contractually, is it a good deed or a...

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Over the past 30 years, Fisher Maritime hashelped scores of clients deal with difficult con-tractual situations associated with shipyard proj-ects. Our clients have included ship owners,shipyards, major subcontractors, consultancies,government agencies, and navies. We have oftenobserved that, during contract performance,some of the problems that arose were triggeredby one of the parties doing a good deed for theother party. Unfortunately, we have observed,good intentions sometimes backfire. This doesn’tmean that good deeds should be avoided, onlythat the risks of them becoming misdeedsinstead of good deeds should be assessed beforeembarking on them. In the spirit of helping oth-ers learn from the unfortunate outcomes ofattempted good deeds, we offer the followingvignettes. The consistent theme that becomesobvious is this: Do not relieve the other con-tracting party of any of its contractual obliga-tions without first assessing all the risks andconsequences that may arise.

Use of Shipboard Equipment: A govern-ment agency’s vessel was undergoing repairs,including hot work in the machinery space. Theagency’s representative complained to the ship-yard that the space was not being adequatelyventilated, allowing too much smoke and fumesto impair work and inspections. The shipyardagreed to increase the ventilation as required bythe contract, but lacking sufficient equipment,sought to borrow the blowers from the vessel’sbosun’s locker. The agency allowed the blowersto be used, including the long spiral-woundhoses attached to them. On the second day ofuse of the blowers, the sparks from hot workignited one of those hoses, and the fire spread.The damage to the vessel and project delayswere significant. The agency tried to hold the

CONTRACTUALLY, IS IT A GOOD DEEDOR A MISDEED?“No good deedgoes unpunished.”

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The First 30 YearsIn 2006, Fisher Maritime Consulting

Group celebrated its 30th anniversary.

Over 500 assignments have beencompleted for: shipyards; ship owners;offshore operators; government agencies;major vendors; subcontractors; designconsultancies; port operators; insuranceinterests; attorneys. (See page 5 for moreexample descriptions.)

Over 300 seminars and training pro-grams have been presented worldwide:more than half were in-house presenta-tions; more than half outside the USA; in15 countries; in 78 cities; to representativeof more than 400 organizations; to morethan 4000 participants from 25 differentcountries. (See back page for informationregarding future programs.) s

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Upright & Afloat–Fall 2006 Fisher Maritime Consulting Group

shipyard responsible, since the fire was started by thecontractor’s hot work. But the shipyard consideredthe agency responsible, for not having alerted theshipyard to the fact that the hose was flammable,even though the agency knew the hose was going tobe used in the presence of hot work. The outcomewas to split the cost of repairing the damage, and theowner accepted the delay as force majeure. Next timethe agency should simply insist that the shipyardcomply with its contractual obligation to supply allthe equipment needed for proper accomplishment ofthe work.

Advance Material Purchases: As part of a 12-week vessel modification project, a shipyard wasobligated to obtain special materials for integrationinto a shipboard cargo-handling system. Althoughthe contract was executed about six weeks before therefit period was to commence, the contractor had notplaced an order for the materials by the time the ves-

sel arrived. The con-tractor reported tothe vessel owner thatit was having troublesecuring the materi-als, and requestedthe owner to obtainthem on the basisthat the owner’s staffwas more familiarwith the equipment.

The owner’s staff then ordered the materials, but thelengthy lead time for their arrival delayed completionof the refit. The delay would have been avoided ifmaterials had been ordered shortly after contract exe-cution. But in agreeing to relieve the contractor ofthe obligation to obtain the materials, the owner’sstaff neglected to address the schedule impacts,resulting in the owner being responsible for thedelay.

Adding insult to injury, the shipyard soughtadditional fees for maintaining the vessel at the ship-yard extra weeks while awaiting the owner-pur-chased materials. Next time the owner should moni-tor the shipyards’ pre-arrival purchasing effortswhenever long-lead time materials are an essentialpart of the contract workscope.

Place of Delivery: A vessel owner was obligatedto deliver to the shipyard’s warehouse an overhauledreplacement for a dredge’s combination pump/motor.The 18-ton replacement unit was located at theowner’s warehouse, on the other side of the riverfrom the shipyard. Shortly before the replacementunit was needed by the shipyard, the owner’s staffrequested the shipyard to send a truck across theriver to the owner’s warehouse to pick-up the unit.The shipyard complied. But during transit from theowner’s warehouse to the shipyard, a roadway acci-dent caused the truck to roll into a ditch, resulting indamage to the replacement unit. Project completionwas delayed more than a week while repairs weremade to the unit that had been on that truck. Theowner withheld liquidated damages. Next time,when asked to provide transportation for the owner’sequipment, the shipyard should politely decline, stat-ing that it looks forward to receiving the owner’sequipment at the shipyard’s warehouse, just as thecontract requires.

Shipyard, Not Storage Yard: A shipyard hadcontracted to convert a vessel into a floating restau-rant. Upon completion, the vessel would be perma-nently moored at a pier undergoing modification toreceive the new floating restaurant. The vessel con-version was completed prior to the pier being readyto receive the floating restaurant. The shipyard, tem-porarily having extra dock space available, agreed tokeep the vessel at its dock, for a daily fee, while thepier was completed. Several weeks later, the restau-rant vessel capsized at the shipyard’s dock due to theaccumulation of water in the bilges. This blocked theshipyard’s dock, impacting other projects, until sal-vage was completed. The restaurant owner, not beinga traditional shipowner, had not understood the needto continuously monitor the bilges. The shipyardconsidered its only obligation for the daily fee was toprovide the dock to temporarily secure the vessel,but not to provide any form of guard service.

Find out how this situation was resolved andwhat you as a prudent contract manager need to doto avoid getting your organization into similar diffi-culties by enrolling in a Fisher Maritime course incontract management. If you are already facing a dif-ficult situation in a contract you are managing,Fisher Maritime Consulting Group can help you toget your project back on track.

Contractually, A Good Deed or a Misdeed? from Page 1

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Contractually, A Good Deed or a Misdeed? from Page 2

Fixed Schedule, But No Fixed Workscope: Ashipyard, constructing a large public vessel, made acommitment to launch the vessel on a specific futuredate so that highly-placed public officials could bescheduled, far in advance, to participate in thelaunching, with TV and newspaper reporters presentin large numbers. Some time after making that com-mitment, but still long before launching, the publicagency requested numerous changes that had con-struction schedule impacts, but the launch date wasnot allowed to be altered. As the long-plannedlaunching date approached, the vessel was far fromready for exterior hull painting. But in order to keepto the schedule of the public officials, the shipyardcould quickly paint only one side of the vessel (sothe TV cameras would have a good view). Thismeant that the vessel had to be drydocked later tocomplete the hull painting, which drydocking hadnot been planned as part of the ship constructionprocess. The extra costs were borne by the shipyard.How could the shipyard have handled this situationso that it could have been fairly compensated for itsadded time and expense in accommodating thisagency’s demands for public ceremony?

Expanded Skills Mean Expanded Risks: Inthe course of planning the replacement of the entirepropulsion system in an older ferry, a shipyardretained a specialist subcontractor to perform therequired lead-paint abatement in the hull beforebringing in the new machinery. Just as the subcon-tractor was finishing its several-week assignment, thevessel owners decided that, in addition to the con-tractually required lead-paint abatement in themachinery spaces, the ferry’s entire deckhouseshould also be subjected to a lead-paint abatement.

The subcontractor was already committed toanother job elsewhere, and could not stay at theshipyard. Other specialist subcontractors were nottimely available, either. The shipyard agreed, underpressure from the vessel owner, to send some of itsown personnel for training to manage the abatementof toxic materials, and rented the special equipment,as well. Being the first lead-paint abatement job thatthe shipyard’s own personnel directed and accom-plished, it went far over budget and schedule.Moreover, it required the suspension and delay ofmuch of the work originally planned. Only afterlengthy litigation, did

the shipyard get some compensation for that extraeffort, but was never compensated for all of its directlitigation costs. How could the shipyard have avoid-ed this situation and the lengthy and costly litigationthat followed?

The shipyard only came to us for help only afterbecoming involved in litigation. Though FisherMaritime assisted in settling the matter, it wouldhave been beneficial and less costly if the shipyardhad contacted Fisher Maritime foradvice at the time that such sub-stantial changes to the contractwork were requested by the vesselowners.

Contractual Difficulties:Fisher Maritime hopes that yourorganization does not find itselffacing contractual difficulties sim-ilar to those described above. Wework with organizations to planand contract for major shipyardprojects so that the likelihood ofcontractual difficulties is minimized. If you are plan-ning a major project, please contact us to learn of thevariety of support services we provide to make yourentire contracting process and project managementrun smoothly. If you find yourself facing contractualdifficulties, utilizing our 30 years of experience in awide variety of contract-related support services, wecan help restore the project to a less-troubled status.Bon voyage! s

© 2006 Fisher Maritime Consulting Group

“Do not relievethe other

contractingparty of any of its

contractual obligations without

first assessing all therisks and

consequences…”


Consulting Group

FISHERMARITIME

Consulting Naval Architects and

Marine Engineers, Project Managers

Tug/Barge Casualties and Personal Injuries

In order to demonstrate Fisher Maritime’s considerable experience in analyz-ing the causes of casualties and personal injuries on tugs and barges, a sepa-rate website has been established. Over the past 30 years, Fisher Maritimehas become widely recognized for the quality and effectiveness of its expertreports in such matters. Following the submittal of our expert reports, anoverwhelming majority of cases have been settled in favor of our clients(both plaintiffs and defendants) prior to trial proceedings.

For more information, go to www.tugbargeexpert.com.

Mechanisms for Shipyard Project ManagementPublication now available

This is a 45-page booklet consisting of PowerPoint slides with extensiveaccompanying notes, derived from the presentation made at the 2006 ShipProduction Symposium. This presentation lays out the fundamental objec-tives of the management of shipyard projects and identifies the mechanismsthat are appropriate to achieving those objectives, for both the Owner aswell as the Contractor.

Copies of the booklet may be ordered from Fisher Maritime by faxing yourrequest, +1 973 660 1144 with credit card information (do not send creditcard info via email), or calling to +1 973 660 1116. We accept AMEX,MasterCard and Visa. $US 35.00 includes airmail postage and handling toUS addresses, $US 40.00 for Canadian addresses, and $45.00 for overseasaddresses.

An Owner’s Management of Ship Construction ContractsAvailable electronically

This paper describes the five phases of contract management from a shipowner’s perspective, and identifies 35 separate aspects that can be individu-ally managed, to ensure that overall project management is achieved by thatcollective effect. This structured approach to contract management allowsship owners’ staff to see problems as they are developing; not once it is toolate to correct them without some cost or schedule impact. It was presentedat a conference of the Royal Institution of Naval Architects.

This 21-page paper is available as a pdf file (320 kb), and can be sent as anemail attachment at no cost. Simply send an email request for the “Owner’sManagement” paper to Fisher Maritime’s Resource Coordinator, Ms. FrancesKeshka, at: [email protected].

NEW RESOURCES FROM FISHER MARITIME

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When do you need us?When you need help with…

DisputeResolution

800-732-3476 • 973-660-1116www.fishermaritime.com

It takes many forms, from project-phase analysis through litigation. In every situation, we provide accurate assessments and incontro-vertible analyses.Recent case: Disputes in pipe-laying barge-conversion project aboutwork scope, schedule, cost. Fisher Maritme provided on-site projectmanagement oversight, and follow-on expert analysis and supportbefore arbitrator.

We support our clients with construction and repair disputes in state,federal, civil and criminal courts, in every stage of litigation. We canalso help you avoid litigation.Recent case: Oil company shipowner in $300 million-plus dispute overconversion of offshore vessels. Fisher Maritime analyzed underbid,currency fluctuation, changes, delay and disruption. Result: completecourt award for our client.

Fisher Maritime writes contracts, specifications, and complete bidpackages for new construction, conversion, overhaul or repair. Wealso review and revise draft contracts and specs.Recent contract work included new construction on: • Class of 400' ferries • Class of 220' offshore supply vessels• Class of anchor handling tugs • Class of well test vessels

Fisher Maritime consultants are grounded in commercial fleet con-struction and repair, as well as naval repair and overhaul. FisherMaritime provides on-deck project management services for shipyardconstruction and conversion projects.Recent project: Dispute over $30 million dollar vessel conversion. Fisher Maritimetook over on-site project management, including the removal of theunfinished vessel to another facility where work was completed.

ProjectManagement

Contracts

LitigationSupport

For 30 years, Fisher Maritime Consulting Group has beenresolving technical, cost, and schedule issues in shipbuild-ing and repair contract disputes. Our clients come fromevery sector of the industry: shipyards, shipowners, third-party vendors, government agencies and private concerns.Because we’re experienced naval architects, marine engi-

neers and project managers, we bring strength and clarityof insight to our clients. Our overriding goal? A well-developed suite of contract documents, structuredmanagement controls for complex projects, rapidresolution of developing conflicts and disputes, andprojects completed with minimal growth.

Consulting Group

FISHERMARITIME

Consulting Naval Architects and


FISHER MARITIME has been offer-ing these popular training pro-grams since 1988, both of whichare scheduled for open-registra-tion in 2007 on the dates and loca-tions shown below. Outlines of the

programs can be viewed on our website www.fishermar-itime.com or you may call to request a detailed brochure viafax or mail.

Each of the programs can be presented on-site at your orga-nization’s facility for seven or more persons at less cost thansending your staff to an open-registration presentation.Over 95 organizations in fourteen countries have had theseprograms presented on an in-house basis over the past 15years. To receive details for arranging an on-site presentationof any of the programs listed below, contact us: tel. 800-732-3476 or 973-660-1116, fax 973-660-1144, email: [email protected].

2007 Training Programs125 In-House Presentations & 115 Open Registration Programs Already Completed

C&CM: Contract and Change Management for ShipConstruction, Repair and Design. This 3-day course is designedfor all members of the contract management team for shipowners, shipyards, design firms, vendors, subcontractors, regu-latory agencies, whether commercial or government. Seniorand middle management of all those types of organizationsbenefit from the “lessons learned” approach to managing allcontractual commitments.

2007Seattle, WA Tues. - Thur. Mar. 13-15London, U.K. Wed. - Fri. Apr. 11-13Milwaukee, WI Tues. - Thur. May 8-10Halifax, Canada Wed. - Fri. Sept. 5-7London, U.K. Wed. - Fri. Oct. 3-5Scottsdale, AZ Wed. - Fri. Nov. 7-9

TPEC: The Port Engineer’s and Owner’s Representative’sCourse. This 3-day course is designed for shipowner’s per-sonnel who prepare specifications, who accompany the shipto the shipyard, and who arrange for new/growth/changework during contract performance. This course helps assuregetting maximum value for money spent.

2007Atlantic City, NJ Tues.-Thur. Jun. 12-14Pensacola, FL Tues.-Thur. Dec. 11-13

SMCC: Shipyard Management of the Customer andContract. This 2-day course for project managers, produc-tion supervisors, estimators and planners is the only trainingprogram specifically developed for mid-level managers ofshipyards and subcontractors. Presented in-house only.Contact Fisher Maritime for details.

Consulting Group

FISHERMARITIMEConsulting Naval Architects and


147Columbia Tpke. #203,Florham Park, NJ 07932 • 800 SEA-FIRM • 973 660-1116 • Fax:973

147 Columbia Turnpike,Suite 203Florham Park,New Jersey 07932 U.S.A.

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What’sInside?upright &afloat

anewsletter forthe Martime Industry

Fall, 2006

Contractually,aGoodDeed or a Misdeed?

“No Good DeedGoes Unpunished”

New Resourcesfrom Fisher Maritime

2007 Training Programs

contractually, is it a good deed or a...

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