Russia World Cup Organizing Committee - Example

Name: Course: College: Tutor: Date: Russia world cup organizing committee Contracts to let Russia as the stage for the 2018 FIFA World Cup competitions requires substantial infrastructures to make the competitions a success. The required infrastructures will include transport networks, hotels and accommodation centres, and stadiums. To meet the structural requirements and deadlines it is essential that the world cup committee organizing the events in Russia identify the groups that will assist in the constructions and assign contracts. To this end, the following contracts will be let to those that prove they have the capacity in resources to meet all the requirements. 1. Development of infrastructure – Russia has an under-developed transport infrastructure that will hamper the transportation of people from one area to another during the competitions. The infrastructure includes rail and road that are not well developed to cater for the increased flow of traffic that will be expected during the period and airports. The competitions will take place in 13 cities, which will have a large mileage network for spectators and players to cover. Therefore, the country requires building additional miles of rail tracks and roads. For the roads, the approved contracts will be for developing 4,791 miles, while the rail track will require 1,257 additional miles (‘New build world cups’ n.d.). This will cater for the high-speed road and rail network required for the games. The constructions will require more than £ 20 billion to complete, which means each contractor will require a substantial investment to the work. Airport upgrades in addition to roads and rails, people will use airports, which is primarily the way many people will enter the country for the competition. To cater for the increased flow of passengers and planes, Russia will need a well-developed airport system than currently available. Therefore, the committee will give contracts for upgrade of airports to cater for international and local flights. 2. Hotel accommodations - the committee is also letting contracts for the development of hotels working with owners to ensure enough capacity and quality. The large crowds associated with the world cup competitions requires substantial accommodations to cater for them. Therefore, Russia will require development of hotels and accommodation centres to house the guests. This will be done through collaboration with hotel owners and constructors. The committee will also work toward having a world cap city that will be hosting the events thus requiring good establishment of an infrastructure network and accommodation. 3. Upgrading of stadia - the event requires 16 stadia to cater for the entire event. The committee has identified three stadia that will require upgrading as of present, while the rest needs building from the beginning at a cost approximated at £ 2.4 billion (OMG Shots 2010). Each stadium requires a minimum capacity of 80,000 to hold the final game, which the country does not have, hence the need for the constructions. Prequalification procedure for appointment of contractors Considering the huge amount of work to be done to cater for the games, it will be essential to choose contractors with the required qualifications to meet the requirements. Moreover, the competitions are just a few years away requiring the country to work with speed, which needs reliable contractors. The following prequalification procedure will be used in the appointment of contractors. 1. Establishment of prequalification assessment – the Russia World Cup Organizing Committee will hold meetings together with the city engineer and others approved by the Russian government to establish standards that contractors will be required to meet during prequalification applications. This will include standards dealing with the contractor’s experience, labour force, equipment, and financial condition (City of Phoenix n.d.). The standards will be utilized to determine the type and value of work that the contractors are likely to present. When defining prequalification applications, the committee has the prerogative to exempt some contractors from the procedure considering their value in pounds. However, considering the value of the contracts provided within the world cup committee, the expectation is that all contractors will present a prequalification application. This is due to the seriousness of the contracts and the magnitude of investment. 2. Applying to the committee – the firms and people seeking to bid for the offered contracts will first have to apply to the Russia World Cup Organizing Committee. The application will provide information on the contractor experience, organization, and other information that the committee will identify as important to the placement of bids and awarding contracts. For a prequalification application to be accepted by the committee, applicants are required to present the full financial statement of their firm with updated balance sheet and income statements showing earnings and cash flow. This will be important to show the financial condition of the contractor at the time of bidding. 3. Review of prequalification applications – within the committee, members will be chosen together with the city engineer to review the applications within thirty days after closing date for the receiving of the application. The reviewing board will then send an acceptance or rejection for the application, showing whether the person or firm can now submit a bid. 4. After receiving the acceptance or rejection letters, a rejected contractor may lodge an objection with the committee but within 5 days after receiving the response. If the committee receives the objection within the appointed time, the objection will be addressed within the next fifteen working days, during which the contractor may present an oral appeal. During the process, the contractor may not make other bids and if the rejection is determined valid, then the contractor will be denied through the city engineer the opportunity for bidding for city contracts for six months. The reason for establishing the follow-up to the prequalification is to ascertain satisfaction from the contractors. Denial of opportunity after appeal is to discourage people and firms that legitimately may not qualify for the magnitude of contracts provided because they do not have the labour force require or financial strength among the other requirements. Suitability of NEC3 Main Option A and C In 1987, Dr. Martin Barnes helped develop specifications for contracts that are today included in the NEC principles (Gould 2007). The original standards included achievement of higher degree of clarity in development of contacts, use of simple and common language while avoiding legal jargon, and continually using those phrases that are identical where applicable. Avoid elements that enable change of core terms through production of core conditions and contract specific data. The standards also included setting out of duties and responsibilities as clearly and precisely as possible, clarity rather than fairness, and avoiding details more appropriately presented in technical specifications. The six NEC options developed sought to ensure drafting of simple and direct standards form contract. For the Russian world cup organizing committee, these principles offer direction on development of contracts for the contracts described above. Among the six, Options A and C are selected. Option A refers to contracts that have the lump sum price and activity schedule. In this the contractor will offer certain work described in the contract for a certain sum of money. During the contract implementation, the employer carries part of the risk and in case compensation occurs, then the lump sum is adjusted. In this option, the contractor writes the activity schedule since he has greater knowledge on the activities to be performed compared to the employer. When designing the activity chart, the contractor places a lump sum on each activity, which represents the amount that will be paid when the activity is complete. The pricing shows approximates for quantities that will be used and resources, and risk assessment and pricing. In the Russian case, using option A will help the committee choose the contractor that clearly indicates their knowledge of the working processes through good allocation of resources and prices, and inclusion of activities. The committee will work with people that have market knowledge to ensure the price quotations represent accurate and reliable market estimations and are not overblown. When considering the activities, engineers working with the committee will have knowledge of the activities. In option A, the prices represent a significant part of the contract since they form the foundation of the defining price for the work that will be done (Eggleston 2006). This makes it important to identify actual prices and not unjustifiable costs. Activity prices govern the price presented at the end of the contract, and therefore each contractor presenting their work using the contract Option A, they should pay critical attention to pricing noting that the committee will pay extra attention to the prices for any Option A contracts. The second Option recommended for the world cup games in Russia is Option C, which has similarities to Option A in that both reflect the need for an activity schedule. Option C is target cost contract with activity schedule. Using this option, contacts negotiate for prices using an activity schedule, where an activity is presented with a lump sum plus a fee showed as a percentage for subcontract activities and work from the contractor. At the beginning of the contract, price is set at the sum of the activity prices and fee; however, this changes with compensation events set out within the contract. Contract payments are based on actual costs with the employer looking at the contractor cost-effectiveness. When savings occur or over-runs, the contractor and employer share them, where risk sharing is considered a potential factor of minimizing disputes in the partnership. This option presents the committee with an effective contract that can be used to ensure a good relationship with the contractor, as well as maintain cost-effectiveness for the projects. Due to the magnitude of the work that will be done in Russia and the time frame, maintain an amiable work relationship with contractors, ensuring activities are met or schedule and within the appropriate price frame, will be important. Option C provides the possibility of meeting these elements of the contract phase. However, it is important to note that pricing in this Option is not as crucial as discussed in Option A. The reason is that in Option C the prices do not significantly affect the price for the work done to date but affect the final contract price, when calculations are made for final price and determining the contractor share. The third option that can be used in the contracts for the world cup constructions is Option D chosen because it allows for target pricing, although this is done through a bill of quantities. The contractor instead of presenting an activity schedule as done in Option A and C, presents a bill of quantities provided through the employer. The prices presented in the bill are adjusted as the work progresses and compensation evens occur. A disadvantage that should be noted in this option is that the employer holds greater risk compared to the contractor, which does not occur in Option A and C. Considering the factors presented in Option A, C and D, the first two present the greater advantage for the Russian case, since it eliminates the greater risk from the employer, in this case the committee. When the employer holds the risk, it means that they will have to meet the rising contract risks, including poor quality in products. However, when the constructor has the greater or equal risk, it presents a greater opportunity to ensure effectiveness in the work and good quality. When implementing this contract Options, it is important to note secondary options that have a bearing for the implementation. The first is Option X3, multiple currencies, used with Options A and B and thus included in this recommendations report for the use of Option A. Option X3 transfers exchange rate risks partially from the contractor to employer, and is applicable when using overseas contracts. When applying Option X3 the exchange rate used in currency conversion should be defined within the contract data. When using this Option (X3) the committee should note that is should not be applied to those contracts defined under Options C and D. This is noted since the three are the recommended contracts. The Options A, C, and D implementation requires an identification of what the contracts will mean by compensation activities or events, since the prices will be adjusted to reflected these events. NEC3 has provided nineteen such events in Clause 60, the first being a change in the work information given to the project manager, but this does not apply to changes made to allow for a defect or the contractor design (Eggleston 2006). Second event is when the employer fails to allow access or use of a part of the site, which had previously been recorded on the contract. This has to be within the accepted programme. The third event is when the employer fails to provide something within the data in the accepted programme. Other events are stopping of the work by the contractor, change in working time, conditions or site as appearing in the accepted programme and works information, and failure to communicate timely thus delaying some aspects. Additionally, consider finding of important art facts that the employer addresses be dealt with, change in decision that had been communicated to the contractor, denial of something not appearing in the contract, and search for a defect yet none is found, though this can be eliminated if the fault was with the contractor. The eleventh compensation event is any inspections that may unnecessarily delay the work, physical obstructions to the work related to the site, often weather occurrences, employer risk events in the contract occurs, and certified taking over of the project by another by the contractor. Failure to provide needed materials, facilities and samples, notice for corrected assumption in the contract, breach of contract by employer, and occurrence of an event delaying or hampering the completion of the work that the employer or contractor could not stop. These represent the risks that the employer and contractor should be aware of prior to the commencement of the contract. Notably, when these risks occur compensation will be expected and added to the final pricing. Therefore, taking note of these risks plus others presented in the secondary options such as the currency exchange rate, will lead to the minimisation of occurrence by taking needed precautions. The risk factors for the project can significantly affect the possibility of completing the constructions in time for the world cup competition to begin; hence, the importance of identifying and addressing them in time or early. Procedure for inviting tenders and evaluation criteria The application for tenders from the contractors will follow a certain direction established by the world cup organizing committee for Russia, which will ensure the process is open and well regulated. The following procedure is recommended for the invitation of tenders for the world cup contracts. 1. Setting the date for application of tenders: the committee will set a date on which to receive tenders from all parties/contractors interested in the work. The reason for establishing this in the procedure is to ensure the contracts will be set within the appropriate time to also give adequate time for reception and consultation with contractors. 2. Publication of the noticing for tendering: after deciding on the contracts, the committee will place a public notice in the daily mainstream papers asking contractors interested in the work to give their applications. The tender notice will be published four times in two weeks, which is perceived to give adequate time for contractors to read about the tenders and begin preparing their application. 3. Reception of the bids and review: committee members will review all the tenders that come in by the set date, with later tenders not considered. This will ensure no favouritism occurs within the bidding process, and people that receive the tenders wanted them from the beginning of the process. Closure of receiving the bids will mean the locking out of late submissions. The committee will review the tenders against mandatory criteria and score the applications, with the highest ranking holding the highest possibility of qualifying. The evaluation of the tenders will be based upon the following criteria: a. Timeliness of the application b. Presented activity plans based on Option A and C c. Quantity bill based on Option D d. Presented prices based on Option A and C e. Firm financial status f. Presentation of workforce subject to the contract applied for g. Presentation of equipment subject to the contract applied for h. Definition of technicalities of the contract and ability to meet them 4. Response to tender assessment: those that sent their tenders will receive a response within four weeks at the closing date of the applications. The committee will issue the invitation for signing contracts with the response. 5. Preparing proposals: the committee will have a prepared proposal that the tender recipients will come to sign on assigned data provided in the letter of acceptance. The signatory must be authorised within the contractor firm otherwise the tender becomes nullified. If the firm decides to withdraw, they may send a withdrawal before the date for signing indicated on the acceptance; otherwise, they will be required to meet the contract agreements, unless it may be qualified they cannot do so as was officially stated. The contract duration will depend with the contract activities. Composition of the Dispute Adjudication Board (DAB) The role of the DAB is to act as a process for adjudicating disputes within the work site. This is appointed at the beginning of the construction contract. The committee for organizing the world cup in Russia and those awarded the contracts hold the responsibility of choosing the DAB, by electing people independent from the contract. For the three presented contracts, three DAB are proposed each taking care of each contract. Furthermore, each contracting party has a responsibility and right to choose the DAB, hence a reason they may differ from each contract. The recommendation for the contract on construction of roads, rails, and airport upgrades is to have a lawyer well versed in construction law, a contractor preferably an engineer that will understand the intricacies at play in the construction site, and human resource supervisor selected for his or her knowledge in dealing with people. The same composition will be repeated in the other two contracts with the difference being made to ensure the persons are aware of the factors defined in each field. The selection will reflect the field to make it more appropriate and ensuring that the DAB is aware of factors that create disputes within the field. The DAB will be expected to be operational at the commencement of the contract to ensure the members are part of the project from the onset. As such, the DAB will be part of the administration of the project. The work of the DAB will be to ensure that occurring strenuous conflicts at the work site are resolved immediately as appropriate. This applies for all parties involved. Their work will involve the prevention of costly litigation and arbitration to the extent possible. Making their work significance is the acknowledgement that the construction industry and contracts is rife with possible conflicts or disputes making it important to resolve them as quickly as they occur. Since the award of contracts is recommended to occur under NEC3 options, it is of importance to note that NEC3 does allow for adjudication, which is the primary procedure for resolving disputes. The contracts provide for dispute resolution through a definite clause requiring the dispute resolution party to act impartially hence the need for independence in composition of the DAB. Their actions should always refer to the matters stipulated in the contract to ensure that the dispute is arising from factors already established between the parties. After arriving at a decision, the parties are expected to respect the decision and consider it binding unless otherwise declared by a tribunal. Under NEC3 therefore, a DAB is applicable and part of the contract implementation process and may be applied in the place of adjudicator. References City of Phoenix, (No Date), ‘Chapter 31A – Prequalification of contractors’, In Phoenix Arizona Code of Ordinances. Retrieved from http://phoenix.gov/CITYCODE/PTIITHCO_CH31APRCO.html Eggleston, B (2006), NEC3 Engineering and construction contract: A commentary, Blackwell Science, Oxford. Gould, N (2007), NEC3: Early Warning and Compensation Events, Fenwick Elliott. ‘New build world cups’ (No Date), Constructionbytes.com. Retrieved 15 April, 2011 from http://constructionbytes.com/international-news/new-build-world-cups OMG Shots, (2010), Stadiums for FIFA world cup 2018 in Russia. Retrieved from http://omgshots.com/1005-stadiums-for-fifa-world-cup-2018-in-russian.html Read More