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IACCM Contract Management Forum

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Air Liquide
2019-09-10 12:20:00

OPen Book meaning

My company entered into an 'Open Book' contract for supervisory works. Each Party has its own definition of the words 'Open Book', depending upon its own experience and interest.
Does it imply that there is no performance obligation, but only best efforts one?
Is it similar to "at cost"?
etc...

Is there any common understanding within the contract community for 'Open Book Contract'?
Thanks in advance
 
 •  ATCO Electric  •   2019-09-11 22:52:06
I have not used Open Book contracts, but as I understand open concept is applied to cost part. The contractor will share real cost with owner and get certain agreed profit margin over it. The contractor is not promising to do cheapest. Same time the performance obligation is not dropped, and contractor is required to provide the quality and warranty, if applicable. Open book would not imply cheapest at no performance assurance.
 
 
 •  Air Liquide  •   2019-09-19 05:17:53
Thank you for your contribution.

To go further, the Contractor is compensated according to the number of working hours, time an hourly rate. The hourly rate depends upon the country of origin of the employee.
The contractual manning plan specifies the country of origin, and therefore the rate.
However, it happens that the actual country of origin may be different than the one specified in the contract

The question is:
Knowing that we have an "Open Book" contract, does the contractor has an obligation to invoice with the rate as per the contract's country of origin rate, or according to the actual country of origin rate?
As illustration, the contract mentions a project manager coming from France, whereas he actually comes from China. Which rate shall be used?

Thank you in advance
 
 
 •  ExxonMobil Nigeria  •   2019-09-25 12:05:53
In response to your latest post, I think in order to avoid any form of dispute or confusion, there has to be a revision/addendum to the contract to explicitly state the rates for different nationals.

I currently work on some contracts, not Open Book though but similar in scope and price structure to what you mentioned. In them, we have rates for Western expats, non- western expats and locals.

This makes it extremely easy for our contrcators to apply the right rate per personnel deployed for the service.

I hope this helps.
 
 
 •  Ministry of Defence  •   2019-10-04 08:32:22
As said Open Book can have various interpretations. Commonly it means access to a supplier's financial information used for pricing.

I am a little surprised about the comment, presumably regarding the nationality of the Project Manager, either French or Chinese? I would have thought the ability of the individual is more important than the nationality and the contract would be priced on that basis? i.e. the services of a professional Project Manager.
 
 
 •  Air Liquide  •   2019-10-04 08:42:43
Hi Graham,
You are correct, competence should prevail on Nationality (and then cost), but the client always want to get the cheapest, presuming that the competency is identical, which is clearly not always true.
 
 
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