Company A and company B enters into an EPC contract for the supply, installation and commissioning of a process plant. During the execution phase they encounters several problems such as delays and extra costs due to changes and increases in scope.
The contract is based on Orgalime SE01 with modifications taken from NTK05 as to how to handle variations and the criteria for delivery. In the discussions in order to find the most probable outcome, one of the challenges has been to determine which exact contractual regulation is applicable to the subject matter, as the modifications that have been made, have not made use of the entire regulation from NTK, but only parts of it.
Through a cost-income and project valuation analysis, it is determined which elements which has contributed to the largest decreases in contract value and it is shown that Orgalime is very contractor-friendly as concerns interests on late payments which is even far above the contractor s cost of capital.
In order to establish a new contract document for the contractor to use on similar projects internationally, an analysis has been made of excisting internationational standards for EPC contracts, where a comparative analysis between FIDIC Silver Book and Orgalime Turnkey Contract has been made. It was found, not unexpectingly, that the Orgalime Turnkey Contract is much more contractor-friendly than the FIDIC alternative.
There is made a detailed analysis of the Orgalime Contract with a set of proposed changes based on the experience from the previous projects. Since the Orgalime Contract is already quite contractor-friendly, only modifications considered as essential or which not scare off the buyer has been proposed.