Simon Olimi Kabuzi finds contractual bliss in the land of the rising sun!
For eight years I worked for a UK-based international process engineering and contracting company of repute. In my travels I came across many horrendous forms of contract but I recall one that I thought was first class.

The ENAA
The Engineering Advancement Association of Japan (ENAA) was formed in 1978 with the objective of "contributing towards the sound development of Japan’s engineering industry by establishing engineering, scientific and technological systems which are adaptable to constant social and economic change."

ENAA has a membership of more than 200 companies which are leaders in the engineering, shipbuilding, steel, equipment and civil and building construction fields.

The first step made by the Contract Standardisation Committee in 1981 and 1982, was the preparation of a model form of contract, to be entered into between an Owner and a Contractor, for the engineering and construction of process plants on a single responsibility lump sum basis.

Process plants come in a very wide variety of forms and each Owner and indeed, funder, has traditional or particular methods of procurement. The Model Form is a very good endeavour and is fairly all-embracing, without compromising the clarity of its objectives. In the preface to the first edition published in 1986, ENAA stated that it believed that "the Model Form represents a fair and reasonable balance of interests between Owner and Contractor and will be of use to all Owners and Contractors intending to enter into turnkey lump sum construction contracts for process plants," such as fertiliser, oil refinery, gas processing, petrochemical, cement and other plants.

The Present Family of the ENAA Model Forms of Contract
There are three members in this family.

o 1992 Edition for Process Plant Construction
Volume 1 Agreement and General Conditions (with process license)
Volume 2 Samples of Appendices
Volume 3 Guide Notes
Volume 4 Work Procedures

o 1992 Edition Alternative Form of Industrial Plant
Volume 5 Agreement and General Conditions (without Process License). Volumes 2, 3 and 4 would also apply here.

o 1996 Edition for Power Plant Construction
Volume 1 Agreement and General Conditions
Volume 2 Samples of Appendices
Volume 3 Guide Notes
 
The ENAA Model Form of Contract for Process Plant Construction.
This form of contract has five constituents:-

• The Agreement, with specific provisions for the project.
• The Appendices, with technical and specific provisions for the project.
• The Special Conditions, again project specific and if required.
• The General Conditions; these are applicable to any project. They have two schedules appended to them. Schedule 1 is a standard form of Mechanical Completion Certificate and Schedule 2 is a standard form of Acceptance Certificate.
  
  The Work Procedures.
  The Main Features of the ENAA Model Form.
  The draftsmen of the Model Form say that it has the following main features:-
   
  1. Emphasis is placed on process-related provisions such as performance tests and process performance guarantees.
  
  2. Consideration has been given to a fair and reasonable balance between the Owner and Contractor of the various risks involved in international projects on a turnkey lump sum basis. This is a feature which will be worth examining in another issue in the context specifically of risk allocation and of variations and the time for completion. 
     
  Risk distribution is provided for in Part VII of the General Conditions and, as one would expect, the time-honoured "turnkey" risks that Contractors regularly undertake with regard to the scope of work, changes and extensions of time are not in this Part VII! You have been warned! In the Model Form, Risk Distribution is about:
  
• Transfer of Ownership
• Care of Works
• Loss or Damage to Property/Accident or Injury to Work/Indemnification
• Insurance
• Unforeseen Conditions
• Change in Laws and Regulation
• Force Majeure
• War Risks
   
  3. Samples of forms necessary for process engineering and other projects, for example, letters of credit, bonds, mechanical completion certificate and acceptance certificate; samples of broad scopes of work, for ease of reference in the preparation of the actual contract; Work Procedure.
  
  4. The Model Form does not have the concept of ‘the Engineer’ but it contemplates that the Contractor will provide all the work required for the execution and completion of a new plant on single responsibility basis.
   
  The matters that the Contractor is to provide range from an obligation to grant a process licence (in the case of the ‘with process licence’ Model Form) to the provision of the process design, basic and detailed designs, procurement and construction performance, to providing training of the Owner’s operating and maintenance personnel. The Model Form contemplates that after the specified guarantees have been fulfilled, the plant will be delivered to the Owner.
  
  The Model Form has the concept of an ‘Expert’ who performs an important role in the settlement of disputes between the parties. The appointment of the Expert is consensual on each occasion but his decision is not final and binding. The appointment of the Expert is without prejudice to the arbitration provisions and the ENAA is of the opinion that an Expert should be in a position akin to a conciliator or a mediator in resolving the disputes in question.
  
  Adherents of the Joint Contracts Tribunal Forms of Contract, which contain sub-contract nomination provisions, will be delighted to know that Britain, without any earnings, visible or invisible, has effected the transfer of "technology" to Japan! The Model Form includes provisions for the nomination of sub-contractors and an interesting reason is given that, "several countries require nominated sub-contractors to be employed in order to develop local industries"! More likely, to protect ineffective local companies!
  
  Positive Features
  There are two features that I have certainly enjoyed in the Model Form. The first is the division of the General Conditions into only a few parts; it is easy for practical construction professionals to follow the layout, without having to play at being a lawyer.
  
  The parts are as follows:-
  Part I Contract and Interpretation
  Part II Subject Matter of Contract
  Part III Payment
  Part IV Intellectual Property
  Part V Work Execution
  Part VI Guarantees and Liabilities
  Part VII Risk Distribution
  Part VIII Change in Contract Elements
  (Parts VII and VIII are interesting enough to merit a commentary in another issue of the Digest).
  
  The second of my two features of interest are the Work Procedures in a list of 226 pages, in Volume IV. They may appear like an unwanted conformist straight-jacket! To the disciplinarians, however, the list constitutes matters of good practice which should appear in any quality assurance manual.
  
  There are ten sample Works Procedures:-
  WP 1 Correspondence
  2 Payment Application
  3 Approval and Review
  4 Works Changes
  5 Procurement
  6 Expediting
  7 Shop Inspection
  8 Field Inspection
  9 Progress Report
  10 Commissioning and Performance
  
  Those of us who have worked on international projects will, I am sure, recall project procedures which bore no relationship to the project in question, never mind having a bearing to the general and special conditions. It is, I think, more heartening than discouraging, that cultural uniformity is being advanced by the Japanese process contractors whose worldwide effectiveness is still held in awe! Perhaps, a lesson is there for the learning.
  
  It is over 10 years ago that I first came across the ENAA Model Form and it’s later additions are forms of contract that I remain happy to work with.
  
  Simon Olimi Kabuzi is Trett Consulting’s Director in charge of the London office.