Friday, January 16, 2015

Structuring Shipbuilding Contract – Part 1

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Maritime and Shipbuilding Law

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Pre-Qualification:
Where shipyard has been successful in its marketing activities, it will be invited to express interest in a particular project. The logical progression will be a bid invitation and pre-qualification questionnaire from Owner.

Questionnaire:
The required information will comprise the following: corporate information, corporate statutory documents, financial information and data, liens, security charges (if any), shipyard facilities and layout, shipyard experience, production facilities, summary of engineering capabilities, summary of planning, capabilities, summary of scheduling capabilities, current workloads , health & safety records, quality assurance policy and procedure , arbitration or legal suits , cost overruns record, schedule delays details, statement of interest, references and other information


Tender Documents:
Upon satisfactory evaluation, shipyard will be invited to bid by submission of tender documents by a particular date, in the price and un-priced packages. This will include a Cover Letter, Form of Tender, Executive Summary, Bid Bond and Form of Performance Bond together with the following, duly completed tender forms.

Tender Forms:
Technical contractual and commercial qualifications, form of agreement, terms and conditions of contract, yard experiences, company profile, cash flow, cash flow schedule, audited financials, ISO certificates, joint venture, consortium, quality management manual, project quality plan, inspection and test plan, planning, resource forecasting, progress and productivity measurement, preliminary project master schedule, method statement, working method, subcontractors, local contents, health and safety record, HSE policy & management manual, project HSE management plan, HSE organization, program and manning, information related to the vessel and equipment, project organization, project organization chart, yard facilities, current workload, general information & facilities, curriculum vitae, QA and QC system, authorized approval and signatory, project reporting and meeting, cost control (change order), communication procedure, document control procedure, purchasing procedure, material Control and handling procedure, design and engineering procedure, preliminary project master schedule, planning and schedule control procedure and interface management plan.


Preliminary Estimate & Price Proposal:
Regardless of whether the price proposal is in response to a formal invitation to bid or a slightly informal request for quotation, the preliminary estimate will essentially be derive from the following: (an example in respect of an offshore supply vessel) - general expenses, hull, superstructure, outfitting, hull preparation, painting, piping system, propulsion and auxiliary systems, electrical and electronic systems, fire fighting and safety equipments, accommodation, carpentry, air-conditioning, navigation and communications systems, launching, certification and documentation fees, insurance (X %), designer’s fees (X %), marketing costs, refund guarantee, bonds, financing costs, commission, overheads and profit (X %)


[Some sore points or overlooked items in the preliminary estimate could be the price to be tagged on indemnity, special terms in insurances, impact of exchange rate on materials and equipments etc (unless adequately hedged), price fluctuation and unfavorable terms in equipment purchase contracts attracting costs impact over and above those originally contemplated] * Note that legal and related costs is omitted.

[Pre-Qualification, Tender Documents, Preliminary Estimates, Price Proposal, Shipbuilding Contract and Ship Financing]
David Seah@All rights reserved 2007