Applicability of contractual specification

[rotw]

Hello,

I would like to ask some guidance on the following:

- I am specifying the technical requirement of a machine according to international standards and codes (e.g API, ASMI) with the amendements to theses codes and standards as given in the contract specifications (prime contract with client).

- I do not re call /refer to a certain international code, lets call it "code XXX", as a technical requirement.
The machine vendor however requires, as part of his standard and his good eng. practices, to follow and execute according to code XXX.

- In the contractual specifications, if the code XXX was to apply as a technical requirement (which is not the case), then it should be amended by specific contractual specification relative to code XXX.

Now the question: being the application of code XXX not a technical requirement of the specifyer but instead a requirement by Vendor - which I am willing to accept, can I ignore the contractual amendment to code XXX on this ground?

Is this defendable in front of an authority or in front of the Client ?

Thanks

"If you want to acquire a knowledge or skill, read a book and practice the skill".

 

[zdas04]

As you obviously know, some codes and standards have regulatory standing in certain jurisdictions. For example in many states and countries failure to comply with the BPVC or API 521 is a violation of law and a contract which requires violating those codes would be invalid. The bulk of the codes and standards are seen by the courts as minimum engineering requirements. In other words if you fail to comply with API 619/ISO 10440-1:2007 in the design of Rotary PD Compressor in Oil & Gas then if anything ever goes seriously wrong the packager may be found to be negligent (or even grossly negligent) and their position in court becomes very weak. If your contract is silent on that code you are probably OK, but the packager is not. If you explicitly require the packager to ignore portions of the code, then you are assuming at least part of the liability.

In your case as long as your technical amendments are adding to the code (e.g., the code says you must do x or y and you require x and y then your approach is perfectly reasonable. My approach has been "Fabricate in accordance with applicable international standards with the additions to the standards described in Appendix 1 thru 7". That way if there is a standard that I simply want them to comply with (like API 521) I don't have to call it out and I don't need an appendix describing exceptions to the code that I have no issues with.

I'm not sure what the phrase "can I ignore the contractual amendment ..." means. If I haven't answered your question please clarify that phrase.

David Simpson, PE
MuleShoe Engineering

In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist

 

[rotw]

Zdas, thanks for your reaction which I think answers my question.
I just want to reconfirm so let me please re formulate a bit the query by making it more specific with an example.

We are the specifier. As part of the technical requirement of the machine we specify, we do NOT require NACE to apply (Sour service material selection, etc). Point is that, as per contract with our Client, when NACE is to apply, we need to include it as part of the technical requirement together with an admendment to it. This amendment is given in the bunch of contractual specifications of prime contract. So by now we dont include it.

The machine vendor requires however to use NACE. This is based on his standard / design practice ; As specifiyer we are willing to accept it.

But since NACE is required by Vendor, the thinking is - from a specifier view point - : contract amendment to NACE is not required to apply.
In other words, the particular specification amending NACE will not be listed as an applicable document for machine vendor. (This is BTW what I tried to mean in original post by "ignored").

I understand from your answer that this approach is reasonnable ? am I correct ?

"If you want to acquire a knowledge or skill, read a book and practice the skill".

 

[zdas04]

For virtually any standard except maybe some of the specific offshore standards and NACE, the added cost of compliance is minimal over what I would call "good engineering practice". NACE and the offshore stuff can add significant costs to the skid without adding commensurate value for an onshore, sweet gas project. I had a client insist on NACE for a project a couple of months ago and it added 12% to the vessel cost (mostly in valve cost). 12% is too much money to to not include the reason why in some document. On the other hand, if the bid the vendor gave you included NACE compliance and the bid was acceptable, then that shouldn't be an issue for capital costs. Repair parts will be more expensive so you are going to take an ongoing hit in OpEx. If that is acceptable and you aren't concerned about putting stainless steel in valves then staying silent on the vendor's requirement is reasonable. I've had issues with NACE trimmed valves failing to seal, but that was in pretty nasty service.

David Simpson, PE
MuleShoe Engineering

In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist

 

[rotw]

zdas,

Actually it appeared that when NACE is included, its impact in terms of capital costs was not that big. Maybe about Opex it could be a different story indeed. In other words going for NACE in my specific case did not appear to be gold plating. So NACE was included by vendor and the bid was found acceptable.
I was worried about the conformity with prime contract (due to presence of amendment), but the issue now is a little bit more clear to me in the sense that scope wise, the machine will be to NACE, still I would not even mention NACE in the technical requirement ; I'll just stay silent and let Vendor do what he has to do (which should be however somehow pre-agreed but the technical requirement will not be the vehicle for this purpose - I am still thinking how...).

Hope this makes sense to you.

"If you want to acquire a knowledge or skill, read a book and practice the skill".