Fisher Maritime's Fairleads

'Lessons Learned' Strategies & Ideas for the Marine Industry

Contractually, is it a Good Deed or a Misdeed? (Part 2 of 2)

If you haven’t done so, be sure to check out Part 1 of this article.  Here are some more examples and lessons learned in regards to good deeds turning out to be contractual misdeeds:

Shipyard, not Storage Yard

A shipyard had contracted to convert a vessel into a floating restaurant. Upon completion, the vessel would be permanently moored at a pier undergoing modification to receive the new floating restaurant. The vessel conversion was completed prior to the pier being ready to receive the floating restaurant. The shipyard, temporarily having extra dock space available, agreed to keep the vessel at its dock, for a daily fee, while the pier was completed.

Several weeks later, the restaurant vessel capsized at the shipyard’s dock due to the accumulation of water in the bilges. This blocked the shipyard’s dock, impacting other projects, until salvage was completed. The restaurant owner, not being a traditional ship owner, had not understood the need to continuously monitor the bilges. The shipyard considered its only obligation for the daily fee was to provide the dock to temporarily secure the vessel, but not to provide any form of guard service. The fundamental cause of this incident was that the shipyard offered to provide a service (keeping an idle, unmanned vessel at its dock) that it doesn’t normally provide, without defining to the owner the limited scope of services it would provide at that time.

Fixed Schedule, but No Fixed Workscope

A shipyard, constructing a large public vessel, made a commitment to launch the vessel on a specific future date so that highly-placed public officials could be scheduled, far in advance, to participate in the launching, with TV and newspaper reporters present in large numbers. Some time after making that commitment, but still long before launching, the public agency requested numerous changes that had construction schedule impacts, but the launch date was not allowed to be altered.

As the long-planned launching date approached, the vessel was far from ready for exterior hull painting. But in order to keep to the schedule of the public officials, the shipyard could quickly paint only one side of the vessel (so the TV cameras would have a good view). This meant that the vessel had to be drydocked later to complete the hull painting, which drydocking had not been planned as part of the ship construction process. The extra costs were borne by the shipyard. Thus, the shipyard paid for doing the good deed of accepting changes without altering the launching date.

Expanded Skills means Expanded Risks

In the course of planning the replacement of the entire propulsion system in an older ferry, a shipyard retained a specialist subcontractor to perform the required lead-paint abatement in the hull before bringing in the new machinery.

Just as the subcontractor was finishing its several- week assignment, the vessel owners decided that, in addition to the contractually required lead-paint abatement in the machinery spaces, the ferry’s entire deckhouse should also be subjected to a lead-paint abatement. The subcontractor was already committed to another job elsewhere, and could not stay at the shipyard. Other specialist subcontractors were not timely available, either.

The shipyard agreed, under pressure from the vessel owner, to send some of its own personnel for training to manage the abatement of toxic materials, and rented the special equipment, as well. Being the first lead-paint abatement job that the shipyard’s own personnel directed and accomplished, it went far over budget and schedule. Moreover, it required the suspension and delay of much of the work originally planned.

Only after lengthy litigation, did the shipyard get some compensation for that extra effort, but was never compensated for all of its direct litigation costs. Though Fisher Maritime assisted in settling the matter, it would have been beneficial and less costly if the shipyard had contacted Fisher Maritime for advice at the time that such substantial changes to the contract work were requested by the vessel owners.

Contractual Difficulties

Fisher Maritime hopes that your organization does not find itself facing contractual difficulties similar to those described above. We work with organizations to plan and contract for major shipyard projects so that the likelihood of contractual difficulties is minimized.

If you are planning a major project, please contact us to learn of the variety of support services we provide to make your entire contracting process and project management run smoothly. If you find yourself facing contractual difficulties, utilizing our many years of experience in a wide variety of contract-related support services, we can help restore the project to a less-troubled status.

Comments are closed.