IChemE suite of contracts: Charles Russell Speechlys develop new training course.

David Savage describes Charles Russell Speechlys’ new training course on the IChemE suite of contracts.

We advise on many suites of contract well beyond the JCT and NEC3 contracts typically used for many UK construction projects. In particular, in our international construction work, we regularly advise on the full range of FIDIC contracts. However, in the water, chemical and process engineering sectors we often advise on the use of the IChemE suite of contracts. The contract framework is intended to be fair and balanced, with each party able to recognise its role and responsibilities. There is a UK and an international version of the full suite of these contracts - and we train on both.

IChemE’s Forms of Contract are, in IChemE’s own words:

“an internationally acclaimed series of model forms of agreement, developed to reflect best practice for project delivery in the process industries.”

We have recently developed a new training course covering all aspects of these suites of contracts, which has been delivered on a number of occasions to our clients in the Middle East.

The course we have developed is very comprehensive, and is structured around nine core modules described in some detail below. The course can be delivered at different levels of detail / intensity over different course lengths. The shortest a period is one day, but the ideal period is over three days – a period that allows for all nine module topics to be covered in reasonable depth.

Process plants are ultimately all about performance in their operation. The IChemE contracts are well drafted to be performance based, with a noticeably more sophisticated completion regime than typically found in building or engineering standard forms of contracts (including FIDIC forms). Our course is intended to help both clients and contractors get the most out of these contracts.

Module 1: An introduction to IChemE and the suite of IChemE contracts – why use a model form contract?

This session covers the following topics:

• the structure of the course in terms of which topics are being examined in which sessions over the next four days.
• an initial understanding of what the IChemE is and the suite of contracts published by them.
• understanding the procurement choices represented by the different forms of IChemE contract.
• have considered the main benefits to using a model form of contract such as the IChemE forms.
• the key components of an enforceable contract.
• the key drivers for selecting a model form contract.

Module 2: The role and responsibilities of the Project Manager under the IChemE international suite of contracts.

By the end of this module, delegates will have a detailed understanding of the role and responsibilities of the Project Manager under the IChemE international suite of contracts, including:

• the powers of the Project Manager in regulating the times for completion of the Works.

• the rights the Project Manager has in respect to the Contractor’s selection of subcontractors.
• the rights the Project Manager has in respect of the Contractor’s design.
• when the Contractor is required to report to the Project Manager.
• the inspection rights the Project Manager has.
• the Project Manager’s role in certifying payments under the Contract.
• the Project Manager’s role in assessing Variations.
• the Project Manager’s role in assessing payments on termination.This session provides delegates with an initial understanding of the range of dispute resolution techniques used within IChemE contracts, and the circumstances for which each technique is appropriate. Particular focus is given to arbitration, dispute boards, expert determination and mediation.This session provides:

Module 3: An introduction to Dispute Resolution for Engineers using the IChemE Forms of Contract

This module provides delegates with an initial understanding of the range of dispute resolution techniques used within IChemE contracts, and the circumstances for which each technique is appropriate. Particular focus is given to arbitration, dispute boards, expert determination and mediation.

Module 4: International Red, Green and Burgundy Book – pricing options

This module provides:

• a more detailed understanding of the different pricing options available for contracting using the IChemE international forms.
• an understanding of the pros and cons associated with each pricing option.
• an understanding of the pricing mechanisms used in the Reimbursable Contract (Green Book) and the Target Cost Contract (Burgundy Book).The challenge of delivering all Time, Cost, and Specification objectives for IChemE based projects.
• The tension between contracts that create an adversarial dynamic as against the need for positive collaboration in projects, and a similar tension between contractual certainties (but potential lack of flexibility) versus contractual or procurement flexibility.

It contextualises the above considerations in a more general procure context that examines:

• The challenge of delivering all Time, Cost, and Specification objectives for IChemE based projects.
• The tension between contracts that create an adversarial dynamic as against the need for positive collaboration in projects, and a similar tension between contractual certainties (but potential lack of flexibility) versus contractual or procurement flexibility.

Module 5: International Red, Green and Burgundy Forms – structure of the contracts

This module provides a more detailed understanding of the overall structure of an IChemE contract, the differences between General and Particular conditions; and explains the importance of the Schedules.

Module 6: International Red, Green and Burgundy Forms – how is completion managed?

This module provides delegates with a detailed understanding of how completion is managed under the IChemE model forms of contract, and the minor differences in this regard between the IChemE international Red, Green and Burgundy books.

The IChemE specific “3-Stage” Completion process, covering Completion of design and construction (Stage 1) Putting to work (Stage 2) and Commissioning the project (Stage 3).

Key clauses reviewed include Completion of construction (Clause 32) Damages for delay (Clause 15) Taking Over (Clause 33) Performance tests (Clause 35) and Acceptance (Clause 36).

Module 7: How is delay and prolongation managed under the IChemE forms?

This module covers the following topics:

• when is the Contractor is entitled to claim an extension of time for completion of the Works?
• when is the Contractor is entitled to receive additional costs for delay events under the Lump Sum Red Book Contract?
• which clauses are relevant to issues concerning delay?
• when is the Contractor entitled to claim an extension of time for completion of the Works?
• Key clauses cover include: Times of completion and Approved Programme (Clause 13) Damages for delay (Clause 15) Delays (Clause 14) Contractor’s Claims (Clause 18).

Module 8: A more detailed look at Dispute Resolution under the IChemE model forms

This module takes a more detailed look at dispute resolution under the IChemE forms, including:

• The IChemE rules for expert determination (as set out in “the White Book”)
• The IChemE rules for Dispute Review Boards (as set out in “the Beige Book”)
• The IChemE Arbitration Rules (as set out in “the Pink Book”)

Module 9: Sub-contracting and the IChemE “International Yellow Book” model form of contract

The final module in our course is all about subcontracting. It gives delegates an appreciation of the importance of subcontracting from a clients’ perspective, and a more detailed understanding of the IChemE Yellow Book model for of subcontract. The topics covered include:

• Introduction to back-to-back subcontracting.
• Types of subcontracting and subcontracts.
• Choosing the most suitable form of subcontract.
• The Yellow Book form of subcontract itself.
• Yellow Book key terms from purchaser’s perspective.

If you would like to discuss whether we may be able to assist in training your organisation on the use of IChemE contracts, whether in the UK or international versions, please contact David Savage via [email protected].