Commissioning and operational issues in waste projects can cause significant issues in achieving certification and generating anticipated revenues. This article addresses the most common issues.
Buried away in the technical schedules is arguably one of the most important documents – the commissioning plan (or the testing regime), a document which quite often causes difficulties for contractors and employers alike.
It is essential that the commissioning plan is consistent with the contract terms to avoid any ambiguity. This document typically sets the performance criteria and the methodology for demonstrating that such criteria is met. It therefore needs to comprehensively address the various issues that may arise in a complex process plant.
The most common issue we see relates to waste composition issues affecting, or in some cases preventing, commissioning. Thought needs to be given to how varying waste composition will be dealt with under the contract to ensure that the process is workable. Otherwise the parties could be left in stalemate and certification of the project will undoubtedly be delayed affecting revenue.
Parties need to understand how the testing mechanisms operate, the interaction with compensation/relief events and the allocation of risk under the contract so they can properly assess their exposure if the commissioning process becomes protracted.
Where potential claims arise, it is important to understand what has caused the issue and who may be liable. Claims can be extremely complex even where made for relatively small sums. A blurring of the lines of responsibility is not uncommon and the cause of a defect or breach may be hard to identify without the use of experts and professional advisers.
The importance of knowing and working in accordance with your contracts cannot be underestimated. Records are key, together with a clear understanding of the process and the impact of third party activities (such as poor operation, failure to maintain the plant in accordance with the operating and maintenance manuals, the delivery of out of specification waste not meeting the waste specification or the impact of optimisation strategies).
The burden of proving that a defect exists rests with the party alleging it and, just because a part of the process or a piece of plant is not operating at its optimum level does not necessarily mean that there is a defect in the works. There are various reasons that could lead to a drop in performance and when assessing defects claims it is important to consider such issues.
Troubleshooting/resolution without proceedings
Waste processing and fuelled renewables projects frequently involve complex processing plant. We have recently helped a number of clients resolve disputes with project counterparties without recourse to formal proceedings. This has the benefit of avoiding costs, preserving the commercial relationship and generally achieving the objectives of the parties in a more timely fashion.
The targeted use of deeds of variation and settlement agreements can be used effectively to resolve issues arising on a project and ensure progress is maintained. We have also adopted this approach where the parties decided to terminate the contract and end their relationship, rather than going through the termination process under the contract which could itself have given rise to even further disputes.
The message is that innovative and proportionate solutions are available when considering the issues that may arise on your project. The dispute resolution procedure is clearly very important but there are other ways to troubleshoot the issues that arise on complex waste projects which can be in the best interest of both parties.