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Nov
26

Private clients in Brazil have been demanded from the contractors a consistent contract management.

Private clients in Brazil have been demanded from the contractors a consistent contract management. Now it is time for the public clients to increase the demands. The new Bidding Law Proposed Bill (PL 6814) creates new requests related to contract management. The aim is to improve the large public projects management, giving to the parties better conditions to perform the contracts and more efficiency to the projects. Some examples:

- Preliminary drawings (Anteprojeto): this new document that may be demanded in some auction notices, describes the minimum requirements to insure a suitable level of engineering to a start a project execution.

- Financial warranties: financial warranties demanded from contractors varies from 5% to 10% of the contract value to 20% or 30% for large projects.

- Higher responsibilities for insurance companies: the insurance companies hired by project contractors will be demanded to sign the project contracts as Intervening parties and have building inspection powers and responsibilities. The reason is that the public clients may request the insurance companies to subrogate in the contractors´ rights and obligations in some specific cases.

- Risk matrix / Probability x Impact matrix: this risk allocation tool will play a role in every contract and mandatory for large projects.

- Alternative dispute resolution methods: arbitration, mediation, conciliation and Dispute Resolution Boards became expressly permitted in public contracts.

The public administration is now proving that an efficient contract management is not a competitive differential anymore but a real need.

WFaria Advogados and Systech International, a traditional Contract Management British company, works together and in a synergistic way to improve the results in large projects through a modern, systematized and well-structured contractual change management system.