09 Nov Opportunities Abound – but how should you prepare? By Alyson Eather and Chloe Donjerkovich, DLA Piper
It’s no secret that there is currently an abundance of new infrastructure opportunities developing in Australia. These include waste to energy projects, renewables projects and enhancements to existing water and transport infrastructure.
The search for alternative energy sources is increasing as is the number of proposed projects with more than 30 proposed waste to energy projects around Australia. These include the most recent Kwinana WTE (in what will be Australia’s first thermal waste-to-energy facility) and East Rockingham waste to energy projects in Western Australia, the Swanbank waste to energy project in Queensland and the Maryvale waste to energy project in Victoria, with industry forecasters highlighting the potential for waste to energy projects to supplement solar and wind production from renewables projects.
Considerable focus is often given to the procurement phases of these new projects but often little attention is given to criticality of the transition phase from procurement to contract delivery. Careful planning and a conscious transition between one phase to the next can make a difference to the success of projects for Korean contractors in Australia in this phase of opportunity.
The negotiation phase is primarily about risk allocation. Project execution is primarily about delivering the project within the agreed risk allocation framework.
That requires an understanding of the:
- scope (in and out of scope);
- pricing and payment;
- risk allocation;
- processes including extensions of time and variations;
- breach and termination triggers; and
- requirements for subcontracts.
Having the right tools to manage the execution of the project within the agreed risk allocation are critical and can be developed during this transition phase.
Flow charts…..are useful tools to ensure key processes are understood and followed such as:
- extensions of time;
- delay costs;
- practical completion; and
- dispute resolution.
Risk Allocation Matrices…..are a useful tool to quickly understand key risk allocation positions and claims potential.
Pro-Forma Notices…..assist with contract management by ensuring that claims are not denied because of form non-compliance.
Document Management and Record Keeping Systems…..are essential to making contracts easier to administer, claims easier to quantify, preventing information silos and in mitigating risk. Actions include:
- establishing systems that manage documents and monitor compliance;
- ensuring meeting minutes are recorded contemporaneously and signed;
- maintaining an events and claims log; and
- being deliberate about email and SMS communication. These could potentially be discovered in the event of a dispute.
Integration of technical, commercial and legal teams…..is critical during project execution. This assists with:
- early claims identification;
- information compilation to support communication; and
- early legal advice to ensure claims are made in accordance with the contract and law.
Choose the relationship and the contract…..decisions should seek to retain (or even improve) that relationship whilst having regard to the legal position.
People are the key…..upfront training of teams about the contract including risk allocation, key processes and use of systems will make the transition from contract negotiation to project execution more successful.
Alyson Eather, Partner, DLA Piper
Chloe Donjerkovich, Senior Associate, DLA Piper