Guidance Note - This clause 22.5 provides the Project Owner with an entitlement to suspend the Works in circumstances where the AOC will or is likely to exceed the TOC by a specified percentage of the TOC or the Date of Practical Completion will or is likely to be delayed by more than a specified number of Business Days after the Date for Practical Completion. This allows the Project Owner to set the relevant thresholds on a case-by-case basis. If the Project Owner suspends the Works under this mechanism, the Project Owner will be free to continue with, and complete, the performance of the Works and any Painshare Amount or Gainshare Amount payable by or to the NOPs under the Agreement will be calculated as if the costs incurred by the Project Owner in doing so were Reimbursable Costs incurred by the NOPs under the Agreement and the NOPs were paid Corporate Overhead and Profit in respect of those costs. The policy informing this mechanism is a recognition that when a project goes materially wrong, there is not an 'equal sharing of pain' between the Owner Participant and the NOPs under the Agreement. Rather, the Owner Participant bears a greater degree of the pain. This mechanism is not intended to shift a greater degree of the pain to the NOPs in these circumstances, but to give the Project Owner greater flexibility in managing the situation . It must be recognised that if the project has got to the point that the Project Owner's rights under this clause are triggered, the Participants have not delivered on the minimum conditions of satisfaction for the project. This mechanism also recognises that alliances are generally used for projects which have compelling public interest drivers. The Project Owner may need access to various options to manage and respond to these drivers. Clause 22.5 has been included to provide the Project Owner with the options that may be required to deal with a project that has failed to meet the Project Owner's essential cost and time requirements. It is only intended to operate as a provision of "last resort" for the Project Owner. |
(a) If, following receipt of a Monthly report under clause 17 or otherwise, the Project Owner determines that:
(1) the AOC of performing the Works under this Agreement will or is likely to exceed the TOC by an amount in excess of [insert]% of the TOC; or
(2) the Date of Practical Completion will or is likely to be delayed by more than [insert] Business Days after the Date for Practical Completion, then the Project Owner may direct the Participants in writing to immediately suspend the progress of the whole or part of the Works for the period specified by the Project Owner in writing and the Participants must promptly suspend the Works.
(b) If the Project Owner suspends the whole or any part of the Works under clause 22.5(a), then:
(1) the Project Owner will be free to continue with the Works on any basis that the Project Owner may decide;
(2) the NOPs must do all things necessary to ensure that the Project Owner is free to continue with the Works within the time period prescribed by the Project Owner;
(3) subject to clauses 22.5(b)(4) and 22.5(c), any costs incurred by the NOPs during the period of suspension will not be Reimbursable Costs and the NOPs will not be entitled to any Corporate Overhead and Profit;
(4) the NOPs will be entitled to any Reimbursable Costs that the NOPs have already committed to incur, in the reasonable expectation of completing the Works, prior to the Project Owner's direction under clause 22.5(a); and
(5) any Painshare Amount or Gainshare Amount (if any and as the case may be) will be calculated under the Risk or Reward Regime as if:
(A) any costs incurred by the Project Owner in continuing with the Works under this clause 22.5 were Reimbursable Costs incurred by the NOPs; and
(B) the NOPs were paid Corporate Overhead and Profit in respect of those costs, for the purposes of the calculation of the AOC and the NOPs will be responsible for the payment of any Painshare Amount which is calculated under the Risk or Reward Regime, notwithstanding any suspension under this clause 22.5.
(c) If, in the exercise of its rights under this clause 22.5(b), the Project Owner requires the NOPs to demobilise from the Site, the NOPs will be entitled to any Reimbursable Costs incurred in respect of such demobilisation.