Contract Management in Offshore and Marine , EPCIC and Shipyard

Introduction

For complex offshore and onshore projects, the preferred contract module used is the EPCIC (Engineering, Procurement, Construction, and Installation & Commissioning) Contract.  Understanding the allocation of risk by mastering the ins and outs of EPCIC contracts will prove to be a valuable tool in driving effective contracting strategies to minimize liabilities.

This Contracts Management course is specifically designed to provide participants with a well- tested and practical guide on:

• Putting EPCIC in the context of the different models of EPC Contracts
• The inherent risk, liabilities, and benefits of employing various contracting strategies
• The challenges of EPCIC lump sum contracts and the ways to manage cost over-runs
• Structuring the contract to address the issues of the several parties to the contract to ensure a positive project outcome. Pros and Cons of the split EPCIC contract form
• Insights into the current issues affecting EPCIC contracts like pollution, HSE, and local content; managing contractor concerns

Objectives

At the end of this training course, participants will be able to:

• Understand the current global, local and financial environment for EPCIC contracts and assess operational, commercial, legal and financial risks in EPCIC contracts
• Examine and analyze the difference between EPCIC contracts & EPCM and appreciate the underlying legal principles
• Appreciate the essential element of the different contract stages from pre to post tender to completion and delivery of project
• Address key issues faced during the project lifecycle and how to tackle these through enforceable contractual clauses
• Avoiding drafting pitfalls and ambiguous contractual terms

Training Methodology

• This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practice. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

This course is suitable to a wide range of professionals but will greatly benefit Contracts Professionals and Project Managers operating in complex offshore and onshore projects in marine and shipyard construction and engineering, whether a beginner or intermediate levels and also:

• Commercial Contract Professionals
• Commercial Operation Professionals
• Contract Engineers
• Procurement Supply Chain Professionals
• Risk Manager / Contract Risk Professionals

Course Outline

Day 1: EPCIC Overview, Legal Framework & Contract Structure, and Risk Allocation

Competency Description: Full understanding of the general rules of formation and of EPCIC and offshore contracts, including commonly found express and implied terms.   Analyze the contract terms and identify areas of possible risks and opportunities related to the application of contract clauses. Have full knowledge of different contract structures and how they differ to enable contract personnel to choose the right contract structure for any particular project.

• Gain the basic knowledge of contract structure.
• Understanding key commercial risks and to review project risks
• Analyze the rights and obligations of parties to these types of contracts
• Considers the rights and responsibilities of parties following contractual or common principles
• Safeguard company’s contract objectives

Topics to be covered

• Maximizing parties’ rights and interests with appropriate contracting strategy
• Contractor’s single point of responsibility
• Split contract structures
• EPCIC aspects in Shipbuilding Contracts for “Floaters”
• Choosing the right contract structure for your project
• The tender process, tender, and award. Discussing and analyzing different strategies

Day 2: Tender Process Leading to an EPCIC Contract

Competency Description: Gain competency in the tender process and appreciate the importance of good tendering processes and practices to ensure a successful project. Get a complete understanding of the best methods of tender evaluation.  Best practices in identifying strengths and weaknesses of tenders.

• Know the full range of tender processes that could be adopted for different projects in order to choose the best tender for the project
• Manage and coordinate contract administration resources for bids and projects to ensure project success
• Appreciate the value of exceptions in the bid process and whether variant bids should be considered if it offers better value for money
• Effective due diligence in the selection of tenders

Topics to be covered

• Legal, Technical and Commercial Pre-qualification of tenders
• Best practices in tender evaluations and selection of tender
• Important of the scope of work and specifications and terms and conditions
• Exceptions – what to accept and what to deny
• Finalizing tender negotiations & Award
• LOI and LOA essential terms and legal effects
• Exercise on the selection process and main elements to ensure a successful tender exercise 

Day 3: Negotiating Essential Contractual Terms of EPCIC Contracts

Competency Description: Enhancing the knowledge of the legal principles governing EPCIC contracts. Allocating parties’ responsibilities in the contract and negotiating terms and conditions of EPCIC contracts to safeguard each parties’ interests. Enhancing project performance to lessen project delay, cost overruns, and disputes.

• Managing parties to an EPCIC contract including sub-contractors and suppliers
• How to deal with the limiting of liabilities and drafting of appropriate indemnities and limitation of liabilities clauses to safeguard parties’ interests
• Understanding the essential terms of the contract that impact contract success.
• Mitigating risks inherent in EPCIC contracts including interface issues through well-drafted contractual terms
• Be conversant with negotiating strategies to get best contract terms to improve project success rates

Topics to be covered

• Identifying critical issues in the project life-cycle
• Managing cost impact clauses like delay, price fluctuations
• Indemnities and other liabilities, MAC clauses, HSE
• Changes in Law and regulations in the host country & stabilization clauses
• Political Risk Insurance
• Force Majeure & Termination for cause and without cause
• Case study & drafting exercise Issues Faced During Contract Life Cycle by Aligning Contractual Terms to Project Management
  • Managing Coordination Issues
  • Handling Completion Issues
  • Liquidated Damages
  • Dispute Resolution
  • Enforcing of Commencement and Completion Dates

Day 4: Essential Aspects of Risk Management Strategies

Competency Description: The proactive management of risks throughout the project lifecycle is important for project success. Understand the risk management practice, which involves risk identification, analysis, prioritization, planning, mitigation, monitoring, and communication. A risk-driven process for selecting contract structures, contractors, and sub-contractors is essential for the success of any project.  Learning to balance the potential negative consequences of risk against the potential benefits of its associated opportunity.

• Consider risk management as a series of steps whose objectives are to identify, address, and eliminate risks before they become either threats or a major source of expensive rework
• Avoiding problems by providing early warnings of the high-risk elements of the project
• Choosing to be reactive or proactive about these problems
• Project teams to avoid being reactive and in a crisis-driven, fire fighting mode leading to difficulty in resolving any serious problems causing extensive modification and or big delays
• Need to develop proactive teams begin thinking about risks even before technical work is initiated

Topics to be covered

• Design, Technology & Process Risk
• Procurement & Specification risk
• Variations and cost impact
• Payment and multi-currency contracts
• Delay and liquidated damages
• Completion and testing & effects of acceptance
• Using contractual clauses to manage liabilities and risks

Day 5: Contract Completion – Critical Issues

Competency Description: All parties involved in contracts have a vested interest in on-time performance and on-time payment which are critical elements in all contracts. Contract completion can be contentious if parties cannot agree that the contract has been completed. Contracts provide for different degrees of completion from phased completion or full and final completion and who should determine this, when is the passing of title and risk to take place and defects to be treated as warranty items or could they be a failure to meet performance guarantees.

• Dealing with contract delays
• Managing time and money claims and managing claims disputes
• Determining when contracts have achieved substantial completion of contracts
• Learning best practices relating to Project Close-Out including administrative closure and contract closure
• Verifying final project deliverables

Topics to be covered

• Acceptance of punch list of defects - what is the effect?
• Passing of title and risk - safety & insurance
• Warranties and Guarantees
• Passing of Intellectual Property rights
• Defects - Exculpatory Clauses
• Dealing with disputes – considering the different options