Ten innovations in the draft law on public works

Strengthening the design-build system, speeding up the tendering process for projects of particular importance to the country's economy, and addressing unusually low bids for projects are among the changes to Law 4412 brought about by the Ministry of Infrastructure and Transport.

Specifically, according to information from the ministry, the bill introduces 10 innovative changes:

1. Strengthening the design-build system, so that the tendering process for projects with a lower degree of maturity than is currently the case can be initiated.
This method of assignment is based on the principle of transferring responsibility for studies to the Contractor.

2. Faster start of tendering for projects of special importance for the country's economy, i.e., projects that fall under Article 7A of the Code of Compulsory Expropriation of Real Estate, in relation to what is currently in force.
Large projects are also expected to implement provisions relating to strategic private investments in order to speed up their tendering process.

3. Dealing with unusually low bids on projects, which made it difficult to complete them, as was also pointed out by the European Commission.
Under the new provisions, any bid that deviates by more than ten percentage points from the average of all discounts offered in the bids submitted must be justified.

This justification will constitute binding agreement and part of the contract award, which cannot be changed throughout the duration of the contract.
At the same time, the performance bond is now calculated on the basis of the initial tender budget rather than the value of the contract.

While the advance payment guarantee is released from the performance bond, if granted, the contractor must provide an additional guarantee for an amount equal to that of the advance payment.

4. The following is established: private supervision of projects and studies, i.e. the possibility of supervision being exercised by persons other than the Service and by certified private entity (natural or legal person or association of persons) who has the necessary specialized knowledge. In particular, for studies, private specialized engineers (checkers) may be hired at the acceptance stage.

5. Conversion of the project monitoring system from an auditing system, as it is today, to a indicative.
What does this mean in practical terms?;
The Managing Authority is relieved of unnecessary bureaucratic obligations that often led to adverse consequences for the public sector.

The submission of measurements by the contractor is now standard practice, accompanied by increased responsibility for their accuracy.
The new method will facilitate project measurements and accounting, thereby speeding up bill payments.

6. For projects with a budget exceeding €10 million, the possibility of arbitration to resolve any dispute arising from the application, interpretation, or validity of the Agreement is established.
For projects with a lower budget, the consent of the competent technical council is required. 
The institution of amicable settlement as a means of resolving disputes before resorting to arbitration.

7. Modernization, digitization, and simplification of procedures are promoted, as contractors are required to keep an electronic project log using widely used free software.
This electronic log is sent electronically to the Head of the Managing Authority and the project supervisor, with the aim of speeding up the process of informing all those involved in the project and resolving any disagreements without delay.

8. Delays in project delivery are combated, since in calls for tenders for projects with an estimated contract value of more than one million (1,000,000) euros, the possibility of providing an incentive is provided – an additional bonus of up to 5% of the contractual cost for the delivery of projects earlier than the contractual deadline.
At the same time, emphasis is placed on better implementation of studies and projects, since the contract is now automatically terminated 24 months after the end of the contractual period for design contracts, and the mandatory warranty period for projects is increased to five years.

9. Lotteries for the selection of committees, which caused excessive delays in the conduct of competitions, are abolished.
At the same time, it is mandatory to publish the project study before announcing it, so that participants in the competition can form a more complete picture of the project.

10. The establishment of a Unified System of Technical Specifications and Pricing for Technical Works and Studies is moving forward.
It is clear that the new institutional framework introduced by the government will contribute significantly to the construction of higher quality projects, to shortening the current execution time, and to a framework of cooperation between contractors and the State, smoothing out those points that have been sources of friction between them for many years.