ABSTRACT
Chapter 17 highlights the risks in developing offshore projects by listing some offshore project accidents that have resulted in substantial loss of life and property. The chapter provides guidance on issues in identifying and managing risks before and during project execution. Clarity of the Contract wording is the starting point for risk management: the wording of the Contract should make clear what has been agreed about who bears which of the key risks. Unclear contract wording should be revised before execution so that the Contract clearly states what the parties’ commercial intentions were and how risks have been allocated. This requires plain language and ensuring that the Contract terms are tailor-made and practical and communicated to all relevant personnel. This encourages personnel responsible for managing the project to read and understand the contractual terms that have been incorporated in the Contract. Irrespective of the contractual requirements, there are a number of processes that can be implemented to identify and manage risks, including creating and maintaining a Risk Register, a Decision Register and an Interface Register. Strict compliance with the contractual change mechanism is another important risk management strategy. A case study is presented on a warranty clause in a shipbuilding contract that emphasises the importance of clarity in contract wording.
