A presentation (webinar) based on 5 steps to creating effective contracts: 1. Decide a contract is important 2. Avoid contract myths 3. Review STAR content 4. Delete jargon 5. Keep it simple The sample contracts were provided by a client working on international process plant projects as a consultant but have been anonymised. For more information or to learn how to create your own STAR review, see Sarah's blog at www.500words.co.uk/blog

1. Creating
effective
contracts &
using them
(cc) Flickr/Daniel Gies

2. Creating effective contracts
Session 1
Decide contracts are critical
Avoid contract myths
Review STAR content
Delete jargon
Keep it simple

3. Contracts are critical

4. A verbal contract
isn’t worth the
paper it’s written
on

5. Functions of contracts
Legal safeguard and enforcement
Managing change, risk, project
Encourage collaborative behaviours
Protect & share information & ideas
Prevent problems & resolve conflict

6. © The Trustees of the British Museum
Avoid contract myths

7. © Mark Holdgate. Used with permission

9. Review STAR content (cc) FreeImagesLive Christmas Hat

10. Will it meet the technical scope?

11. Can you trust the client?

12. What if the project misses its aim?

13. What risks do you need to manage?

14. Sample STAR reviews

15. Red Book
Scope: Specification
Trust: “parties shall co-operate” and “deal
fairly openly & in good faith”; limits
Aims
Time = by time for completion (liquidated
damages)
Quality = fit for purpose (tests & remedies)
Cost = contract price + variations
Risks: insurance, risk events

16. Silver Book
Scope: Services, IPR
Trust: “parties shall co-operate” and “deal
fairly openly & in good faith”; limits
Aims:
Time = Key Dates
Quality = reasonable skill & care; defects (!)
Other = Deliverables
Risks: insurance, indemnity

17. Sample Contract 1
Scope: IPR
Trust: claims period 5 days; confidentiality;
termination w/out cause
Aims:
Time = comply strictly with scheduling &
coordination
Risks: wide one-sided indemnities

18. Sample Contract 2
Scope: ‘highest standards of care’, warranties
Trust: mutual limits and exclusions; limit of
50% of contract price
Aims:
Time = works to meet time schedule; unrealistic
time notices; delay damages
Risks: wide uncapped indemnities

19. Sample Contract 3
Scope: not infringe IPR; assign IPR
Trust: indemnity subject to limit; cap on
liability; cancellation without compensation
Aims:
Time/Cost = work to schedule & budget
Quality = warranty of fitness for purpose
Risks: obtain adequate insurance

20. Why delete? Major cause of disputes
2016 Cause
1 Failure to properly administer the contract
2 Poorly drafted or incomplete & unsubstantiated
claims
3 Employer/contractor/subcontractor failing to
understand and/or comply with its contractual
obligations
4 Errors and/or omissions in contract documents
5 Incomplete design/works information (D&B)
Delete jargon

21. Jargon in Contracts
Showstoppers
• Jargon you don’t understand
• Procedures you cannot comply with
• You can agree by silence + conduct
• Alternatives
– Ask ‘what does it do?’
– If you don’t like it, say so!

22. The creation and negotiation of many building contracts is
based on the premise that the other party is the opposition
and cannot be trusted…
David Mosey

23. Jargon in Contracts
Showstoppers
• Non-waiver
• Severability
• Liens/title
• Compliance with regulations
• Condition precedent

24. Keep it simple