Project managment

Conditions mainly for plant and equipment supply

I Mech E Model Form A

This form, together with modifications that can be adopted (such as ‘Form G’ and a combined version called ‘G90’) is intended for contractor design, manufacture, supply, and installation of mechanical, electrical and instrumentation plant of all sorts. The form is still in use especially in its modified G90 form in the water industry despite the introduction of MF1 (see below). The contract allows for definition of what is required in outline and by specification, the contractor being responsible for the design and manufacture or procurement.
The total plant required for a project is often procured by issue of contracts covering separate specialities, such as pumps and motors, switchgear, or instrumentation selected to suit the capabilities of tenderers. Provision for any associated civil works included in the contract is elementary: if they are required it is best they should be included as a fully designed package that can be sub-let. Payment terms are usually lump sum, but interim payments and some items of re-measure can be included. The terms provide for restricted liability of the contractor for defects other than during the first year of maintenance.

I Mech E/ IEE; MF/1

This is for similar purposes as Model Form Abut the terms have been modernized
and improved, with revised and extended liability for defects and provision
for performance tests. The first edition was published in 1988 but further
revisions with amendments have been issued, Revision 4 being issued in 2000.
Among other matters, payment terms have to be decided and details added.

FIDIC 2nd and 3rd Editions: ‘Yellow Book’

These apply to mechanical, electrical, instrument and similar work, the provisions being similar to I Mech E Form A conditions referred to above. The 3rd edition is a substantially altered and improved version of the 2nd edition.
Again it is intended for work worldwide so it allows for additions to cover local needs. Although the new FIDIC form for plant is available this form is still in use.

I Chem E ‘Red Book’ Conditions

These conditions are primarily intended for process plant paid for on a lump sum basis, with interim progress payments as agreed. The contractor carries the main responsibility for design but must comply with any requirements set out in the contract. He arranges all procurement including any civil, mechanical, electrical and instrument work, etc. and installs, sets to work, commissions and tests all plant. Performance tests are required to prove that the effectiveness of the plant is as specified in the contract. Provisions for dealing with claims and variations are not extensive; the expectation being that, prior to the award of contract, the parties will have agreed in detail the specific items of plant to be provided, so that little change is needed. The project manager is not fully independent, though required to be impartial in some actions; the purchaser is bound by the decisions made by his project manager and cannot dispute them in arbitration. Provision is made for an independent expert to be called in to decide some technical or valuation matters. Since there is little allowance for unforeseen constructional problems, the conditions may not be suitable for major associated civil engineering works.

I Chem E ‘Green Book’ Conditions

These conditions cover a cost-reimbursable contract for the provision of process plant. They can be used when the process or works have not been fully defined, so both purchaser and contractor may have design inputs; but  the contractor is responsible for proper construction. The contract can be on the basis of cost plus a percentage fee (rarely used) or cost plus a fixed fee, or a target cost. Payment terms have to define which costs are reimbursable and which are covered by any lump sum payments. Payment is made on the basis of the estimated expenditure for the forthcoming month, subject to adjustment of the preceding month’s payment according to the actual expenditure incurred. This amounts to payment in advance. A project manager administers the contract but he does not have a fully independent status, although he is required to act impartially in some matters. The purchaser is responsible for the actions of the project manager and cannot dispute his decisions. These I Chem E conditions have been used occasionally for certain civil engineering works, primarily because they form a framework on which to base a cost reimbursement contract.


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