Identification, Assessment and Management of the Risks in Oil and Gas design-build (DB) Contract, and Their Impacts on preventing Claims and Disputes

This study is the continuation of a few research studies that have been carried out in Iran and other countries identifying the types of the risks involved in design-build contract. Recently, many Iranian petroleum contracts have been encountered with various claims and disputes which made the industry difficult to cope and imposed heavier direct and indirect costs and expenditures. This research is meant to provide solutions not only how to tackle this risk but also to prevent cases of such bitter events in the petroleum industry. This study endeavors also to identify the risks in the design and build and EPC contracts in petroleum contracts and then to manage and allocate such risks between the Parties to such contracts. Further, the indented and assessed risks alongside with optimized allocated risks have been compared with the Model Contracts of the EPC No. 5490, drafted by the Planning and Supervision Organization of the Islamic Republic of Iran, and then recommended solutions are proposed in this paper. It is concluded that one of the main causes of such many claims and disputes in the petroleum industry of Iran, is the lack of professional exercise related to the identification, assessment and managements of the petroleum industry risks. It is also resulted from this study that contracts risks management should be the prevailing exercise to design sustainable policy and strategic approaches to prevent the petroleum projects risks that may be embedded during the execution of the petroleum projects.