IChemE publishes two sets of forms of contracts for use in the process industries:
Both sets have been drafted by a team of highly experienced professionals who are well familiar with process plant contracts.
Each form of contract handbook contains a model form of Agreement and General Conditions, together with detailed guide notes to assist the user in preparing a contract.
IChemE provides both public and in-company training courses in the forms of contract, and in basic contract law.
Process plants are judged by their performance in operation. Process industry contracts must, therefore, also be performance based. This is the underlying philosophy of IChemE’s Forms of contract suite. It is a fundamental difference from much of the wider construction industry.
IChemE's contracts are used extensively not only in the process industries, which themselves range from oil and gas to pharmaceuticals, food and fibres and many more, but also increasingly in a wide range of other industries both in the UK and internationally where their philosophy of fairness between the parties and teamwork in project execution are recognised as beneficial.
Originally IChemE's contracts were drafted to operate under English law. Their growing international use has led to the preparation of a further suite of forms of contract written for international use under a wide range of legal systems.
All the contracts are internally consistent and have extensive guide notes to help in their completion and operation. They reflect best practice in the process industries and recent developments in both law and project implementation.
IChemE's contracts have been specifically written to reflect the particular needs of the process industries, and key features include:
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The copyright law exists to protect the intellectual standing and economic livelihood of creators and publishers. All IChemE publications are protected by copyright and are NOT available for duplication. A separate Form of contract must be purchased for each party to the contract. Licensed electronic versions are available to assist with preparing multiple contracts.
Lump sum, the red book, fourth edition, 2001Reimbursable, the green book, third edition, 2002Target cost, the burgundy book, first edition, 2003 Minor works, the orange book, second edition, 2003 Subcontracts, the yellow book, third edition, 2003Subcontract for civil engineering works, the brown book, second edition, 2004
The International red, International green, International burgundy and International yellow books, published in November 2007 have, as in all IChemE contracts, extensive guide notes with draft forms and notice included.
The international contracts, while immediately recognisable to users of the UK forms in their arrangement, general drafting and philosophy of cooperation and teamwork, have been fully revised to reflect the particular needs of international contracting in many and various jurisdictions. IChemE has also been rigorous in using common language across all forms wherever possible and appropriate.
To facilitate the use of the International forms of contract, the text of all the agreements and the particular conditions are freely available for each book below:
Lump sum the international red book, 2007 agreement and particular conditions
Reimbursable the international green book, 2007 agreement and particular conditionsTarget cost the international burgundy book, 2007aggreement and particular conditionsSubcontracts the international yellow book, 2007agreement and particular conditions
Addendum issued to the adjudication rules, August 2009
Rules for expert determination, the white book, fourth edition, 2005Arbitration rules, the pink book, fourth edition, 2005Rules for dispute review boards, the beige book, first edition, 2005
User guide, the purple book, fourth edition, 2004
What every engineer should know about contracts
12-13 May 2010, London, UK5-6 October 2010, London, UK
Learn about the law of contract and why contracts say what they sayWhen managing projects whether large or small, a clear understanding of the law of contract is essential. Failure to understand the basics can prove very expensive. This course has been delivered to engineers of various disciplines over many years, and will provide invaluable knowledge and understanding of the law of contract as it applies to engineering projects.
The IChemE UK forms of contract
23-24 June 2010, London, UK
The IChemE forms of contract are drafted as performance-based contracts for the design and construction of process plants and other output-based projects. This course examines the suite of contract forms for use in the UK: their applicability to process plant contracts, their approach to risk and payment, and their structure.
The first day focuses on the duties of the contractor, the various stages of the works, the testing regime, the role of the project manager, looking at the IChemE Red book. The second day looks at risk allocation, the difference between price and cost based contracts and the consequent differences in cost liability, and the different payment terms in the lump sum Red book, the cost reimbursable Green book and the target cost Burgundy book. Reference is also made to the Yellow and Brown books (for subcontracts).
Process contracts
This course is designed to help users gain an increased understanding of the Forms of contract available and how to use them to their best advantage. It concentrates on two families of conditions - the IChemE Forms of contract, used in the chemical and process industries and the MF1 Conditions of contract, used in the electrical and mechanical industries. Currently available as an in-company course.
The IChemE International forms of contract
This two-day course, intended to be provided anywhere in the world, is currently available as an open course in collaboration with an appropriate industry body or as an in-company course.
Process plant contracts are increasingly spanning national borders, and the nature of a process plant contract is such that a form of contract which is drafted specifically for the purpose is necessary. The IChemE International forms of contract meet both of these requirements. They provide various risk/payment profiles (lump sum; cost reimbursable; target cost) allowing the parties to choose the approach best suited to their needs.
The IChemE International forms of contract are drafted as output-based performance contracts for the design and construction of process plants and other output-based projects. They were first published in 2007, and are based on the very successful and highly-regarded UK forms of contract.This course examines the suite of contract forms: their applicability to process plant contracts, their approach to risk and payment, and their structure.
The first day is focussed on the duties of the contractor, the various stages of the works, the testing regime, the role of the project manager, looking at the IChemE International red book. The second day looks at risk allocation, the difference between price and cost based contracts and the consequent differences in cost liability, and the different payment terms in the three main contract forms – the lump sum International red book, the cost reimbursable International green book and the target cost International burgundy book. Reference is also made to the International yellow book for subcontracts.The structure of the contract documentation is explained, such that delegates should have a good understanding of the various provisions of the forms of contract and how a contract is to be compiled. Advice is given as to when to use each of the three main contract forms. Where possible the course will include contributions from those in the country or region where the course is provided.Contact the courses department for further details.
IChemE provides in-company courses on contracts and contract law. Courses can range from a broad introduction to the contracts available through to a detailed examination of conditions relating to a particular contract or project.
Contact the courses department to discuss your requirements.
Forms of contract user guide, the purple book, fourth edition By David Wright
The purple book is aimed primarily at anyone with limited experience of the Forms of contract. It explains the philosophy underlying the series, how individual Forms of contract are intended to be used in practice, and the steps necessary to begin working with them.
More experienced users will benefit from the detailed discussion of each of the six Forms of contract, including a guide to their structure and use.
This fourth edition has been fully revised to cover the millennium editions of the series -- Red book 4th (2001), Green book 3rd (2002), Burgundy book 1st (2003), Yellow book 3rd (2003), Brown book 2nd (2004) and Orange book 2nd (2003).
International forms of contract user guide, the international purple book, first edition By David Wright
This international edition of the Forms of contract user guide covers the 2007 international versions of The red, green, burgundy and yellow books.
Help us deliver an even better product
IChemE and the contracts working party has a User group to gain feedback on the current range of products and suggestions for possible development in order to continue to produce contracts that are both valid to the current market and easy to use. The User group meets annually at IChemE’s London, UK offices in November plus occasional correspondence via email. If you are interested in joining our User group, please contact Rachel Robinson.
In view of a change to the law resulting from two cases earlier in 2007, IChemE has issued an amendment to the adjudication rules, click here to view.
International red (2005)
Sub-clause 28.1, line 2: delete 'less' and replace with 'more'
Sub-clause 28.3, line 1: 'site' should be 'Site'
Sub-clause 29.1, line 6: should read 'safe and tidy condition'
Sub-clause 36.2, line 1: should read 'Sub-clause 38.10'
Sub-clause 37.2, line 1: should read 'replacement or repair'
Sub-clause 37.4, line 3: delete 'Further' and replace with 'The'
Sub-clause 43.2, marginal note: delete 'paragraph 5' and replace with 'paragraph 4'
Sub-clause 6.1, line 1: should read 'The Purchaser and the Contractor'
Sub-clause 34.9: should read 'See Guide Note X and Sub-clause 43.3' instead of '42.2'
Sub-clause 37.1, penultimate line: delete ''Works' and replace with 'Plant'
Appendix I, item (6). The order of precedence should be:
The Special ConditionsThe General ConditionsThe SchedulesSchedule 1 (Description of the Works)The Specification and Documentation (if any) listed therein or annexed thereto
Replace 15.2 (d) with:(d) ionizing radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste, from the combustion of nuclear fuel, radioactive, toxic, explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof: or
pg iii, bottom of the page: should read 'The 'Guidance on compiling the Schedules and the Guide Notes' does not form part of the Contract.'
Agreement, item (H): '(Sub-clause 9.3)' should read '(Sub-clause 9.4)'
Agreement: current item (I) becomes item (J) and new item (I) is inserted as follows:'(I) The bank referred to in Sub-clause 18.9 shall be ….'
Sub-clause 12.2, line 5: should read 'to the reasonable satisfaction of'
Sub-clause 15.2 (d): incorporates the above errata slip
Sub-clause 28.4, line 3: 'Sub-clause 27.9' should be 'Sub-clause 29.1'
Sub-clause 29.3, paragraph 3, line 3: delete 'or an adjudicator'
Guidance on compiling Schedule 1, paragraph 2, line 2: should read 'the temporary works'
Beige book: (2005)
In 1964 IChemE appointed a special committee to review the question of contract conditions for process plants. This led to the publication in 1968 of the first edition of the Model form of conditions of contract for process plant suitable for lump sum contracts.
Now commonly known as The red book, this new initiative proved popular and successful, prompting IChemE to prepare an equivalent set of conditions for use on reimbursable contracts. The result was the 1976 publication of The green book, or as it was originally titled, the Model form of conditions of contract for process plant suitable for reimbursable contracts.
At the request of industry, a Subcontract form of contracts, the yellow book, was introduced in 1992. The yellow book offers a ‘back-to-back’ subcontract for use with The red and green books.
These forms of contract broke new ground in establishing a viable contractual basis, reflecting industry best practice, for the complex way in which purchaser, contractor and subcontractors manage their respective responsibilities on a multidisciplinary process plant project.
Since then, the series has been further expanded with the publication of in 1998 of The orange book, a minor works contract, followed in 2000 by The brown book, a subcontract for civil engineering works and in 2003 The burgundy book, for the increasingly popular target cost contract format.
Most recently, in response to the growing use of The red book on projects outside the UK, The international red book, international form of contract – lump sum contracts was published in July 2005. This is a truly international publication, which includes various additional clauses to meet the special requirements of international projects whilst removing any specific reference to UK legislation. This was in the form of a consultation edition with first editions of international red, green, burgundy and yellow due for publication in October 2007.
A quartet of other titles supports the Forms of contract suite. The grey book, adjudication rules, The white book, rules for expert determination, The pink book, arbitration rules and The beige book, rules for dispute review boards, set out the rules to be followed in the event of a dispute arising under a contract.
All the contracts are regularly reviewed and updated to reflect changing industry practice, developments in the law and recent legal decisions.
The Forms of contract suite is produced by a committee of senior practitioners with many years of hands on experience in all areas of the international process industries, including operations and management, contracting, consultancy and construction law.
Gordon Bateman (chairman)
Gordon is a lecturer and consultant in private practice. He was previously with Thames Water where he was the in-house specialist on contract law and engineering and construction contracts, drafting contracts for major overseas projects and consultancy work and advising the various utility businesses within the Thames Water Group on contractual and procurement matters. He is also a member of the disputes resolution panel and is listed as an adjudicator.
David Wright
David is a consultant, lecturer and arbitrator with many years experience in the process industry. He has been a member of the working party for several years and is the author of the IChemE’s User guide to the forms of contract. Formerly company director of an international process contractor, he now runs an IChemE course on the use of contracts in the process industries. He is also chairman of the disputes resolution panel.
Henry Rowson
Henry has many years experience in operations, contracting and consultancy in the international process industries and is also a member of disputes resolution panel of which he was chairman until recently. He is an experienced arbitrator and dispute resolver.
Paul Buckingham
Paul is a Chartered chemical engineer and barrister who specialises in the litigation, arbitration and adjudication of construction and engineering disputes, particularly those arising in the energy sector. After seven years at the international law firm Clifford Chance, he has recently returned to independent practice at Keating Chambers.
Roger Button
Roger is a senior partner in the firm of Shadbolt & Co., solicitors where he specialises in both the preparation and negotiation of construction and engineering contracts as well as claims resolution.
John Challenger
John is currently Divisional Director of the Nuclear & Process Division of Mott MacDonald. He is a member of Mott MacDonald's Industrial and Nuclear Task Force groups with particular responsibility for the coordination of Clean Industry and Science Sector projects. He has extensive experience in industry in the fields of project management, process and mechanical design, general management and marketing. John has acted as an arbitrator or expert in a number of disputes and sat for over 20 years as a member of the contracts working party.
Geoffrey Hawker
Geoffrey is a chartered civil engineer and barrister specialising in dispute resolution within the construction industry and commerce generally, both in the UK and overseas. He has long been involved in drafting the various ICE conditions of contract and of the related disputes procedures, together with similar involvement in Ireland and internationally through FIDIC. He has for some years sat on the IChemE contracts working party as legal advisor.
Chris Hillier
Chris is a senior manager at Gardiner & Theobald Fairway and is responsible for dispute resolution services on engineering and construction contracts globally, having previously worked for many years as project manager in the contracting industry. He is a chartered member of the Institution of Gas Engineers.
David McLurgh
David is a Chartered chemical engineer and solicitor with over ten years experience in the negotiation of engineering and construction contracts. He is Deputy General Counsel at Foster Wheeler where he is manager of the legal team providing commercial and legal advice to the UK group of Foster Wheeler companies.
Jon Shattock
Jon is Vice President, Legal Services at Jacobs Engineering Group Inc., responsible for all legal services outside North America. He is a solicitor and a fellow of the Institution of Mechanical Engineers.
Ray Shaw
Ray works for the Shaw Group (previously Stone & Webster). He is a chartered engineer with many years experience in technology, engineering and construction for the process and power industries. The manager of contracts in England for the Energy and Chemicals division of Shaw Stone & Webster Ray provides commercial and contractual advice within the division for its international business.
Iain Turner
Iain is currently the Commercial Manager of CEL International, a major process contractor, part of WSP Group. With a BSc in Mechanical and Electrical Engineering, and a background in the process industries, he had extensive experience of design and project management before gaining experience of tendering, sales and marketing. In his current role, he has responsibility for all procurement functions, provision of commercial and contractual advice and the drafting, reviewing and negotiation of contracts.
Jim Williams
Jim is a non-practising barrister, who has worked for thirty years in the process engineering and construction industry (Costain Oil, Gas & Process Ltd) drafting contracts and resolving disputes and commercial problems. He is a fellow of the Indian Society of Arbitrators as well as FCIArb.
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