Mills & Reeve

IChemE — process engineering contracts

By Martino Giaquinto

For those involved in heavy engineering projects, whether domestic or overseas, choosing a form of contract that is most apt or suitable for the particular job is of fundamental importance because the parties will be accepting substantial risks and liabilities, and invariably these flow from the terms of the contract entered into.

While there are a number of standard form contracts on the market, if the project concerns the design, construction, commission and operation of a process plant or the building or modification of plant or equipment that will produce a product, the IChemE forms would be the obvious choice by the parties. Unlike various building and civil engineering industry contracts that are essentially ‘work-based’ forms, the IChemE forms are fundamentally ‘out-based’ forms designed for use in performance or ‘results-based’ projects. But while the IChemE forms have been drafted for delivery of process plants, they have been successfully used for a variety of projects including liquefied natural gas (LNG) plants, combined heat and power (CHP) plants, waste-to-energy (WTE) plants and sewage treatment works (STW) plants. The IChemE publishes a range of forms of contract, with a suite of contracts for use in the UK and overseas.

The three main forms for use in the UK comprise a lump-sum contract (red book), a reimbursable contract (green book) and a target-cost contract (burgundy book). There is also a ‘back-to-back’ subcontract…

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