Case Studies > Off-gas Project

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A BP Chemicals DF Off-gas Project with Waste Heat Boilers to a Thermox Plant, comprising of all mechanical and electrical engineering installations, waste heat boilers, steel structures, piping, power and power distribution, operations and control systems. The project structure was arranged such that a Managing Contractor acted as the Employer with overall responsibility for the entire Thermox Plant works within a turnkey framework and therefrom, awarded a design and build contract to a Consortium of specialist firms acting as the General Contractor. Within that Consortium, our Client acted as consortium leader responsible for overall coordination of the member firms and for representation and direct interfacing with the Employer. However, their physical scope of work was limited to the basic and detailed design for the waste heat boilers and associated works (defined within a so called “Black Box” scope of work), including all appurtenant structural steelwork and pipework.

The Consortium contract (for the design & build scope), was awarded on a fixed-price, lump-sum basis under the Employer’s standard form of contract. Shortly after this contract came into effect, it was subject to numerous causes of disruption and delay as well as considerable additional costs, loss and expense. The multifarious causal events giving rise to such consequences occurred throughout the various project phases to varying degrees to create a myriad of complex interdependent cause and effect scenarios.

However, one of the primary contributors to the said causal events emanated from a number of significant design changes initiated by the Employer. This situation was further complicated as a direct result of the manner in which the consortium members’ workscopes had been interfaced. As a result, and in the first instance, a number of claims for time extensions and associated and other additional costs, loss and expense claims were raised collectively by the Consortium against the Employer. Many of the claims for time and money were successfully negotiated and settled with the Employer. Nevertheless, our Client was subsequently presented with extensive residual claims from the Consortium member responsible for the manufacturing, supply, assembly, installation and commissioning and testing of Waste Heat Boilers and associated works. Our Client had tried but failed to reach a mutually agreeable settlement on all of these residual claims.

CONSULTANCY SERVICES - Claims Management (Defence)
As a consequence of that situation, we were brought in by our Client to determine which of these residual claims had contractual or other valid grounds and thereafter evaluate the quantum, as appropriate. We undertook an initial review of all relevant contract documents and correspondence in our client‘s UK offices correspondence in order to establish the admissible basis of each claim from the Consortium member, related to the design changes caused by the Employer and those allegedly caused by our Client.

Our findings concluded that the Consortium member had provided neither sufficient factual evidence in respect of the cause and effect link of the alleged design changes, nor a consequent contractual basis for each of its claims. We therefore requested the Consortium Partner to provide further and better particulars in relation to compliance requirements in accordance with contractual notice provisions appertaining to all (caused by the Employer and / or our Client), alleged design changes, delays, disruptions, contract variation orders together with the details of all relevant correspondence. Among other items, the Consortium member was requested to provide comprehensive details on take off quantities, method of measurement, records of all discipline man-hours, constructional plant and equipment, materials and the precise location of the alleged design change, contract variation or design development item and its alleged consequences related to the aforementioned resources.

Further details of the Consortium member’s sub-contracts and supply contracts, including their details of all alleged design changes (additions, amendments and omissions), with resultant impacts on their work programmes and associated costs were also requested. Additionally, a fully detailed final account from the Consortium member was also requested to cross check the bases of their claims.

Despite our requests, the Consortium Partner was only able to provide partial information which proved to be inadequate in terms of demonstrating liability on the part of our Client. As a consequence of this, we were able to satisfy the Consortium member that there was no proven liability for any alleged design changes on the part of our Client. The entire set of residual claims was successfully rebutted by us and thereupon the Consortium member withdrew its claims and settled the final account with our Client accordingly without serious damage to the business relationship between the parties.

Our findings concluded that the Consortium member had provided neither sufficient factual evidence in respect of the cause and effect link of the alleged design changes, nor a consequent contractual basis for each of its claims.

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