IChemE suite

For over 45 years, IChemE has published Forms of Contract. The latest editions have been revised to reflect the most recent developments in law and project implementation.

IChemE’s Forms of Contract are a series of model forms of agreement, developed to reflect best practice for project delivery in the process industries. The contracts address the complex way in which the purchaser, contractor and subcontractor divide responsibility for creating new process plants and working on existing structures.

There are currently two suites of contracts available, one suitable for the UK market and the other for international use. Each contract contains a model form of agreement and general conditions, supplemented with detailed guidance notes to assist the user in preparing a contract.

For those involved in heavy engineering projects, whether domestic or overseas, choosing a form of contract that is most suitable for the particular job is of fundamental importance. This is because the parties will be accepting substantial risks and liabilities, and invariably these flow from the terms of the contract entered into.

Unlike various building and civil engineering industry contracts that are essentially ‘work-based’ forms, the IChemE forms are fundamentally ‘out-based’ forms designed for use in performance or ‘results-based’ projects. Process plants are judged by their performance in operation, therefore these process industry contracts are performance based. While the IChemE forms have been drafted for delivery of process plants, they have been successfully used for a variety of projects including LNG (Liquefied Natural Gas) plants, CHP (Combined Heat and Power) plants, WTE (Waste to Energy) plants and STW (Sewage Treatment Works) plants.

The latest set contains the latest editions of the eight UK Forms of Contract, including the:

  • Red Book, Lump Sum Contract (fifth edition, 2013): this is a lump-sum contract suitable for use in a wide range of industries, particularly those where a high technical input is required in design and construction and where a proven system or service is required for the completed project.
  • Green Book, Reimbursable Contract (fourth edition, 2013): this is a cost-reimbursable contract for the design, construction and commissioning of performance-based process plants.
  • Burgundy Book, Target Cost Contract (second edition, 2013): this is used for either setting the target cost at the time of making the contract or later during the contract, when the detailed scope of work has been agreed.
  • Yellow Book, Subcontracts (fourth edition, 2013): working fully back-to-back with the Red, Green and Burgundy Books, the Yellow Book is intended for subcontracts that include the design, supply, site construction, erection and/or installation and testing of equipment that is significant in the main contract plant.
  • Brown Book, Subcontract for Civil Engineering Works (third edition, 2013): fully compatible with the three main contracts, the Brown Book is for civil engineering subcontracts in relation to work that is often required prior to the construction of a process plant, such as access roadways, foundations and other ‘non-process plant’ elements.
  • Orange Book, Minor Works (second edition, 2003): this is for use with minor packages of work involving an existing process plant. It is applicable where the far more comprehensive Red, Green and Burgundy Books would be too detailed and complex.
  • Purple Book, Forms of Contract User Guide (fourth edition, 2004).
  • Silver Book, Professional Services Contract (first edition, 2017): this contract is split into a short-form agreement and a long-form agreement. The short-form agreement is ideal for pure consultancy services for projects of relatively low cost and short duration. The long-form agreement is a more detailed contract suited to complex projects requiring high value professional services.

There is a common structure across the main contracts:

  • an agreement
  • the special conditions (if any)
  • the general conditions (1–49)
  • the specification
  • the schedules (1–21).

The parties will need to complete the agreement, draft any special conditions that they wish to include and prepare the specification and the 21 schedules. The general conditions aim to promote a high degree of co-operation between the parties and are intended to be fair to both purchaser and contractor.

Unlike other contracts, the general conditions require the completed plant to be ‘fit for purpose’ and this strict liability requirement is one that process plant contractors are willing to accept. This is perhaps because of the limitations on liability that provide the contractor a level of protection not found in other engineering contracts.

Most IChemE UK forms were updated in February 2013 to take account of industry best practice and changes in legislation, most notably the Local Democracy Economic Development and Construction Act 2009.