Project Management in the Oil and Gas Industry

party that does not apply the decision output considers the implementa-
tion of its contractual obligations a disruption. In particular, the contrac-
tor shall continue to work with due diligence, whether he or the owner 
requests to go through the arbitration procedure or not, until such time 
as amended by settlement agreement is in accordance with the decision of 
the arbitral tribunal. If any one of the parties does not desire to submit the 
dispute to a judge within 70 days from the date of the decision from the 
consultant engineer, this decision is considered final and the arbitral tribu-
nal is to take into account the decision of the consultant engineer.
The contract must provide a way of arbitration and, often, the jury con-
sists of three arbitrators chosen by each party and the two arbitrators agree 
on the third arbitrator, which is usually the president of the commission. 
International contracts must define the nationality of the third arbitrator as 
the decision will be crucial in the case of equality of votes in the arbitral 
tribunal. In the case of disputes in international contracts, the contract must 
define who will be the third arbitrator in the case that the parties fail to select 
who would be, it is better that it is the sponsor of the course of arbitration 
who choose the third arbitrator. Appointment authority comes from the 
management of arbitration in private institutions such as the International 
Chamber of Commerce President, judicial body, or person known for his or 
her integrity and it is usually recommend that the nationality of an appoint-
ment authority is different from the nationality of the two sides of the conflict.

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200 
Project Management in the Oil and Gas Industry
6.9 Bids and Tenders
After defining the project and its work volume, collecting all drawings and 
specifications, selecting the type of contract, and determining the final 
form of the contract, we now enter the phase of complex administrative 
work. This phase is needed to understand all the laws of each country that 
has its own laws governing contracts and bids for projects, where it can 
reduce the manipulation and corruption and guarantee an honest and fair 
competition between contractors.
Most countries have laws that reduce construction in order to give some 
business to foreign companies and encourage local construction companies.
Understanding the laws governing the tendering and bidding proce-
dures is one of the most important administrative steps that affects the 
whole project’s primary objective to contract with the contractor who can 
provide the achievement of the project by the required quality at the lowest 
price.
Every country has its laws. Therefore, the international companies 
doing business in more than one country are responsible for a contracts 
department, which manages the contracts and tenders and has a strong 
knowledge of the laws governing contracts and tenders for each country.
The general framework of the different types of tender is fixed as well as 
the conditions to be followed and the characteristics of each type of bid, but 
there is a difference in the financial limits and some operational requirements.
There are four types of tender:
• Public (open) tender
• Limited 
tender
• Negotiated 
tender
• Direct 
order