Designing Buildings - User contributions [en]

Reliance data in EPC contracts

2018-06-03T17:29:11Z

JFJ Afitac:

The starting point of many EPC tenders and contract negotiations is as follows: the Owner / Employer provides the Contractor with the data he has in his possession regarding the project together with a specific statement that «the Employer does not give any warranty as to the completeness, accuracy or fitness for purpose» of that information. He does this to avoid any claim by the Contractor during the project execution on the basis that the provided information is inaccurate or incorrect. Sometimes the situation is even worse and the Owner / Employer simply tries to avoid giving any information. In practice, withholding information is counterproductive as it does not enable the EPC Contractor to quote properly, with reasonable efforts. Contractors may walk away from the tender, overprice or underestimate the project’s cost. In the latter case, Contractor often create trouble during the execution phase in an attempt to limit their losses.

FIDIC 1999 Silver Book (Clause 5.1) requires the Contractor to scrutinise the Employer’s Requirements prior to the bid submittal. The Employer shall not be responsible for any error, inaccuracy or omission of any kind in the Employer’s Requirements except for data and information which are stated as immutable or the responsibility of the Employer and also except for data and information which cannot be verified by the Contractor. Having some data on which the Contractor may rely (reliance data) is therefore good industry practice and in line with the contract standards.

The difficulty starts when identifying precisely the “reliance data”, “baseline data” or whatever word is defined in the contract to introduce the same concept. The data is usually parked in an appendix containing a limited list of data for which the Employer takes responsibility. An objective methodology to establish "reliance data" is to look at the project (to be executed) as a “black box”:

* Whatever is in the box are the works to be executed. These are defined in a functional, not detailed, not prescriptive specification. The reliance data should not include any information from within the project “black box”.
* The project “black box” is somehow connected to, and interacting with, its surroundings/environment. It is physically attached to/founded on the outside world. It also receives some inflow. The “black box” can be impacted/shaken-up by the outside environment. The quality, magnitude and characteristics of these foundations, inflows, connections and impacts are data that can, and often should, become reliance data.

Concrete example of the “black box” concept:

in case of building a hydro power plant, the following can be reliance data:

* Geo-technical baseline data: reference characteristics of subsurface conditions like rock classes (“foundations”)
* Water quality: chemical composition of water quality for which the penstocks and turbine equipment should be designed; maximum water temperature to be taken into consideration for the design of the cooling system; hydrological data (“inflow”)
* Grid connection information: data related to the transmission line and grid characteristics (voltage, frequency). The electric grid often still has to be expanded under a separate contract (“connections”)
* Maximum wind speed or seismic acceleration coefficient: design requirements that the “black box” will have to withstand (“impacts”).

Some concept of reliance data is healthy for a balanced EPC contract. It is necessary to minimise the information to those design inputs that are essential and cannot reasonably be verified by the Contractor during the tender stage. This includes information that is the result of long-term data series or unaccessible or needing unreasonable efforts and resources to obtain during the tender stage (when the Contractor is not sure to be awarded the contract).

--[[User:JFJ Afitac|JFJ Afitac]] 18:29, 03 Jun 2018 (BST)

[[Category:Projects_and_case_studies]] [[Category:Contracts_/_payment]]

Reliance data in EPC contracts

2018-06-03T17:21:52Z

JFJ Afitac: Created page with "The starting point of many EPC tenders and contract negotiations is as follows: the Owner / Employer provides the Contractor with the data he has in his possession regarding the ..."

The starting point of many EPC tenders and contract negotiations is as follows: the Owner / Employer provides the Contractor with the data he has in his possession regarding the project together with a specific statement that «the Employer does not give any warranty as to the completeness, accuracy or fitness for purpose» of that information. He does this to avoid any claim by the Contractor during the project execution on the basis that the provided information is inaccurate or incorrect. Sometimes the situation is even worse and the Owner / Employer simply tries to avoid giving any information. In practice, withholding information is counterproductive as it does not enable the EPC Contractor to quote properly, with reasonable efforts. Contractors may walk away from the tender, overprice or underestimate the project’s cost. In the latter case, Contractor often create trouble during the execution phase in an attempt to limit their losses.

FIDIC 1999 Silver Book (Clause 5.1) requires the Contractor to scrutinise the Employer’s Requirements prior to the bid submittal. The Employer shall not be responsible for any error, inaccuracy or omission of any kind in the Employer’s Requirements except for data and information which are stated as immutable or the responsibility of the Employer and also except for data and information which cannot be verified by the Contractor. Having some data on which the Contractor may rely (reliance data) is therefore good industry practice and in line with the contract standards.

The difficulty starts when identifying precisely the “reliance data”, “baseline data” or whatever word is defined in the contract to introduce the same concept. The data is usually parked in an appendix containing a limited list of data for which the Employer takes responsibility. An objective methodology to establish "reliance data" is to look at the project (to be executed) as a “black box”:

* Whatever is in the box are the works to be executed. These are defined in a functional, not detailed, not prescriptive specification. The reliance data should not include any information from within the project “black box”.
* The project “black box” is somehow connected to, and interacting with, its surroundings/environment. It is physically attached to/founded on the outside world. It also receives some inflow. The “black box” can be impacted/shaken-up by the outside environment. The quality, magnitude and characteristics of these foundations, inflows, connections and impacts are data that can, and often should, become reliance data.

Concrete example of the “black box” concept:

in case of building a hydro power plant, the following can be reliance data:

* Geo-technical baseline data: reference characteristics of subsurface conditions like rock classes (“foundations”)
* Water quality: chemical composition of water quality for which the penstocks and turbine equipment should be designed; maximum water temperature to be taken into consideration for the design of the cooling system; hydrological data (“inflow”)
* Grid connection information: data related to the transmission line and grid characteristics (voltage, frequency). The electric grid often still has to be expanded under a separate contract (“connections”)
* Maximum wind speed or seismic acceleration coefficient: design requirements that the “black box” will have to withstand (“impacts”).

Some concept of reliance data is healthy for a balanced EPC contract. It is necessary to minimise the information to those design inputs that are essential and cannot reasonably be verified by the Contractor during the tender stage. This includes information that is the result of long-term data series or unaccessible or needing unreasonable efforts and resources to obtain during the tender stage (when the Contractor is not sure to be awarded the contract).

[[Category:Projects_and_case_studies]] [[Category:Contracts_/_payment]]

User:JFJ Afitac

2018-06-03T17:02:40Z

JFJ Afitac:

Companies, whether small or large, wish to do their international business based on well-balanced contracts.<br />
Large multinational companies have considerable internal resources: a legal department, tax advisors, insurance experts, a risk management team etc.<br />
For small & medium size companies, too specialized resources would not be properly amortized in view of the size of its international business.<br />
AfiTaC provides the necessary support to your internal resources to overcome this gap: expert advice, coaching and training of your teams, tendering support, establishment of structured processes.