Pre-Contract Negotiation of Technical Matters

Many U.S. shipbuilders and owners experience problems with each other particularly during design and production phases. Usually, most shipbuilder troubles stem from the following Changes due to poor designengineering capability andor insufficient clarification of technical matters with customers before contract award. Conflicts with owners representatives during production due to lack of prior discussions, negotiation and agreement before contract award concerning design and production practices, inspection acceptance levels, authority of owners representatives and selection of materials as well as of machinery suppliers. Such conflicts are causing substantial losses to both parties. Representatives of an owner noted that ...nowhere else in the world is a great percentage of the construction cost of a vessel allocated to legal fees, accounting procedures and associated personnel. 1 Such losses could be avoided if thorough discussions and agreements characterized precontract negotiations in the U.S. In order to avoid conflicts, the purpose of this publication is to provide guidance concerning technical items that should be clarified andor incorporated in contract specifications. Obviously, when conflicts are avoided, a ships cost is reduced and both owner and shipbuilder benefit.