Contracts and Risk Management

Where does a successful maritime tender begin? With a well-defined scope of work

The main cause of failed tenders, unrealistic pricing and exhausting claims in maritime projects lies not in evaluation or performance, but in a vague, incomplete and non-standard scope of work in the original documents.

In the procurement of maritime and port services, from towage, dredging and pilotage to terminal management and equipment maintenance, a flawed technical and operational scope of services sets off the first domino of project failure. When the scope of work is not clear, the bids received become incomparable and contractors are forced to price on conflicting assumptions, which leads either to abnormal underbidding or to inflated precautionary prices.

Figure 06Standard maritime contract forms, a comparison of port governance models, commercial risk allocation and the regulatory controls that frame procurement.

The scope of work is not just a technical annex; it is the legal and operational backbone of the whole tender package (RFP):

  • Qualification and evaluation criteria: if the technical indicators are vague, it becomes impossible to tell contractors’ real competence apart, and quality criteria give way to a fragile focus on “the lowest price”.
  • Deliverables and acceptance conditions: precise definition of the deliverables, the quality standards for acceptance and the delivery test procedures is the only firm guarantee of the service provider’s legal accountability. Ambiguous acceptance conditions leave the contractor free to lower the service standard.

2. The contractual consequences: variation orders and tenders that turn into claims

Projects that start with a vague scope of work enter a cycle of variation orders, suspension and price adjustment immediately after the contract is signed. Experienced contractors use the gaps in the scope of services as a tool for raising claims and repeatedly adjusting contract sums, which in the end pushes the final cost of the project well beyond the original estimates.

A tender readiness framework: three key questions before publishing the documents

Before approving and publishing the tender documents (RFP), the employer’s senior managers should answer three key questions:

  1. Have the operational boundaries of the service, the limits of responsibility and the logistics obligations between employer and contractor been written separately and without room for interpretation?
  2. Are the acceptance indicators for the services objective, measurable (KPI-based) and consistent with standard, current practice in shipping?
  3. Has the bid evaluation matrix been designed to reveal differences in the bidders’ technical and engineering approaches and to stop unrealistic prices from winning?

Management conclusion

A successful tender is not an administrative event for collecting price envelopes; it is an engineered process for aligning the employer’s operational goals with the market’s capacity to deliver. Every investment in clarifying the scope of work before publishing the documents saves many times its cost in supervision, legal claims and lost port operating time.

Practical checklist

  • Define the boundaries of the scope of work, the assumptions and the responsibilities
  • Set measurable acceptance criteria for the services
  • Use the same basis for comparing technical and financial bids
  • Provide a mechanism for changes and for managing contractual claims

Editorial note: this article is written for awareness and management decision-making. Applying any rule depends on the authentic current text, the legal position of the State concerned and the facts of the case. The content is independent and implies no endorsement by, or affiliation with, IMO.

Sources

  1. World Bank — Port Reform Toolkit (3rd Edition)
  2. World Bank — Procurement Framework for Investment Project Financing
  3. UNCITRAL — Model Law on Public Procurement (2011)

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