Operation And Maintenance Agreement Definition

Finally, parties to long-term operating and maintenance agreements should be aware of the possibility of changes that could affect the long-term nature of the transaction. B, such as a change in political regime or a regulatory change. In anticipation of such cases, the operator`s right to exemption and additional compensation must be clearly stated in the agreement. In a perfect world, these claims are compensated by the project company`s claims as part of an acquisition agreement or other project documents. Operating and maintenance contracts (O-M agreements) are generally short-term contracts lasting two to five years that enter into a contractual agreement between the project company and a professional operator to provide operational and maintenance services for the project. They define the range of obligations and responsibilities of the operator, as well as remuneration, which is usually a fixed fee. Sometimes the D-M agreements provide for results-related fees and, conversely, damages are liquidated for non-compliance with the required performance criteria. The O-M agreement should contain provisions that define, in as much detail as possible, the consequences of a delay in the operator`s service obligations, including liquidated damages or other financial damages. In most cases, operating and maintenance agreements set minimum performance levels below which the operator is considered to be late in accordance with the agreement, as well as the options and corrective measures available to the owner. Operating and maintenance agreements should relate to all levels of performance achieved by the EPC contractor at the time of delivery.

These defined values, adjusted for deterioration, should establish the basis for the operator`s service obligations. For example, for an energy project, it is imperative that technical and legal consultants ensure that the performance review and performance guarantee as well as the liquidated claims plans of the agreement are recovered with the corresponding schedules of the work contract. Liquidated damages are financial compensation for loss, injury or injury to a contracting party granted by a provision of the contract for infringement. Contracts or agreements involving the exchange of money or the promise of benefits, such as. B the O-M agreements, often contain a provision for liquidated damages. The purpose of a liquidation replacement provision is to determine a predetermined amount to be paid when a contracting party does not provide a benefit as agreed. Liquidated damages can only be assessed in a contract if (1) the damage is either uncertain or difficult to quantify; (2) the amount is reasonable and takes into account the actual or expected harm caused by the offence, the difficulty of proving the actual damage and the difficulty in finding another appropriate remedy; and (3) the damage is structured to act as repair, not repair. If these criteria are not met, a liquidation clause is not paid. If the operator and contractor of the EPC are identical or related companies, the agreement should prevent the agreement from relying on delay or under-performance on the part of the other, in order to obtain relief from the owner as part of their contract.

The agreement should also prevent a contractor from sticking to the actions of the other to defend the owner`s right to a delay or non-compliance. The transaction and hand agreements should, if necessary, define the operator`s service obligations. Performance benchmarks generally include items such as availability, failures, production levels and other technical, quality, safety and environmental performance criteria.