwhoeitherhasthein-housetechnicalexpertiseorengagesoutsideexpertsnecessaryto:•clearlyconveyprojectvision;•evaluateandselectconsultants;•understandtherisksandproceduresinherentinprojectexecution;and•followthroughwithproperO&Mproceduresandmonitoringofoutcomes.InformedPurchaserTheInformedPurchaserwillbebetterequippedtoincorporateotherQuality-BasedPrinciplesattheprojectdevelopmentphase,including:•CapacityBuilding;•Sustainability;and•MonitoringofOutcomes.ProcurementofEngineeringServicesTheprocurementofengineeringservicesisoneofthemostimportantaspectsof,andhasthegreatestimpacton,ensuringqualityintheconstructedproject.TheClient’schallengeistogetagood“returnoninvestment”indesignservices.Quality-BasedSelectionofConsultingEngineers•QualityOutcomeissignificantlymoreobtainablewhenQBSisemployed.Thisistrueforallprojects.•TheQBS/QCBSdecisionisnotamatterofwhichprocurementprocessleadstogreaterquality;itisamatteroftowhatdegreequalitymatters.•ToachieveaQualityOutcome,Life-CycleCostmustbeconsidered;QBSresultsinlowerLife-CycleCosts.TheprocurementofconsultingengineerserviceshasthegreatestimpactontheLife-CycleCostoftheproject,yetistheleastcostlycomponent.TheOwner’schallengeistogetagood“returnoninvestment”indesignservices.LifeCycleCostImpactonProjectSuccessEngineeringConstructionRepresentationofTypicalLifeCycleCostandImpactonProjectSuccessOperation&MaintenanceQuality-BasedSelectionofConsultingEngineersTheQBSprocessalsoprovidesagreateropportunitytosuccessfullyrealizetheprojectvisionthrough:•Innovation.ThenegotiationphaseprovidestheOwnerwiththeopportunitytoconsideralternativeapproaches,whichcanimprovetheprojectandsavecosts.•Greaterpublicsafetyandwelfare.Themorequalifiedtheconsultant,thegreatertheassurancethattheprojectwillpromoteandprotectthepublichealth,safetyandwelfare.Quality-BasedSelectionofConsultingEngineersQuality-BasedSelectionofConsultingEngineersTheQBSprocessgenerallyincludestheselectionofthebestqualifiedfirmbyobjectivecriteriaandthennegotiatesscopeofworkandprice.RefertoFIDICGuidelinesfortheSelectionofConsultants.•Thebestqualifiedfirmisselected;•Ascopeofservicesfullyunderstoodbybothpartiesisnegotiated;•Afairandreasonablefeeisnegotiated;•Failingagreement,negotiationsareterminatedandaninvitationofferedtothenext-rankedfirmtonegotiate.ResultofGoodQualityOutcome•QBSproducesqualitydesigns.•Qualitydesignsproducequalityprojects.•Qualityprojectshavefewervariationordersduringconstruction.•Fewervariationordersresultinlowerconstructioncosts.•Qualitydesignsandlowerconstructioncostsresultinlowerlife