Watson Millican & Company’s technical experts were retained through counsel for a pipeline construction contractor to assess technical related claims and counterclaims associated with the engineering and construction of a 500 km natural gas pipeline and surface facilities in Oceania under a lump sum contract. The dispute resolution was international arbitration.

The Dispute

The construction contractor initiated an ICC arbitration against the owner for non-payment of work scope variations submitted by the contractor under a lump sum EPC contract.   The contract involved the engineering, procurement, and construction of over 500 km of steel pipelines as well construction of numerous surface receipt and delivery stations located in eastern Australia.  The contract included a lump sum conversion provision which provided for finalizing construction quantities after a period of initial engineering.  During execution of the work the contractor submitted variations (change orders) for alleged out of scope work as well as for disruptions due to easement and permit delays.   The variations related specifically to additional water/road/utility crossings, additional pipeline field bends, design changes at the surface facilities, and impact to contractor related to lack of access to the pipeline route.

Watson Millican & Company Scope

Watson Millican consultants reviewed project records and interviewed contractor personnel to assess the variations submitted by the contractor.   Regarding the pipeline variations, Watson Millican technical experts reviewed each crossing and all field bends to determine if they were part of the contractors’ scope of work or whether they were not identified or known at the time of the lump sum conversion.   For the surface facility variations, Watson Millican reviewed engineering drawings and specifications to determine if the claimed changes were additions or changes to the defined scope of work or whether they would be considered part of detailed engineering and therefore not out of scope.  Watson Millican also reviewed several land access issues that required the contractor to move their construction spreads around the restrictions.  Watson Millican assessed the reasonableness of the actions taken by the contractor as well as the impact of the spread move arounds. 

Watson Millican technical experts prepared and authored expert reports and provided written rebuttal reports to expert reports submitted by the owner.  Watson Millican provided oral testimony at the arbitration hearing and participated in joint expert sessions for the benefit of the arbitration panel.

Project Scope:

  • Value: US $900 Million

  • Services:  Pipeline engineering and construction; Project development and management: EPC contracts

  • Sectors: Pipelines; Midstream; Construction; Natural Gas and NGLs