This article appears in our Energy Playbook 2022 Year in Review. Download the free ebook.
Your company has committed to an exciting project to install green energy! You will supercharge your public image, become net zero by 2050 and blow past your internal ESG targets. How will you make the leap from great expectations to a successful project?
This is no longer a debate about the Paris Climate Accords, you are now ears-deep in an infrastructure project. There’s no need to panic. The smart move is to engage a strategic partner who can assist you at every stage of the project, working under the direction of your project management team.
A successful project looks like this:
- Well planned, well designed, well built
- Completed on time and on budget
- Disputes with contractors, suppliers and consultants prevented or resolved early
- An accident-free construction site
- Risks managed effectively from day one
However, a successful infrastructure and energy project does not happen by accident. It is the product of early identification and management of risk as part of an overall project strategy for procurement and contracts that should stretch from first concept drawing to close-out of the warranty period.
Below is a brief checklist of items to consider with the help of your legal team/strategic partner.
Pre-project preparation and support
Hiring Consultants
- Evaluating the commercial issues and risks when engaging project managers and design consultants
- Developing effective requests for proposals
- Preparing and negotiating well-designed consultant contracts
Evaluating Project Delivery Strategies
- Selecting and adapting the best model for your project that will appropriately balance cost, schedule and performance risks, while ensuring that the chosen project delivery model balances funding and operational considerations
Managing Procurement
- Selecting and developing a procurement strategy that aligns with the project delivery schedule
- Designing and implementing effective procurement processes
- Structuring effective submission requirements and evaluation criteria aligned with your project and contract needs
- Advising you on unexpected procurement issues
Evaluating and Developing Project Construction Contracts
- Assessing contract options and customizing the contract to fit your project
- Creating options for assigning and managing project risks and developing contracts that match the project risk allocation
- Explaining complex clauses and solving troublesome negotiating positions
- Negotiating your construction contracts
- Ensuring all your contracts with contractors, consultants and suppliers are co-ordinated and aligned
Intellectual Property
- Securing the necessary IP rights to use your project designs and drawings throughout your project’s lifecycle
- Advising on licensing and contract issues when using building information modelling (BIM) for your project
Implementing Effective Project Bonding and Performance Security
- Implementing appropriate levels of performance security through bonds and/or letters of credit, to ensure that contractor and supplier insolvency and non-performance risks are mitigated
Choosing the Right Project Insurance Approach
We recommend selecting your insurance strategy early, ideally during the pre-project phase.
- Evaluating insurance programs for your project, including owner procured and contractor procured models, in collaboration with your insurance advisers
- Ensuring your chosen insurance program is properly integrated into all contracts falling under the project insurance program
- Evaluating and negotiating insurance policy terms, as needed
Ensuring Occupational Health & Safety and Prime Contractor Compliance
- Ensuring contracts appropriately assign and allocate health and safety responsibilities for the project
- Identify and plan for how the owner’s health and safety responsibilities and obligations will be met
- Identifying what is required by law to avoid personal liability for your senior leadership and board of directors
Immigration
- Ensuring non-resident personnel needed to perform the project are legally allowed to be in the country working on your project, including early identification and resolution of potential immigration-based delay
Managing Procurement
- Designing and implementing effective procurement processes
- Structuring effective submission requirements and evaluation criteria aligned with your project and contract needs
- Advising you on unexpected procurement issues
Regulatory Compliance and Indigenous Engagement
- Zoning and environmental compliance requirements
- Duty to consult and consultation process, including pre-consultation assessments and establishing a consultation plan
- Project compliance with existing greenhouse gas emission reduction strategies, climate change policies and sustainability targets
Construction/project execution phase
Once the project is underway, your legal team/strategic partner can add value by ensuring the carefully crafted procurement and contracting strategy is executed. With early involvement, the team can respond quickly and with the knowledge of the project background, to avoid implementation risk.
Occupational Health and Safety
- Advising on health and safety matters and on adequacy of contractor’s “prime contractor safety plan.”
- Assisting you during the OHS investigation if an accident occurs at the project site.
Supporting Your Project Leadership Team
- Educating your project team on your contracts to ensure your rights and obligations are understood clearly.
- Participating in internal project meetings and assessing developments against your contracts to help you manage risk.
- Advising on material project issues as they arise, including contractor performance issues or major contract renegotiations.
Supporting Your Contract Administration Team
- Monitoring for and responding to potential contractor claims for additional compensation and time extensions.
- Assisting to formulate and draft owner-driven changes, claims and notices, including for default.
- Assisting with notices and claims on project bonding and performance security.
- Providing real-time advice on claims before and as they arise in order to establish consistent communications and decisions to avoid undermining your contract rights.
- Reviewing project meeting minutes for early warning of contractor claims.
Information Preservation and Management
- Establishing an effective document management system that will reduce your costs in case of litigation.
- Advising on how to create and manage legally-sensitive documents and reports.
- Capturing evidence in order to ensure institutional memory following project wrap-up in the event of a dispute.
Initiating or Responding to Disputes and Claims
- Implementing an overarching claims strategy in accordance with your contracts.
- Addressing contract interpretation and project disputes as they arise.
- Effectively handling builders’ liens and statutory holdbacks.
- Representing you in mid-project or post-project mediation, arbitration or litigation.
- Considering the need for and securing expert evidence.
Post-construction phase
Post-construction should be a time to reap the benefits of your successful project. Should you be drawn into any claims post-construction or discover warranty issues, your well-planned contracts will give you the best chance to prevail in the claim process. Your legal team is already up-to-speed on your project, and they will be ready to support you directly during this phase.
We can help. Our experienced infrastructure lawyers are your strategic partners through all phases of your project to help you succeed.
The Energy Playbook highlights key developments in Western Canada and discusses some of the risks and opportunities for the energy sector. Download the e-book now.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.