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IMCA publishes Renewables Contracting Principles

Published on 22 September 2015

The International Marine Contractors Association (IMCA) has published a variety of guides, templates and discussion documents aimed at raising awareness on contracting issues, promoting discussion and providing tools that may be useful for its contractor members, their clients and sub-contractors, the latest is the series is ‘IMCA Renewables Contracting Principles’ which can be downloaded from the Safety and Legislation section of the IMCA website at legacy.imca-int.com.

“Each of our Contracting Principles’ documents (of which there are now five in addition to a discussion document and other associated documentation) is published as an aide to clients and contractors alongside their in-house standard contracts and other industry publications,” explains IMCA Technical Director and Acting Chief Executive, Jane Bugler.

“As the international trade association representing offshore, marine and underwater engineering companies (over a thousand member companies in more than 60 countries) we have several roles, but view a key one as promoting dialogue amongst the various companies, both clients and contractors, for the benefit of the whole industry.

“The ‘IMCA General Contracting Principles’ were published in May 2011, followed by the ‘IMCA Decommissioning Contracting Principles’. The renewables sector is a relatively new one in the industry and consists mainly of offshore wind farm construction and cable laying.

“Whilst the ‘IMCA General Contracting Principles’ could be applied to this new sector, a number of issues in the renewables sector differ from general offshore activities and it was felt that these needed to be addressed in the contracts made.

“In our newly published document, IMCA presents the Renewables Contracting Principles, which are to a large extent similar to the other contracting principles published and are also based on the FAIR acronym:

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”

Jane Bugler adds:”The Principles are not intended to represent a complete analysis of all risks which are covered by contracts in the offshore renewables 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, such as LOGIC and FIDIC. 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.”

The history of IMCA’s contracting principles documents

Offshore construction is an industry that cannot be compared with other types of construction. Those involved in marine construction, in particular in offshore locations, will all agree.

It is a known fact that contracts require certain conditions that are uncommon to onshore construction contracts; e.g. an equitable balance of risk and reward mechanism can avoid adversity and disputes, but most of all, is in the interest of control of progress and cost control.

A variety of initiatives have been undertaken to address this issue. In February 2005, IMCA published a discussion document to help to: promote dialogue and encourage equitable solutions for both contracting parties; improve clarity and efficiency; and, to avoid duplication and save money, and the first of the ‘Contracting Principles’ documents was published in 2011.

Service contracting is a high risk activity and risk exposure can be very large and bear no relationship to Contract value. 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.

Further information on IMCA

Further information on IMCA and its work on behalf of its 1000+ member companies in over 60 countries is available from legacy.imca-int.com and imca@legacy.imca-int.com. The association has LinkedIn and Facebook groups and its Twitter handle is @IMCAint

ENDS

About IMCA

  • IMCA is an international association with over a thousand members in more than 60 countries representing offshore, marine and underwater engineering companies. IMCA has four technical divisions, covering marine/specialist vessel operations, offshore diving, hydrographic survey and remote systems and ROVs, plus geographic sections for the Asia-Pacific, Central & North America, Europe & Africa, Middle East & India and South America regions. As well as a core focus on safety, the environment, competence and training, IMCA seeks to promote its members’ common interests, to resolve industry-wide issues and to provide an authoritative voice for its members.
  • IMCA Vision & Strategy. As a result of work and collective input in 2013, IMCA has redefined its stated core purpose to be”Improving performance in the marine contracting industry”. To achieve this goal, IMCA’s Vision & Strategy has been devised with two elements in mind: Core activities and ways of working.
  • IMCA publishes some 200 guidance notes and technical reports – many are available for free downloading by members and non-members alike. These have been developed over the years and are extensively distributed. They are a definition of what IMCA stands for, including widely recognised diving code of practice, DP documentation, marine and ROV good practice guidance, the Common Marine Inspection Document (CMID) – now available electronically as eCMID, safety recommendations, outline training syllabi and the IMCA competence scheme guidance. In addition to the range of printed guidance documents, IMCA also produces safety promotional materials, circulates information notes and distributes safety flashes.

About the industry IMCA serves

The marine contracting industry plays a vital global role. Its vessels account for 4% of the world’s maritime fleet. Collectively IMCA members employ some 350,000 people and have an annual turnover of around $150bn. They work in all the world’s major offshore areas, delivering large offshore oil and gas and marine renewables projects around the globe that quite literally fuel the global economy.