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'Lessons Learned' Strategies & Ideas for the Marine Industry

Emergency Response — Restoring Contractual Relationships

A client ship owner was facing a small number of very large value change orders that appeared to be outrageously priced by the shipyard. Specifically, within the first two months during a major offshore conversion, two change orders totaling over $4.2 million (about 20% of the initial contract price) were presented to the ship owner on a take-it or leave-it basis. Needless to say, the ship owner was extremely annoyed with the shipyard’s change order pricing. Similarly, the shipyard was upset with the owner for questioning the price and administration of its change orders.

The on-site relationship between the shipyard and ship owner quickly deteriorated on all matters, including the change order process. Fisher Maritime was selected by the ship owner to stabilize the contractual relationship before further deterioration, and to then correct the misunderstandings that led to the nearly-irreconcilable situation. Working out of the ship owner’s on-site office, Fisher Maritime’s personnel brought a cool, professional approach to all the issues that were bringing the contractual relationship to the boiling point.

Within the next several weeks, Fisher Maritime analyzed and exposed the shipyard’s erroneous pricing assumptions, leaving the shipyard no choice but to reduce the price on those two change orders to $44,000 (one percent of their original value). The continuous back-and-forth process of discussing the factual and contractual information relevant to those two changes helped restore a working relationship between the ship owner and shipyard. Fisher Maritime accomplished its task of restoring order by a cold, hard analysis of the facts as opposed to making self-serving, one-sided arguments for the sake of posturing.

Fisher Maritime routinely provides analyses of change order pricing issues. These analyses focus on contractual and technical facts rather than emotional and argumentative issues. Fisher Maritime’s staff is comprised of professionals able to bring a quiet certainty to otherwise emotionally-charged project disputes. They have the requisite technical background and project management experience needed to stabilize the contractual relationships and rapidly defuse the most serious disagreements.

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