Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr
Issue link: https://emj.epubxp.com/i/652911
MARCH 2016 • E&MJ; 69 www.e-mj.com O P E R AT I N G S T R AT E G I E S Tips for remedial action in these in- stances include: Contractually agreeing on a condi- tional effective date—The effective date of the contract should be linked to the contractor issuing a down payment bond to the employer in the amount of the contractually agreed down payment and receiving from the employer, against the submission of a down payment invoice, the down payment in the agreed amount. Only when both of these conditions have been completely fulfilled by the parties does the contract become effective. Both parties have thus obtained more security with regard to the future of the joint project. In addition, it should be agreed in the contract that the down payment bond will be promptly returned to the contractor by the employer as soon the contractor has provided appro- priate proof to the employer that it has rendered performances to it in the amount of the down payment amount. If the employer does not return the down payment bond to the contractor without a valid reason, it will be obliged to com- pensate the contractor for the addition- ally incurred guarantee fees. Agreement on relative performance deadlines—Absolute performance dead- lines should be avoided as much as pos- sible in the formulation of the contract. With regard to the completion dates, delivery dates, engineering deadlines etc., periods in calendar days relating exclusively to the conditional effective date of the contract should always be defined. This ensures that a company is entitled to the period for performance that it calculated as being necessary at the planning stage during the preparation of the offer. For the example presented above, the time of successful provisional acceptance of the installations would be defined as "910 calendar days after the effective date of the contract." There are additional measures that should be considered, including: • Unambiguously define contractual units of time: Apart from money, time is the most important asset in the pro- ject, so in the preamble of the contract define the units of time to be applied in the project. Agree on calendar days. Contractually establish the time when a calendar day starts and finishes, as well as the time zone, which is to apply for the performances to be rendered by the contractor on that calendar day. This will help to avoid disputes if things "get tight" in the project. Do not use "weeks" as the unit of time to avoid getting into a dispute as to when a week begins. Internationally, the unit of time known as "a week" can start and end on many different days. • Define public holidays or special local circumstances: Contractually agree which calendar days are not business days at which place of performance; for example, due to religious or national holidays. These days should, depend- ing on the place of performance, be defined in the contract as "non-busi- ness days" and the construction period measured accordingly. This contractual measure also helps to avoid disputes and ensure clarity in the measurement of the contracted performances. "Absolute performance dead- lines should be avoided as much as possible in the for- mulation of the contract."