IMCA survey work contracting principles

 

Version history

June 2024 Rev. 3.1 – Page 2, template and bookmarking updated; no change to content

February 2017 Rev. 3 – Alignment with IMCA General Contracting Principles (Rev. 4)

December 2015 Rev. 2 – To include the IMCA Competition Law Compliance Policy (Appendix 1)

December 2014 Rev. 1 – Alignment with IMCA General Contracting Principles

April 1999 Initial publication

 

Summary

The International Marine Contractors Association (IMCA) is the international trade association representing offshore, marine and underwater engineering companies. It has several roles but a key one is communication and promoting dialogue amongst the various companies, both clients and contractors, for the benefit of the whole industry.

A variety of initiatives had been undertaken related to contracts.

In February 2005, IMCA published a discussion document, IMCA LCIC002 – IMCA Contracting Principles, to help to:

• promote dialogue and encourage equitable solutions for both contracting parties
• improve clarity and efficiency, and
• avoid duplication and save money.

Contracting conditions around the world are complex and numerous. Often the risks and rewards have become imbalanced – a position which is not sustainable for the industry generally.

Service contracting is a high risk activity and risk exposure can be very large and bear no relationship to Contract value. The world of risk management has changed following a number of major incidents. Insurance companies and financial institutions have become more risk aware and as a result insurance has become more restrictive and expensive and clients are attempting to transfer increasing levels of risk to contractors.

FAIR, IMCA’s risk allocation goals are as follows:

• Fair (not equal) and realistic distribution of risk in proportion to relative rewards
• Allocation of risk – to the party best placed to assume
• Insure – sufficient scope of cover
• Reasonable – avoid ‘duplicate’ assumptions of risk and minimise potential for dispute.

IMCA believes these ‘principles’ will serve the long-term interests of all participants in the oil and gas industry by encouraging an equitable contractual balance based on the parties’ respective risks and rewards. This, in turn will improve relations, increase efficiency and reduce overall costs.

The principles are not intended to represent a complete analysis of all risks which are covered by contracts in the oil and gas industry. In general, they reflect well established industry custom and practice of addressing certain risks such as the knock for knock indemnity regime.

In addition, the principles are not contractual clauses. They do not in any way form a standard contract nor is their adoption in any way mandatory. They are published as a discussion document and an aide for clients and contractors alongside their in-house standard contracts and industry published standard contracts. Each IMCA member is free to negotiate its own terms, qualify such contracts and to make use of the principles should it wish to do so in order to achieve a contract satisfactory to both parties

IMCA is widely recognised for developing and publishing technical guidance which establishes industry good practice for many issues relating, for example, to safety and the environment. This good practice may become a contractual requirement if a client adopts it in a contract. Some clients look to IMCA membership, or compliance with IMCA guidelines as a prequalification for tendering. (IMCA’s Competition Law Compliance Policy is attached as Appendix 1.)

The document contains seventeen principles each including a comment more easily understood by the layman and showing clearly how each principle measures up to IMCA’s FAIR risk allocation goals.

The present document, called IMCA Survey Work Contracting Principles, has been developed to raise awareness on contracting matters specific to that particular part of the industry among its members and their clients. The FAIR risk allocation should be borne in mind to ensure that the risks accompanying such situation are allocated appropriately.

In July 2006, IMCA published a related document LCIC011 – Identifying and assessing risk in construction contracts – An IMCA discussion document to which the reader is also referred.

The seventeen principles covered in this document are:

• Company group and Contractor group property and personnel
• pollution
• third parties
• consequential losses
• gross negligence and wilful misconduct
• warranty obligations
• limitations of liabilities
• force majeure and suspension
• delay
• variation orders
• intellectual property rights
• termination by Company for convenience
• Company’s obligation to pay Contractor
• extraordinary risk
• breakdown
• Contracts (Rights of Third Parties) Act 1999
• anti-corruption.