Summary of Meetings with Contractors During the Market Dialogue

Contractors consider the present market situation relatively stable, and in a phase where geographic focus is changing from the Asian market to the European. By giving the companies a possibility for strategic positioning of their dredging equipment, the European projects become attractive. The prognosis for dredging projects in Europe the forthcoming two years is considered unpredictable, but dredging equipment will most probably be available to satisfy the demand of the European market.

The Malmporten Project is by all participants considered to be a prestigious contract, why most companies will participate in the tendering process.

All participants claim that their own resources are available and fulfil the requirements of the projects. They all also claim to have ongoing development processes for dredging methods, as well as an increased number of resources and equipment relevant for the projects.

Giving the contractor enough time for positioning, transporting and establishing of equipment on site is of utmost importance from the tendering process and contract signing to the start of dredging works.

Price Level and Risk Management

Contractors request high quality and clarity of geotechnical data to be able to deliver a bid/quotation without or with few reservations. In general, bedrock implies raised costs. An extensive, accurate geotechnical documentation will enable bids without reservations as well as otherwise following negotiations of what was included in contract or not.

Contractors want to see a shared responsibility for interpretation of geotechnical data to keep their own risk level and the uncertainty premium low.

Contractors suggest the client to present all geotechnical survey data available in the forthcoming tendering processes, even raw data, to let contractors make own analysis based on experience from previous projects.

In the Malmporten Project, the risk is considered high due to the specific local geotechnical conditions and the very large dredging volumes. The surveys must therefore be extensive, and the quality of the general documentation must be of high quality. The planned test dredging will substantially contribute to this.

In the Skandia Gateway Project, the uncertainty is assessed as being on a considerable lower level because of the local geotechnical situation and the experience from the previous dredging operation.

The daily vessel traffic to and from the port is assessed as a considerable risk for disturbances, why thorough planning of traffic and dredging areas respectively is of utmost importance.

The present volatile situation on the world fuel market makes calculating hazardous, why contractors recommend the client to share this risk with an incentive for fuel costs, for example related to index.

Combined Procurement and Execution of SMA’s Projects

Combining purchase and execution of SMA’s Projects is considered positive for the specific projects Malmporten and Landsort. For the remaining projects no obvious advantages are discovered, but a minor project might be purchased adjacent to a major project with lower general costs as result. The major projects are likely to be planned for implementation parallel and successive to the contractor’s other projects on the international arena within the Baltic region.

Three seasons seem to be a realistic timeline for the conventional dredging in the Malmporten Project, with an additional initial season for the environmental and preparatory dredging works. Contractors suggest to gather all dredging works for this project in one contract.

Time frame for the Skandia Gateway Project implementation is assessed to two, up to three, seasons, based on available knowledge of volumes and geotechnical conditions.

The Landsort Project is assessed as a one-season project.

Procurement and Contract

Contractors recommend raw geotechnical data to be available for them at least nine months before closing of quotation period. If this data is disclosed in advance, procurement period may be cut down to three to six months. Time for establishing equipment on site is assessed to at least six months.

Contractors, normally active on the international market, are not used to the Swedish contract form AB04. They point out that insurance conditions may be inapplicable together with the standard conditions normally used in the construction branch. Contractors prefer a customized version of FIDIC Blue Book and suggest AB04 to be made public as a Request for Information, RFI.

Swedish language in contract may cause a risk for the contractor, which will be put on top of bids. A proposed solution is to use two languages in documents and contract, with preference given to the Swedish text for interpretation, or in case of an arbitration procedure.

Contractors suggest a risk distribution making the client responsible for all additional costs related to discrepancies in traffic management, geotechnical surveys and disruptions caused by unfavorable weather conditions. Contractors responsibility will then be limited to own equipment and technique.

Contractors suggest as much freedom as possible concerning when to deliver production milestones to keep the possibility to optimize and alter the use of own dredging equipment between projects.