Fisher Maritime's Fairleads

'Lessons Learned' Strategies & Ideas for the Marine Industry


LESSON LEARNED #36: Two Owners Means Two Different Vessels

Lesson Learned

A shipyard, constructing an excursion vessel for an owner, was approached by a second owner that wished to contract for a second of the same vessel. Using the same contract drawings and specifications, the shipyard priced the second vessel assuming the benefit of a production learning curve and that nearly all the engineering for the first vessel would be directly applicable to the second vessel. This proved to be an erroneous and costly assumption. In the process of reviewing the construction details and testing/trials agendas, none of which were contractually defined with specificity, the second owner’s representatives were far more demanding than those of the first owner. These greater demands resulted in significant rework, excess engineering hours and more extensive tests and trials.

Lesson learned: even if the same drawings and specifications are being used for two or more vessels, the shipyard should consider each vessel to be the first of a series when it is being constructed for a different owner.

 


Conflicting Categories of Drawings in Contracts

Contracts for ship construction or conversion typically contain a series of “Contract Plans” or “Contract Drawings” that are listed and identified as essential elements of the contract.  However, often there is a second list of drawings categorized as ‘Contract Guidance Plans,’ ‘Guidance Plans,’ ‘Reference Plans,’ ‘Information Plans’ or some comparable categorization. Unless the intended use and purpose of the second list is clarified, the identification of two sets of plans or drawings within the contract is a starting point for significant problems. Let’s look at the fundamentals of this situation.

Multiple Plans Indicates Different Rights, Responsibilities, and Obligations

If the rights and obligations of both parties were the same for both lists, they would have been consolidated into a single list of Contract Plans. The presence of two lists of plans in the contract signifies that the contracting parties have different rights, responsibilities and obligations for each list. The problems associated with that second list of plans usually start to develop because the contractor (shipyard) has a different interpretation of those rights and responsibilities for the second list than does the purchaser (ship owner). The contractor cannot know what was in the mind of the owner’s technical team when it developed and/or provided the second list of plans unless the intended use of those plans — and how that is different from use of the Contract Plans — has been communicated in the contract documents.

Upon assisting in the resolution of numerous problems arising from the inclusion of two lists of plans within the contract, many different intended uses—or limitations on their use—have been realized. Unfortunately, in many instances this has occurred only after disputes had arisen. There are many possible interpretations of the intended use of such second categories of ‘guidance’, reference’ or ‘information’ plans that are listed in the contract documents.  The wide variation of possible intended uses of that category of plans raises questions that should have been explicitly addressed during contract formation.

  1. Is the Contractor is expected to achieve full compliance with the Guidance Plans unless there is an interference between a component shown on the Contract Plans and one shown on the second category plans?
  2. Can the Contractor rely on the accuracy and/or completeness of those second-category plans and use them without alteration for the construction or conversion?
  3. Can the Contractor rely on those second category plans being entirely consistent with the Contract Plans and Contract Specifications?
  4. If used for a ship conversion or repair, can the Contractor rely on those second category plans being consistent with the actual arrangement and condition of the vessel?
  5. Does the Contractor have to receive permission from the Owner to vary from the second category plans?…and if so, is a formal Change Order necessary?
  6. If it is necessary to vary from the second category plans in order to remain consistent with the Contract Plans and Contract Specifications, which party has responsibility to analyze, understand and take responsibility for the operational consequences of the necessary variations?

Those are some, but not all of the possible interpretations of the intended use of second category plans that are listed in the contract documents. The wide variation of the intended use of second category plans raises questions that need to be addressed when the intended use is not explicitly stated. These problems are generally avoidable if the contract documents describe, in plain and simple words, how the Contractor is to use the plans in that second list, and how that usage is different from the use of the Contract Plans.