Ten Key Steps to Ensure Sound Solids Handling Contracts
1. The crucial factor is to secure plant that works well. The cost of inadequate performance and ’teething troubles’ can far outweigh superficial initial cost ’savings’ between offers by different vendors. Prepare a ’Cost/Liability assessment for production delays, rectification provision and performance shortfall. Read the Rand Report and a follow up investigation, (1, 2), on the performance of Solids Handling Plants if you like horror stories, and then make a judgement that includes optimum exposure costs.
Do not let the contract price dominate the buying decision.
2. Do not depend on Penalty clauses or Litigation for insulation against problems.
(a) No contractor can economically meet realistic consequential damages for almost
unlimited liability on a full production facility.
(b) The root causes of operating problems are almost invariably due to behavior
characteristics of the bulk material as a result of product conditions not
accommodated because of inadequate up-front investigation.
(c) Disputes occupy enormous unproductive and unrecoverable time. A supplier that
stands by his equipment should difficulties arise is invaluable. Value that.
3. Identify and specify the main features relating to the bulk solids that are of interest. Some factors are peculiar to, and known only be, the user. E.g. the significance of particle attrition and segregation to product quality, purity, appearance, solubility, perhaps density condition for packing and the like. Draw these features into the specification with an indication of their realistic importance. See I.Mech.E. Guide as below.
4 Base the specification on measured relevant values on the bulk material that are verified, agreed and bounded by realistic limits. E.g. wall friction with specific material of contact, bulk density in defined conditions, shear strength in given conditions of compaction, range of ambient conditions, maximum residence periods to be accommodated, and the like.
5. Meet realistic up-front costs to secure this relevant information about the duty and the flow and handling properties of the product. It is proper that these costs ultimately fall on the contract, hence by the plant user. Failure to appreciate the importance of these values and to secure their valid measurements is the single most common cause of all solids handling contract problems and disputes, with cost implications that usually overwhelm vendor price variations. It is not good economics for these values to be multiply determined by all parties invited to quote for a contract.
6. Secure prior agreement on the position should the material condition fall outside the agreed specification. Sometimes supply, process or production changes introduce significant variations not catered for within the original design. In some cases a ’representative’ sample, as with some pharmaceutical developments, is not available at the initial contract stage. The name of the bulk material is never enough to be the basis of a contract, neither is particle size distribution adequate to assess material behaviour. ’Moisture content’ is usually very significant. A description ’similar to ’-----’, can only be used as a rough guide, not a contract condition. Co-operation, not an arms length relationship, is essential between parties to secure best results.
7. Look at the track record of the supplier. Technical and financial resources, test facilities, design experience and customer list, degree of specialisation in the form of equipment to be supplied.
8. Ensure that emphasis is appropriately directed. Year ’2000’ compliance and ISO 9000 documentation are not relevant to whether flow takes place in a hopper, but production is.
9. Establish a realistic time frame for both the tender stage and the contract itself. Allow due diligence on pre-contract investigations, with responsible cover for approval of drawings as required. Make crystal clear what authority and responsibility is given by ’approval’. If for information only, then do not delay or jeopardise progress by wide circulation for ’comment’.
10. Include cover for the effect that ’extras’ have on the programme of the main contract. The procedure for incorporating changes should take account that design variations incur inevitable delays for consideration, even if the changes are not finally implemented. The significance of such contract ’interference’ should not be under-estimated.
Remember
Reputable purchasers and suppliers honour the spirit and ethics of good business relationships. Clear progress payments on time and do not withhold total reserves because of minor features.
The Engineering Construction Industries Association has published a ’Code of Fair Contracting Practice’ that is a model of a balanced, commercial relationship.
Solids Handling contracts have to go further in defining contract conditions.
The Institution of Mechanical Engineers publication - ’Guide to the Specification of Bulk Solids for Storage and Handling Applications’ sets the background for defining relevant bulk material properties as the basis for a contract. A structure for ‘hazardous materials’ is given on section 14 .
References:
1. Merrow E.W., Phillips K.E., Myers C.W.: Understanding cost growth and performance
shortfalls in pioneering process plants’. Rand Corporation Report. Section V. 1981
2. Merrow E.W.: Linking R & D to problems experienced in solids processing’, Chem.
