Comparative study on construction public investment regulations in Romania and Germany.
Negrut, Mircea Liviu ; Mihartescu, Ana-Andreea
Abstract: The paper objective is a compared study of regulations
and procedures with regard to award of public investments in the
construction sector, in Romania and Germany. By analyzing the existing
regulations in the two countries, we will seek solutions for a more
efficient use of financial resources from the budget, with increasing
quality and reducing the duration of projects execution works and
disputes between the contracting and construction companies in Romania.
Conclusions can be a point of view, to improve contractual conditions
and working environment in construction, among participants in
public/private sector investments in Romania. Key words: construction
works, public award procedures, standardized contract conditions
1. INTRODUCTION
From the examples seen in Romania, we notice that construction
works often takes much longer and cost more than was planned. These
happen for various reasons, contractual disputes between the parties
and, vagueness or lack of contract conditions, are among the main
reasons.
The paper highlights a fundamental research that consists in
analysis, processing and assimilation of base knowledge, found in
international usage, to make changes in the procedures of awarding,
contracting and management of public construction works.
2. RESEARCH METHODOLOGY
The research method used in the scientific paper is the
observation, which consists in analyzing the legislative framework in
Romania and Germany on the implementation of public contracts award. The
research methodology is presented in Figure 1.
[FIGURE 1 OMITTED]
Comparative analysis will highlight similarities and differences in
the legal framework for contracting public works construction in the two
EU countries. Based on this comparative analysis will outline the
conclusions of the paper.
3. COMPARATIVE ANALYSIS OF AWARDING AND CONTRACTING PROCEDURES IN
CONSTRUCTION
At present, the European construction industry is characterized by
increasing internationalization and a reduction of entrance barriers to
local markets. Therefore, there is a strongly growing demand by
companies and organizations active in the construction sector for
information on foreign construction markets and information necessary
for international cooperation.
In Romania the contracts forms are generally based on commercial
contracts requirements, but in construction industry are need certain
regulations and there are several different types of contracts.
3.1 Awarding and contracting procedures of construction public
works in Romania
In the context that Romania has become a member of the European
Union, the legal framework on public procurement has underwent
substantial changes, aimed to bring it up to the EU standards, mainly by
implementation of the relevant directives into the Romanian legislation
(Global Legal Group, 2010). Currently the Government Emergency Ordinance
No.34/2006 on the awarding of public procurement contracts, concession
contracts for the public works and contracts for the concession of
services, sets out the general legal framework of public procurement in
Romania.
GEO No. 34/2006 transposes the rules and principles established by
the EU law provided under Directive 2004/18/EC, Directive 2004/17/EC of
the European Parliament and of the Council of March 31, 2004, and of
Council Directive 92/13/EEC of February 25, 1992.
GEO No. 34/2006 explicitly provides that the fundamental principles
at the base of any award of public procurement contracts are:
non-discrimination; equal treatment, mutual recognition, transparency,
proportionality, efficiency in using public funds, and assuming of
responsibility (Global Legal Group, 2010).
GEO No. 34/2006 covers the following three main types of contracts:
(1) Public procurement (acquisition) contracts (including the
fields of water, energy, transportation and postal services);
(2) Contracts regarding the concession of services by a contracting
authority to a private entity; and
(3) Contracts regarding the concession of public works by a
contracting authority to a private entity.
Over the time GEO No. 34/2006 was amended with various other laws.
The contracting authority has the obligation to state accurately
within the tender documentation any request, rule, criteria and other
necessary information, in order to ensure that the bidder is completely,
justly and explicitly informed regarding the way of conducting the
awarding procedure (Global Legal Group, 2010).
It is compulsory for the terms of references, to contain the
technical specifications, prescriptions, technical characteristics
needed to describe, in an objective manner, in order to meet the
requirements of the contracting authority.
The criteria for awarding the public procurement contract can be:
* The most profitable bid from the economic point of view;
* Exclusively, the lowest price.
Unfortunately, GEO No. 34/2006 is a general law which regulates the
procedures for awarding public procurement contract, the concession of
public works and services concession contract, but does not cover the
main recommendation of some contractual conditions.
Contractual conditions can protect contact performance in the
conditions earned by auction, or may allow substantial changes to the
initial conditions, especially by the lack of their inclusion. These
changes can have significant influence on the main objectives of
construction projects, such as value, quality and duration of the
project.
3.2 Awarding and contracting procedures of construction public
works in Germany
The basic principles of German public procurement law are the same,
which are underlying the EC public procurement Directives. For the
performance of construction works, the relation between client and
contractor is governed by a construction contract.
The essential components of this construction contract are:
* the provisions under public law, e. g. the German Civil Code, the
Federal Building Act, and the Building Regulations of the Lander
* the German construction contract procedures, VOB
(Verdingungsordnung fur Bauleistungen)
* the conditions concerning contracts for supplies and services,
VOL (Verdingungsordnung mr Leistungen)
* the relevant technical codes, e. g. the DIN Standards
* the general and supplementary contract conditions of client.
The specification with bill of quantities, embedded in this
framework, is the most important part of the construction contract.
Beyond that, the VOB plays a central role in the execution of the
construction work.
Under German procurement law, technical specifications serve the
purpose to describe the work, supply or service to be performed under
the contract, which is being awarded. All descriptions have to be
"complete" and "exhaustive" in order to ensure, that
each competitor bidding for the contract has the same understanding of
the description of performance (Global Legal Group, 2010).
Contract award for public sector works is governed by the German
construction contract procedures, VOB, which consists of three parts:
(1) VOB Part A: General provisions for the award of construction
contracts;
(2) The standardized contract conditions, [VOB Part B: General
contractual conditions for to the execution of construction work; and
(3) VOB Part C: General technical conditions of contract for
construction work].
Tender actions pass through the following stages before completion
of the construction work:
(1) Tender Specification: the designer prepares a specification
containing work descriptions and quantities.
(2) Tendered Specification (priced): the price specification must
be submitted by the tenderer to a certain date.
(3) List of Contract Works: the future contractor is selected and
entrusted with the execution of the works.
(4) Accounting: interim valuations of the construction works
progress are made, in accordance with the VOB and works are settled.
In accordance with the requirements of the EC public procurement
Directives, contracts must be awarded on basis of the award criteria.
The awarding authorities can choose between awarding the contract on the
basis of the most economically advantageous offer or on the basis of the
lowest price only. The criteria used have to be objectively, it is
common to use a mixture of price and quality criteria to determine the
most economically advantageous offer.
4. CONCLUSIONS
As shown above, I conclude that the legislative framework for
public award procedures of construction contracts in the two countries
analyzed, meet the Directives of the European Parliament and are quite
similar. The differences can be observed in drawing up the
specifications and technical specifications used to describe the
construction works and prepare tender. They correspond to national
procedures for specifications and tenders preparing. These differences
are significant and have negative influence for the ongoing contract of
Romanian contracting authority, because these are often technologically
outdated.
In Romania does not exist regulation for General conditions of
contract relating the executions of construction work, as there is in
Germany, VOB Part B. The general technical conditions for quality
control of works, as there are in Germany, VOB Part C, are also often
technologically outdated.
In Romania, the absence of such regulations leads to numerous
changes and contractual disputes between the parties. Unfortunately,
these changes allow radical change of the initial conditions, obtained
by public auction, which can lead to a substantial increase in value,
extend the deadline for completion or lower quality. This is the reason,
for which is necessary for construction works, to create certain
national General conditions of contracting, that does not allow changing
the main terms that were derived from winning the auction.
The result obtained in the paper can be used to start a research by
government agencies at national level to define a set of conditions of
the contracting. These should not allow changing quantities of work,
unit prices, the deadline for completion, or the quality of work, only
in exceptional circumstances.
By specifying clearly the responsibilities of each party and the
conditions for achieving the construction works, it can increase
efficient use, of public funds by reducing the number of disputes, and
compliance with contract terms.
5. REFERENCES
Global Legal Group, (2010), The International Comparative Legal
Guide to: Public Procurement, pp.105-110, pp. 200-207 Publisher, Editor
Global Legal Group, London
Zimmermann, J. (2010), Project Management.--Written lecture at the
Department of Construction Process and Real Estate Development at the
Technical University of Munich, Edition 06/2010, Munich
***, (2009), "VOB-B Procurement and construction contract
procedures--Part B: General contractual conditions for the execution of
construction works ", DIN 1961:2010-04, DIN German Institute for
Standardization, Berlin
***, (2010), "Emergency Ordinance no. 34/2006 on public
procurement contracts, the public works concession contracts and
services concession contracts", Version updated on 02/07/2010, ISSN
1453-4495, Official Gazette, no. 418 of May 15, 2006, Bucuresti
***, (2010), "Emergency Ordinance no. 76/2006 amending and
supplementing Government Emergency Ordinance no. 34/2006", ISSN
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