ENGINEERING LAW AND MANAGERIAL ECONOMY FOR ...

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ENGINEERING LAW AND MANAGERIAL ECONOMY FOR STRATEGIC

MANAGEMENT OF CHEMICAL ENGINEERING WORKS: ISSUES AND WAY

FORWARD.

BY

BASSEY JOY ANIETIE

18/ENG01/004

SUBMITTED TO

THE DEPARTMENT OF CHEMICAL AND PETROLEUM ENGINEERING

COLLEGE OF ENGINEERING

AFE BABALOLA UNIVERSITY ADO-EKITI (ABUAD)

IN PARTIAL FULFILMENT OF

ENG 384: ENGINEERING LAW AND MANAGERIAL ECONOMICS

DATE OF SUBMISSION: 11TH MAY, 2021

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ABSTRACT In this paper, a critical analysis is presented of aspects of contemporary legal systems, from

the perspective of chemical engineers who desire to perform their profession in an ethical or

socially responsible way, or who wish to contribute positively, through their professional

work, to human well-being. It is argued that such aspirations are at present obstructed or

impaired by certain aspects of contemporary legislation economics in their calculation and

decisions to solve real life problem. Engineers have an added responsibility and that is to

include economics in their calculation and decisions to solve real life problem. The purpose

of managerial economics is to provide a systematic framework for problem analysis and

solution. The pluses and minuses of various decision alternatives must be carefully measured

and weighed. Costs and benefits must be reliably measured; time differences must be

accurately reflected. The purpose of managerial economics is to provide a systematic

framework for problem analysis and solution. The pluses and minuses of various decision

alternatives must be carefully measured and weighed. Also, are the investigated global legal

issues related to chemical engineering and construction projects. International contracts and

legal issues affect the progress of projects when they are being built by chemical engineers

and construction personnel in host nations. The research investigated the legal issues that

affect chemical engineering and construction projects including international: contacting,

litigation, arbitration, claims and disputes, contract clauses, rules of law, choice of law, and

choice of jurisdictions.

Keywords: Engineers, Engineering law, Managerial Economics.

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Table of Contents

ABSTRACT ...............................................................................................................................ii

TABLE OF FIGURES ............................................................................................................... 1

CHAPTER ONE ........................................................................................................................ 2

INTRODUCTION ..................................................................................................................... 2

1.1 ENGINEERING, LAW AND THE IMPORTANCE .......................................................... 2

1.2 WHAT IS CHEMICAL ENGINEERING? ......................................................................... 2

1.3 WHAT IS ENGINEERING LAW? ..................................................................................... 3

1.3.1 MAIN TOPICS UNDER ENGINEERING LAW ............................................................ 4

1.4 MANAGERIAL ECONOMY RELATING TO CHEMICAL ENGINNERING ................ 4

1.5 MANAGERIAL ECONOMICS/ MANAGERIAL ECONOMY ........................................ 5

CHAPTER TWO ....................................................................................................................... 6

LITERATURE REVIEW .......................................................................................................... 6

2.1 WHAT TYPES OF LAW DO ENGINEERS NEED TO STUDY? .................................... 6

2.1.1 CONTRACT LAWS ......................................................................................................... 7

2.1.1 TORT LAWS .................................................................................................................... 7

2.1.3 INTELLECTUAL PROPERTY LAWS ........................................................................... 7

2.1.4 LAWS AFFECTING THE WORKPLACE...................................................................... 7

2.2 SOURCES OF LAW ........................................................................................................... 8

2.3 CRIMINAL AND CIVIL LAW .......................................................................................... 8

2.3.1 CIVIL LAW VS CRIMINAL LAW. ................................................................................ 9

2.3.2 CONTRACTS ................................................................................................................. 10

2.3.3 INTERPRETING A CONTRACT ................................................................................. 10

2.3.4 DISCHARGING A CONRACT ..................................................................................... 11

2.3.5 BREACH OF CONTRACT ............................................................................................ 11

2.4 MANAGERIAL ECONOMY UNDER CHEMICAL ENGINEERING ........................... 11

2.4.1 ROLES OF MANAGERIAL ECONOMISTS ............................................................... 11

2.5 THE ISSUES UNDER THE ENGINEERING LAW AND MANAGERIAL ECONOMY

BASED ON CHEMICAL ENGINEERING ............................................................................ 12

2.5.1 RISKS WHICH THE CONTRACTOR CAN BEAR ..................................................... 12

2.5.2 RISKS WHICH THE EMPLOYER CAN BEAR .......................................................... 13

CHAPTER THREE ................................................................................................................. 15

METHODOLOGY .................................................................................................................. 15

3.1 PROBLEMS FACED AND SOLUTIONS APPLIED ...................................................... 15

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3.1.1 TACKLING CLIMATE CHANGE ................................................................................ 15

3.1.2 RESOURCE EFFICIENCY............................................................................................ 16

3.1.3 CHEMICAL ENGINEERING REDEFINED ................................................................ 17

3.2 TORT CASES IN THE FIELD OF CHEMICAL ENGINEERING .......................... 18

3.2.1 CASE STUDY 1 ............................................................................................................. 18

3.2.2 CASE STUDY 2 ............................................................................................................. 19

3.2.3 CASE STUDY 3 ............................................................................................................. 20

3.2.4 CASE STUDY 4 ............................................................................................................. 20

CHAPTER FOUR .................................................................................................................... 22

RESULTS AND DISCUSSION .............................................................................................. 22

4.1 SOLUTION TO CASE STUDY 1 ..................................................................................... 22




CHAPTER FIVE ..................................................................................................................... 24

CONCLUSIONS AND RECOMMENDATION .................................................................... 24

REFERENCES ........................................................................................................................ 25

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TABLE OF FIGURES FIG 1: CRIMINAL LAW VS CIVIL LAW.............................................................................. 9

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CHAPTER ONE

INTRODUCTION

1.1 ENGINEERING, LAW AND THE IMPORTANCE Engineers perform services or creative work as consultation, testimony, investigation,

evaluation, planning, analysis, design and design coordination of engineering works and

systems, planning the use of land and water, performing engineering surveys and studies, and

the review of construction or other design products for the purpose of monitoring compliance

with drawings and specifications. Engineering law (or law in engineering) is the empirical

study of the application of laws and legal strategy in engineering. Law can be defined as

those rules and regulations, backed by sanctions when flouted, which guide the conduct and

behavior of members of a community or society, and which they accept and consider as

binding. The knowledge of engineering law is important to every engineer as we are involved

in construction, contracts, consultancy services on capital projects, design, analysis,

fabrications, adjudication of tender, bill of engineering measurements and evaluation. It does

not mean that the legal profession plays a part in every contract; the majority of contracts are

executed with both parties satisfied with their involvement and these never come to the court.

However, when there is a dispute, provided that the courts are satisfied that a valid contract

existed, they will enforce the details of the agreement. When alternative courses of action are

available, the decision that produces a result most consistent with managerial objectives is the

optimal decision. The process of arriving at the best managerial decision, or best problem

resolution, is the focus of managerial economics. Forecasting refers to the process of

analyzing available information regarding economic variables and relationships and then

predicting the future values of certain variables of interest to the firm or economic

policymakers. A good forecast should be timely, simple to understand, accurate, reliable and

cost effective.

1.2 WHAT IS CHEMICAL ENGINEERING? Chemical engineering is a multi-disciplinary branch of engineering that combines natural and

experimental sciences (such as chemistry and physics), along with life sciences (such as

biology, microbiology and biochemistry) plus mathematics and economics to design,

develop, produce, transform, transport, operate and manage the industrial processes that turn

raw materials into valuable products.

Many of the processes within chemical engineering involve chemical reactions, and the field

takes cues from chemists who are looking for new ways to create products and to investigate

the mechanisms within chemical reactions. Chemical engineers then translate this chemical

information to formulate designs. As such, there are two broad subgroups that better answer

the question “What is chemical engineering?” – more precisely:

- Designing, manufacturing and operating plants and machinery for carrying out large-

scale industrial chemical, biological or related processes

- Developing new or adapted substances for a wide range of products

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Chemical engineers may be specialized in one or the other subgroup, but work from both

sides will be required in order to create a final product. They will need to consider economic

viability, management of resources, health and safety, sustainability and environmental

impact.

Chemical engineers develop and design chemical manufacturing processes. Chemical

engineers apply the principles of chemistry, biology, physics, and math to solve problems that

involve the production or use of chemicals, fuel, drugs, food, and many other products.

1.3 WHAT IS ENGINEERING LAW? Engineering law refers to the application of laws applying to the practice of professional

engineering. Engineering law is the study of how ethics and legal frameworks are adopted to

ensure public safety surrounding the practice of engineering. California law defines

engineering as the professional practice of rendering service or creative work requiring

education, training and experience in engineering sciences and the application of special

knowledge of the mathematical, physical and engineering sciences in such professional or

creative work as consultation, investigation, evaluation, planning or design of public or

private utilities, structures, machines, processes, circuits, buildings, equipment or projects,

and supervision of construction for the purpose of securing compliance with specifications

and design for any such work.

By comparison Ontario lists safeguarding of life and public welfare in its definition. Ontario

law defines engineering as the act of planning, designing, composing, evaluating, advising,

reporting, directing or supervising that requires the application of engineering principles and

concerns the safeguarding of life, health, property, economic interests, the public welfare or

the environment, or the managing of any such act.

The practice of engineering is largely separated from the practice of a natural scientist by

engineering law. A semiconductor physicist and an electrical engineer, practicing at a large

company are mainly differentiated by the laws they are practicing under and the license they

carry. The laws and the license will affect the tasks that can be performed by the engineer

compared with the tasks that can be performed by a natural scientist. Engineers are held to a

specific legal standard (see below) for ethics and performance while a natural scientist is not.

Engineers are subject to disciplinary measures such as fines or loss of license for professional

misconduct and negligence.

Engineering must be conducted in an orderly and ethical manner where all appropriate codes

and standards are carefully considered. Orderly consideration is a vital part of any

engineering work involving public safety or a contract. Any disorder involved in engineering

practice could be termed as reckless or hacking and may endanger the public's trust in the

safety or quality of the engineering being practiced. Negligent practice evolves when

managerial, accounting, scheduling or legal pressure impinges on the careful consideration of

proper engineering practice. Engineers must conduct themselves in a dignified manner and

their work must reflect this dignity and a dedication to excellence.

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To avoid reckless engineering practice engineers must ensure they have documented process,

formalized requirements and formal methods of practice. All documents and analysis must be

up to a high standard and must be well considered.

It is possible to compare the professions of law and engineering. Just as courts must maintain

a certain order or decorum for a fair trial to proceed so too engineering must be conducted in

an orderly fashion with a certain formalized method and process. When this order breaks

down catastrophes may occur.

1.3.1 MAIN TOPICS UNDER ENGINEERING LAW Key topic areas for engineering law are:

- Ethics, professional misconduct, negligent practice and gross negligence

- Tort law is integral to assigning blame and penalties after engineering failures

- Contract law is the promissory basis for the vast majority of engineering projects

- Product liability law for manufactured products

- Intellectual property protection, which includes patents, copyrights, trade secrets and

integrated circuit topographies.

- Safety legislation codes, and regulations, which includes plant safety, risk

management, the electrical code and food safety

- Standards and certification, which can be product or system specific constraints on

design and testing processes often imposed for health and safety reasons.

1.4 MANAGERIAL ECONOMY RELATING TO CHEMICAL ENGINNERING Management is important for everything, whether it is individual or an organization.

Wherever there are activities we need to manage them to achieve our timebound objectives.

In chemical engineering we are concerned with the role of plant operation, design, equipment

procurement, election, etc. Therefore, to manage these activities we are working with a team

which can be internal and external. There are multidisciplinary experts and we will be dealing

with these people who can be your peers, above and below you in hierarchy. So, to complete

the project or to operate the plant successfully. We need to manage the activities and the

people also. Management is important and we all do this every time knowingly or

unknowingly.

Management is the process of planning, controlling, and directing resources (human,

financial processes, material's etc.) of a business to achieve certain objectives. A chemical

engineer works in an organization where inputs are bought which is supply chain and

products are sold that is sales and marketing. The organization has human resources who are

recruited, managed, disciplined, rewarded and who work according to labor and other laws.

That is human resource management. Things are bought are sold for money and payments

made or received and someone has to know how to account for these hence the need for

financial management. Markets change due to actions in and outside the organization such as

government action, competitor activity and processes changes due to automation and

innovation. Someone needs to plan for these hence the need for strategic thinking which is

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part of management. All these activities need to be coordinated so that they support each

other and seamless operations is achieved.

1.5 MANAGERIAL ECONOMICS/ MANAGERIAL ECONOMY Managerial economics is a branch of economics involving the application of economic

methods in the managerial decision-making process. Managerial economics aims to provide a

frame work for decision making which are directed to maximize the profits and outcomes of

a company. Managerial economics focuses on increasing the efficiency of organizations by

employing all possible business resources to increase output while decreasing unproductive

activities.

The two main purposes of managerial economics are:

1. To optimize decision making when faced the firm is faced with problems or obstacles,

with the consideration of macro and microeconomic theories and principles.

2. To analyze the possible effects and implications of both short and long-term planning

decisions on the revenue and profitability of the Business.

To correctly optimize economic decisions, both managerial economics objectives may

involve the use of operations research, mathematical programming, strategic decision

making, game theory and other computational methods. The methods listed above are

typically used for making quantitate decisions by data analysis techniques.

The theory of Managerial Economics includes a focus on; incentives, business organization,

biases, advertising, innovation, uncertainty, pricing, analytics, and competition. In other

words, managerial economics is a combination of economic and managerial theory. It helps

the manager in decision-making and acts as a link between practice and theory. Furthermore,

managerial economics provides the device and techniques for managers to make the best

possible decisions for any scenario.

Some examples of the types of questions that the tools provided by managerial economics

can answer are;

1. The price and quantity of a good a business should produce.

2. Whether to invest in current staff by training or go to market for staff.

3. When to retire fleet equipment.

Managerial economics is sometimes referred to as business economics and is a branch of

economics that applies microeconomic analysis to decision methods of businesses or other

management units to aid managers to make a wide array of multifaceted decisions. The

calculation and quantitative analysis draw heavily from techniques such as regression

analysis, correlation and calculus.

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CHAPTER TWO

LITERATURE REVIEW

2.1 WHAT TYPES OF LAW DO ENGINEERS NEED TO STUDY? Engineering and law may not seem to have much in common, but laws affect every

profession in some way. Engineers deal with highly technical concepts, designs and products,

and the laws affecting an engineer’s work can be as complex as the work itself. While

engineers may be reluctant to devote time to a subject like the law, there are some laws that

engineers should be familiar with in order to avoid problems during their careers.

Engineers and engineering managers need to have a working knowledge of the laws that

affect their work so that they can do the following:

- Follow regulations.

- Stay compliant with governmental ordinances.

- Know which permits are necessary in which circumstances.

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- Protect their work.

- Know the boundaries of liability.

- Avoid lawsuits.

- Negotiate contracts.

- Know when to contact a lawyer.

Here are some of the types of laws that engineers and engineering managers should

understand generally.

2.1.1 CONTRACT LAWS Engineering firms work with clients, and almost every project involves a contract. Contracts

form the basis of an engineer’s work, and contracts are legally binding documents.

Understanding the basics of contract law protects engineers’ rights and obligations, and it

helps avoid potential lawsuits due to accidental breach of contract.

2.1.1 TORT LAWS In engineering, laws about tort primarily deal with civil injuries resulting from negligence.

Courts measure the damages resulting from these injuries in monetary amounts. Liability

issues can be complex, but engineers should learn the basics to protect themselves and their

companies.

2.1.3 INTELLECTUAL PROPERTY LAWS The term “intellectual property” is a broad classification, but engineers work with it on a

daily basis. Patents, copyrights and proprietary designs all fall under intellectual property

laws.

Engineers who do not understand patent law can end up infringing on someone else’s

intellectual property rights or accidentally forfeiting their own. Companies often have their

own policies regarding intellectual property, and engineers need to understand those policies

and how they affect their own work.

2.1.4 LAWS AFFECTING THE WORKPLACE In addition to the laws engineers need to know, engineering managers may also need to

understand the various laws regulating hiring and the workplace. National and state laws

cover everything from hiring practices to workers’ compensation.

Health and safety laws can be especially important in the engineering field. There are also

laws preventing discrimination in the workplace, laws governing medical leave and laws

protecting workers’ rights.

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Managers serve different functions in a company, so not all engineering managers need to

know the details of all laws affecting the workplace. Those interested in an engineering

management career, however, should be aware that these laws exist and can affect a

manager’s day-to-day duties.

There are some law topics that engineers simply cannot ignore if they want to avoid potential

legal troubles. For engineering and engineering management professionals, taking the time to

learn what types of engineering laws can affect their careers — both positively and negatively

— can only be beneficial in the long run.

2.2 SOURCES OF LAW Sources of law means the origin from which rules of human conduct come into existence and

derive legal force or binding characters. It also refers to the sovereign or the state from which

the law derives its force or validity. There are many different sources of law in any society.

Some laws will be written in the country's Constitution; others will be passed by the

legislature (usually a parliament or congress); others will come from long social tradition.

Sources of law is a legal term that refers to the authorities by which law is made. There are a

number of different sources that are used to define the creation and force of law, though not

all are used equally. Some examples of sources include legislation, government regulation,

court decisions, and custom. Several factors of law have contributed to the development of

law. These factors are regarded as the sources of law.

There are many different sources of law:

•The Constitution

•Customary law

•Common law

• Legislation

• Case law

There are different participants in the law:

•Those who pass laws (legislature)

•Those who apply laws (judiciary)

2.3 CRIMINAL AND CIVIL LAW Those who enforce laws (police and others) Not all court cases involve crimes. Many of them

do, of course; but many others involve what is called civil law, rather than criminal law.

Criminal law deals with offences by people against society as a whole. Prosecutions are

usually brought in the name of the Head of State, or of the State itself. Civil law deals with

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offences by people against other individuals. This may include disputes over fences and other

land matters, defamation cases, damaged property, broken promises or a host of other

disputes between people. In a criminal court, the two sides are called the prosecution and the

defence. In a civil court the two sides are called the plaintiff (that is the person who is

bringing the complaint) and the defendant or in some cases, the respondent. In a criminal

court, the judgment at the end of the hearing will be that the defendant is either guilty or not

guilty. In a civil case there is no question of guilt, because nobody has been charged with any

crime; the judgment will simply be either for the plaintiff or for the defence. In a criminal

court, a defendant who has been convicted (that is, found guilty) will be sentenced – usually

by either a fine or imprisonment. In a civil case, there is no sentence. However, if judgment is

for the plaintiff (that is, the person bringing the complaint wins), the court may award

damages against the defence. This means the court agrees that the plaintiff has been wronged

by the defendant, and orders the defendant to pay a sum of money (called damages) by way

of compensation. The court may also, under certain circumstances, order the losing side to

pay all the legal costs of the winning side. This would happen usually if the judge considers

that the loser has acted unreasonably in fighting the case at all, and should have settled out of

court without forcing the other person into expensive legal proceedings.

2.3.1 CIVIL LAW VS CRIMINAL LAW. There are two main kinds of law: Criminal law and Civil law

Civil law and criminal law are two broad and separate entities of law with separate sets of

laws and punishments. According to William Geldart, Introduction to English Law 146

(D.C.M. Yardley ed., 9th ed. 1984), "The

difference between civil law and criminal

law turns on the difference between two

different objects which law seeks to

pursue - redress or punishment. The

object of civil law is the redress of

wrongs by compelling compensation or

restitution: the wrongdoer is not punished;

he only suffers so much harm as is

necessary to make good the wrong he has

done. The person who has suffered gets a

definite benefit from the law, or at least

he avoids a loss. On the other hand, in the

case of crimes, the main object of the law

is to punish the wrongdoer; to give him

and others a strong inducement not to

commit same or similar crimes, to reform

him if possible and perhaps to satisfy the

public sense that wrongdoing ought to

meet with retribution.” Examples of criminal law include cases of burglary, assault, battery

and cases of murder.

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FIG 1: CRIMINAL LAW VS CIVIL LAW

2.3.2 CONTRACTS A contract is a legal agreement between two parties which is enforceable in a court of law or

by binding arbitration. In other words, a contract is an exchange of promises with a specific

remedy for breach of those promises.

A contract must contain:

1. An offer which is made and accepted,

2. Mutual intent to enter into the contract,

3. Consideration,

4. Capacity, and

5. Lawful purpose.

A contract will contain a number of terms as well perhaps supporting documentation. A term

requiring performance of one of the parties is said to specify an obligation for that party. An

obligation essential to the contract is called a condition while a non-essential obligation is

called a warranty. A term obligating a party to not do something is a negative covenant.

2.3.3 INTERPRETING A CONTRACT The rule of contra proferentem is used in interpreting the terms (i.e., against the party drafting

the term) and while there may be implied terms (see The Moorcock, 1889), no addition or

variation to the terms can be made by parole evidence (by verbal but not written terms).

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2.3.4 DISCHARGING A CONRACT The contract is discharged (concluded) when all parties have satisfied their obligations, when

there is an agreement to discharge, by the terms of the contract, or by frustration.

2.3.5 BREACH OF CONTRACT If a party, under the terms of the contract, fails to perform one or more obligations, it is said

to be the defaulting party and it has breached the contract with the innocent party. The breach

of an obligation may result in damages to the innocent party for which the innocent party may

seek a remedy, but it requires a breach of a condition for the innocent party to consider the

contract discharged by the breach.

2.4 MANAGERIAL ECONOMY UNDER CHEMICAL ENGINEERING Managerial Economics is a discipline that combines economic theory with managerial

practice. It tries to bridge the gap between the problems of logic that intrigue economic

theorists and the problems of policy that plague practical managers. “Managerial Economics

is concerned with the application of economic concepts and economic analysis to the

problems of formulating rational managerial decisions.”

2.4.1 ROLES OF MANAGERIAL ECONOMISTS Spencer and Siegelman have defined the subject as “the integration of economic theory with

business practice for the purpose of facilitating decision making and forward planning by

management.”

- They study the economic patterns at macro-level and analysis it’s significance to the

specific firm they are required to work in.

- They have to consistently examine the probabilities of transforming an ever-changing

economic environment into profitable business avenues.

- They assist the business planning process of a firm.

- They also have to carry the cost-benefit analysis.

- They assist the management in the decisions pertaining to internal functioning of a

firm.

- A managerial economist helps the management by using his analytical skills and

highly developed techniques in solving complex issues of successful decision-making

and future advanced planning.

- Accurately values all operations (support and production) of an entity (i.e., the supply

and consumption of resources) in monetary terms.

- Provides information that aids in immediate and future economic decision making for

optimization, growth, and/or attainment of enterprise strategic objectives

- Project Management

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- Planning, directing, and controlling resources (people, equipment, material) to meet

the technical, cost, and time constraints of the project.

- The application of knowledge, skills, tools, and techniques to project objectives to

meet stakeholder needs and expectations

- Project as “an organization of human, materials and financial resources in a novel

way, to undertake a unique scope of work, of given specification, within constraints of

cost and time, defined by quantitative and qualitative objectives so as to achieve a

beneficial change”.

- Achieving Quality on Projects requires:

- Quality of the management process (most important)

- Quality of the product (ultimate goal)

Study of Managerial Economics helps in enhancement of analytical skills, assists in rational

configuration as well as solution of problems. Management can be defined as the organ or

body of an organization specifically charged with planning, organizing, directing and

controlling the use of the organization’s resources effectively and economically to attain the

organization’s objectives. Managerial economics for chemical engineers is concerned with

the systematic evaluation of the costs and benefits of proposed technical and business

projects. It involves technical-economic analysis with a decision assisting objectives;

mathematical modeling with emphasis on the economic effects is the primary analytical

technique used to select between defined feasible alternatives.

2.5 THE ISSUES UNDER THE ENGINEERING LAW AND MANAGERIAL

ECONOMY BASED ON CHEMICAL ENGINEERING Construction works, especially those in the industries handles by chemical engineers are

usually exposed to unforeseen circumstances and unexpected events (natural hazards) that

can result in unforeseen losses for a Contractor. To avoid unforeseen losses that can make a

project a loss for a contractor, it is important that the Contractor’s Lawyer identify potential

risks and seek to negotiate their allocation between his client and the employer (party

procuring work) during the contract formation stage.

The idea is that since such risks emanate from circumstances not the due to the fault of either

party, it is only fair that each party takes a role in absorbing the costs. Thus, the industry is

well advised not to place all risks on the contractor. To do so will lead to higher tender prices

and the attendant risk of less competent contractors winning bids. The main concern of a

construction lawyer as indeed construction contracts is therefore the prior and equitable

allocation of risks. In this, the starting point is to identify and assess the risks upon which

decisions will be taken on their allocation. Following this is the question who shall bear

what?

2.5.1 RISKS WHICH THE CONTRACTOR CAN BEAR First, in the efficient management of risks, contractors, should decide which risks they can

accept and manage (such as those arising from government policy and economy) or better

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still those risks they can pass on to insurance policies (such as personal injury and damage to

equipment).

Secondly, there are risks which arise from third parties (i.e., manufacturers, suppliers,

subcontractors) and which risks (design, maintenance risks, workmanship) are best passed on

to those third parties.

2.5.2 RISKS WHICH THE EMPLOYER CAN BEAR Force Majeure:

This usually refer to an extraordinary event or circumstance beyond the control of a party

which prevents the party from fulfilling his/her obligation under the contract, temporarily or

permanently. In construction, such risk is more fairly borne by the employer as it manifests

independently of the will of the contractor (completely out of his control) to prevent or delay

the performance of the contract.

The unavoidability of an event and its consequences are sufficient factors to constitute force

majeure in some jurisdictions. While in others such as France, there is the added requirement

of unpredictability. In other words, where the event was reasonably foreseeable, the party

concerned is expected to have taken such event into account at the time of making the

contract. If he does not, he will be liable for any damage that result.

Thus, in the English case of Matsoukis v. Priestman & Co [1915], the Court held that force

majeure could not be extended to cover bad weather, football matches or a funeral, saying

“these are the usual incidents interrupting work and the defendants, in making their contract,

no doubt took them into account”.

There are 2 categories of force majeure though some legal systems combine them as one.

The first are those occurrences commonly referred to as Acts of God. These are natural

disasters that include flood, volcanic eruptions, earthquakes, hurricanes etc. The second

category consist of extraordinary events triggered by human acts or technical failures. These

include wars, terrorist attacks, riots, strikes, labor disputes resulting in strikes, lockouts,

power outages etc.

There is much less disagreement on what constitutes force majeure when it comes to natural

disasters. However, there is much controversy as to what human acts or technical failures can

constitute force majeure, particularly as some jurisdictions completely exclude such category

of events.

In the circumstance, it makes good commercial sense for construction contracts (notably in

Nigeria) to expressly define force majeure and state the extraordinary occurrences or

circumstances, acts of God or otherwise, that can constitute it.

In certain cases, a force majeure event may result in delay as opposed to total non-

performance. In such cases, a force majeure clause should make provision for the Contractor

to be allowed additional time to complete the works.

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Other Liabilities:

When a Contractor fails to complete work within the time frame stipulated or within a

reasonable time thereafter, he can be liable to pay penalties or liquidated damages without a

limit for the delay in completing works. Likewise, a Contractor is typically liable for damage

or injury which arise from his/her default or negligence without any limitation.

In such cases, a Contractor’s Lawyer will do well to suggest a limit as to the penalty or

liquidated.

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CHAPTER THREE

METHODOLOGY Throughout history, chemical engineers have had a profound impact on society and the

world. Since the ancient Greeks and Romans, chemical engineering prowess has enabled and

driven the economies that supported empires. The first and second industrial revolutions

brought with them the formalization of the profession of engineering. What it means to be an

engineer became intertwined with the impact of the grand challenges that were being

addressed at the time. As we move through a fourth revolution based around data and

communications, no doubt another set of disciplines will emerge.

Chemical engineers have developed solutions to environmental problems, such as pollution

control and remediation. And yes, they process chemicals, which are used to make or

improve just about everything you see around you.

3.1 PROBLEMS FACED AND SOLUTIONS APPLIED

3.1.1 TACKLING CLIMATE CHANGE The global community lacks no ambition, or urgency, when it comes to climate change. For

over thirty years the Intergovernmental Panel for Climate Change (IPCC) has expounded the

scientific case for climate change, limiting global temperature rise and reducing greenhouse

gas emissions. The 2015 Paris Agreement was adopted by nearly every nation, committing to

limiting global temperature increase to below 2°C, while pursuing means to limit it to 1.5°C.

Yet on almost every effort – scale-up of renewables, reenergizing nuclear, or deployment of

carbon capture, utilization and storage (CCUS) – we currently lag the required trajectories,

while absolute global emissions continue to rise. Ambition and urgency are not enough; we

also need pragmatic solutions.

In 2009, a Cambridge University team, concerned about the lack of real progress asked the

simple question: what would make a big difference? They found that global carbon emissions

were driven by three almost equal activities: energy use in buildings, in vehicles, and in

industry. For buildings and vehicles efficiency improvements and technology switching were

clear technical pathways for reducing emissions, but industry was already relatively efficient,

possessed few viable production alternatives, and was facing significant future materials

demand growth. As such industry has been labelled ‘difficult to decarbonize’.

The Cambridge team’s acclaimed book, Sustainable Materials: With Both Eyes Open,

outlines the decarbonization challenges faced by industry and reviews all available options.

The book presents two approaches. ‘With one eye open’ describes a range of technical

options being pursued: energy efficiency, heat capture, novel process routes, CCUS and

decarbonized electricity. The team modelled trajectories of these technologies to 2050, for

five materials. If every technology was deployed, to its technical limit, in each industry, then

emissions per tonne of material could be halved. However, demand for these materials is

expected to double by 2050, resulting in zero absolute emissions savings. This is clearly a

problem.

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‘With both eyes open’ outlines an alternative range of mitigation options, collated under the

banner of ‘material efficiency’: using less material by design, reducing yield losses, diverting

manufacturing scrap, re-using metal components, longer life products and reducing final

demand. These six options had been traditionally overlooked by industry yet with new

business approaches and models, these could become profitable and mitigate emissions.

Modelling these options was challenging, but the results showed that pursuing material

efficiency across the five materials could halve emissions per tonne of material by 2050.

Combining both the options together (one eye and both eyes open) could lead to a 75%

reduction in emissions per tonne, equal to a halving of absolute emissions—some real

progress

Both approaches face significant challenges and much effort is still required to successfully

deploy any option at scale.

A key question to emerge from this analysis is: what should industry be doing? Reducing

yield losses in the metal industries is a good start: currently 25% of all steel, and 50% of all

aluminum, never makes it into a product, but is re-melted within the plant, wasting energy

and producing unwanted emissions. Another is closing the gap between the best and worst

performing plants, which can be as large as 30% for some industries. To do so requires a new

methodological approach that considers the interactions between energy and materials in

process plants and provides a comparable metric of how efficiently plants transform

resources (energy and materials) into products. Resource efficiency provides such an

approach.

3.1.2 RESOURCE EFFICIENCY Improving industrial resource efficiency is one of the most cost-effective options to

simultaneously avoid wasting scarce and toxic resources, reduce operating costs and CO2

emissions, and improve responsiveness to future climate regulations. In fact, understanding

the current state of a facility’s resource use, the factors driving it and the opportunities

available to minimize it, is a prerequisite for companies to remain competitive.

The good news is, there is overwhelming evidence that the improvement potential of circular

and resource efficiency measures in process industries is vast. The current raft of metrics,

however, are ineffective: they are criticized for failing to appropriately quantify the energy

and environmental impacts of improvement interventions. Furthermore, these metrics

typically provide insight at the country or global level but are difficult to apply to resource-

intensive material production. For such industries, applying circularity strategies to reduce

emissions in practice means reducing overall resource inputs and waste of (energy and

materials) per tonne of product.

We know that measurement is the dogma of industrial production. Understanding a

company’s reliability, safety, or its production quality necessitates tracking their relevant

performance metrics. Resource efficiency is no different. The first step in becoming more

resource efficient involves putting a number on it. CEOs from resource-intensive sectors are

coming under increased pressure from shareholders to disclose how they are preparing for the

low-carbon economy and to demonstrate their sustainable business strategies. This pressure

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then translates into demands for site managers to quantify their operational resource

efficiency. However, managers are struggling to come up with a meaningful metric.

Emerson has developed an engineering solution based on well-established thermodynamics.

Though devised in the 1900s, this method (commonly known as exergy or availability) has

experienced a renaissance in the past two decades.

The approach traces resource use across entire production systems and characterizes

resources as a combination of two components: a chemical portion, based on the resource’s

composition and concentration; and a physical portion, which accounts for the resource’s

temperature and pressure. Using thermodynamics to disaggregate chemical and physical

resource components also enables us to measure the quality as well as the quantity of these

resources. This is key because not all resources are equally valuable. We want to ensure that

the efficiency improvement measures we identify focus on the resources that make the

biggest difference to CO2 emissions.

Unlike conventional energy-intensity or material-efficiency metrics, this new indicator

integrates energy and material flows into a single, dimensionless number. In doing so, it

consolidates multiple KPIs that currently measure resource use from different standpoints. As

a result, producers are empowered to make the right choices at the right time, while widening

the breadth of efficiency options available and capturing unavoidable trade-offs.

Based on this, we can now measure resource efficiency as a ratio of useful resource outputs

to resource inputs. Results from these methods are founded on accurate energy and material

flow sensor data and are substantiated through rigorous data collection, cleaning and analysis

processes.

Armed with a meaningful measure of resource efficiency, companies can now manage and

track their resource efficiency from bottom-up – be it through real-time management systems,

operational performance reviews or the development of sector-wide benchmarks. The

integration of all three activities along the management ladder and across the value chain

would be the ideal.

3.1.3 CHEMICAL ENGINEERING REDEFINED We’ve taken enormous strides in making the process industries that we work in safe. We now

need to tackle the issue of climate change and carbon neutrality with the same determination.

Within the career-memory of many of us, serious injuries and fatalities characterised the

operation of the process industries. Extraordinary efforts have been and continue to be made

to address this. The idea of zero injuries has shifted from being a wild aspiration to the

expected norm with safety a central focus of every chemical engineer. We’ve surrounded

ourselves with practices, procedures and regulations that institutionalise this thinking and

secure on-going improvement, but at what cost to our profession?

In the last 30-40 years the defining characteristics of engineers have changed. As procedures

have become automated and institutionalised, and safety practices standardised and

formulaic, some argue that engineers have moved down the spectrum from rule breakers and

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rule makers to being predominantly rule followers. Efficiency and conformity have overtaken

innovation and creativity as the most prized characteristics.

Ironically, as our willingness and ability as a profession to innovate is diminished we find

ourselves facing perhaps the grandest challenge of all – how to protect our planet from the

impacts of climate change without damaging the economic systems that have done so much

to raise people out of poverty. There has never been a more urgent need for the qualities and

capabilities that have defined engineering and engineers for centuries. We need to rediscover

our heritage and learn how to reward risk taking and alternative thinking – without

compromising safety. We need to foster a renewed sense of rulemaking and learn to tolerate

and manage an appropriate amount of rule breaking – because if we don’t, and we fail to live

up to our responsibilities for, and ability to, impact climate change there are no alternate

groups with the knowledge and expertise necessary to take our place.

Central to this is the ongoing need to attract the right talent, develop and retain them within

the profession.

We particularly must nurture and support those with the mindset to challenge behaviours and

make the new rules essential to overcoming this latest grand challenge.

Public perception of our industry is wrong and misguided, and we need to make sure that we

don’t perpetuate the myth. There is a groundswell of activity by engineers and industry to

tackle this grandest of challenges – working together through organisations and alliances such

as the Oil & Gas Climate Initiative (OGCI) and the Task Force on Climate-related

Disclosures (TFCD) to ensure progress is as rapid and impactful as possible. IChemE has

revised its own strategy to fit with the UN Sustainable Development Goals and Engineering

Grand Challenges (go and have a look at them if you don’t know what they are).

We will continue these themes and begin to change the conversation at APAC 2019, where

leading figures from the field of process automation and control will gather to look at themes

as diverse as sustainability, emerging technologies and cyber security.

3.2 TORT CASES IN THE FIELD OF CHEMICAL ENGINEERING

3.2.1 CASE STUDY 1 Ontario Industrial Laundry Inc. ("OILI") is the owner of several laundry plants in Ontario.

OILI's operations include handling the laundry for various industrial and institutional

facilities around the province. OILI decided to build a large new plant in Brampton. The new

plant would replace a number of smaller and aging facilities OILI operated nearby.

OILI engaged an architectural firm, Clever and Really Useful Design Developments Inc.

("CRUDDI"), and entered into an architectural services agreement with it. Under the

agreement, CRUDDI was to design the new plant and prepare construction documentation

necessary to build it. According to the agreement, CRUDDI was to design "the most modern

and technically up-to-date laundry in Canada."

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CRUDDI hired a number of engineering consultants to provide the various engineering

design services necessary for the project. Of these, Mechanical Engineering Systems and

Services Inc. ("MESSI") was to design the air conditioning and handling system.

Although MESSI did not have a contract with OILI, it worked closely with a representative

of OILI who specified that, as it was important to provide comfortable working temperatures

in the plant, the air conditioning and handling system must be able to provide working

temperatures in the range of 22 to 25°C and a minimum of 18 air changes per hour.

OILI, on the basis of competitive tenders, awarded the contract for the construction of the

new plant to Dominion Industries and Related Technologies Inc. ("DIRTI"). The contract

price was $15 million. DIRTI completed the construction in accordance with the contract

drawings and specifications.

Almost immediately after having commenced its operations in the new plant, OILI

experienced problems in the air conditioning and handling system. The temperature in the

working areas was excessive, reaching 38°C in the summer months. In the compressor room,

the temperature reached 50°C and caused malfunctions. In addition, the circulation was poor

and the air quality was offensive. The employees began suffering fatigue and other ailments

and it became necessary for them to take frequent "heat breaks."

CRUDDI and MESSI tried several times to remedy the problems but they were unsuccessful.

OILI retained Top Industrial Designs Inc. ("TIDI"), another mechanical engineering

company, to conduct an independent investigation. TIDI determined that the air conditioning

and handling system was underdesigned. The air conditioner's chilling unit had a capacity of

only 230 tonnes; a larger unit having a capacity in the order of 600 tonnes should have been

specified. In addition, the exhaust and intake vents on the roof were located too close to each

other and caused exhausted air to re-enter the plant.

TIDI determined that the system would require $1.1 million in modifications in order to meet

the plant's specifications. It also indicated that, had the system been specified and constructed

as it ought to have been in the first place, construction costs incurred by OILI would have

been $400,000 higher, that is, $15,400,000.

3.2.2 CASE STUDY 2 Hyper Eutetoid Steal Inc. ("HESI") is a company which produces various types of style for

industrial applications. In order to increase the strength of its steel products, HESI uses a

process of quenching and tempering.

During the quenching stage, hot steel is quickly cooled with water. During the tempering

phase, the steel is then heat treated for an appropriate time. The process requires large

amounts of water and heat.

Faced with rising costs for energy, HESI decides to install a heat recovery system. The

system would include a heat exchanger by which heat could be recovered from the cooling

water in the quenching stage, combined with additional heat from a steam line in the plant

that was otherwise not being fully utilized. The recovery heat, then, would be used to heat the

steel in the tempering stage.

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HESI entered into an equipment supply contract with Energy Recovery and Recycling

Systems Inc. ("ERRS"). ERRS agreed to design, supply and install a heat recovery unit for a

contract price of $600 000. After an analysis of HESI's process, ERRS determined and

guaranteed in the contract that the heat recovery system would recover 40% of the heat in the

cooling water and that this would result in substantial savings in energy costs.

The contract also contained a provision limiting ERRS's total liability to $600 000 for any

loss, damage or injury resulting from ERRS's performance and its services under the contract.

The heat recover system was installed and operation; however, certain defects in the heat

exchanger prevented the system from recovering more than 5% of the heat in the cooling

water. After repeated unsuccessful attempts by ERRS to remedy the defects, HESI hired

another supplier, who, for an additional $800 000 replaced the heat exchanger and was able

to achieve the level of performance originally promised by ERRS. The total amount received

by ERRS under its contract was $500 000.

3.2.3 CASE STUDY 3 Clearwater Ltd. ("Clearwater"), a process-design and manufacturing company, entered into

an equipment-supply contract with Pulverized Pulp Ltd. Clearwater agreed to design, supply,

and install a cleaning system at Pulverized Pulp's Ontario mill for a contract price of $800

000. The specifications for the cleaning system stated that the equipment was to remove 99 %

of certain prescribed chemicals from the mill's liquid effluent in order to comply with the

requirements of the environmental control authorities. However, the contract clearly provided

that Clearwater accepted on responsibility what-so-ever for any indirect or consequential

damages, arsing as a result of its performance of the contract.

The cleaning system installed by Clearwater did not meet the specifications, but this was to

determine until after Clearwater had been paid $720 000 by Pulverized Pulp. In fact, only

70%nbsp; % of the prescribed chemicals were removed from the effluent.

As a result, Pulverized Pulp was fined $60 000 and was shut down by the environmental

control authorities. Clearwater made several attempts to remedy the situation by altering the

process and cleaning equipment, but without success.

Pulverized Pulp eventually contracted with another equipment supplier. For an additional cost

of $950 000, the second supplier successfully redesigned and installed remedial process

equipment that cleaned the effluent to the satisfaction of the environmental authorities, in

accordance with the original contract specifications between Clearwater and Pulverized Pulp.

3.2.4 CASE STUDY 4 A newly formed energy company ("NEWCO") decided to investigate the possiblity of

developing a liquefaction process to convert coal deposits into oil.

NEWCO entered into a contract with a large engineering firm pursuant to which the

engineering firm was to carry out a feasibility study to determine, over a period of eight

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months and by a specified date, the feasibility of the proposed liquefaction process. The

contract between NEWCO and the engineering firm expressly provided that should the

feasibility study be completed by the deadline date specified and should the results of the

study indicate that the liquefaction process proposed by the engineering firm would meet the

specified quality and volumes of liquefied oil output, then the engineering firm would be

authorized to carry out further work to develop the liquefaction process to operate on a

commercial basis, all on terms and conditions clearly set out in the contract between

NEWCO and the engineering firm.

The engineering firm undertook the feasibility study and, although the results of the

feasibility study appeared promising and in compliance with the parameters specified in the

contract with NEWCO, the engineering firm found that it would be unable to complete the

feasibility study by the date specified. The president of the engineering firm explained to the

president of NEWCO that the engineering firm would not be able to fulfill all aspects of the

feasibility study as required by the specified date. The president of the engineering firm

emphasized that whereas the engineering firm would likely be two weeks late in completing

its feasibility study obligations, the result of the feasibility study indicated that the

liquefaction process would very likely meet NEWCO's requirements for commercial

production as specified.

The president of NEWCO indicated to the president of the engineering firm, verbally, that the

time for completion of the feasibility study would be extended.

The engineering firm completed the feasibility within two weeks after the date specified in

the contract.

Subsequently, NEWCO took the position that the engineering firm had not completed the

feasibility study in time and, accordingly, that NEWCO was not obligated under the wording

of the contract to authorize the engineering firm to carry out further work to develop the

liquefaction process on a commercial basis. Instead, NEWCO issued a request for proposals

from several firms for the development of the liquefaction process to operate on a

commercial basis. NEWCO selected another firm that was prepared to undertake the

development of the process for a fee substantially lower than the fee that was to have been

paid to the original engineering firm had it completed the feasibility study by the date

specified in the contract.

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CHAPTER FOUR

RESULTS AND DISCUSSION For chemical engineering as a profession, we should take great pride in what we’ve

accomplished: billions have been lifted out of poverty; education and good health has become

the expected norm across most countries; economies are vibrant with innovation and

creativity. But we also need to accept responsibility for the impact that progress has had:

pollution jeopardizes ecosystems around the planet; there is unprecedented depletion of non-

renewable resources; and most prominent of all, changes to climate and global warming

threaten the very existence of society.

4.1 SOLUTION TO CASE STUDY 1 The problem of the case was due to a breach of duty. OILLI awarded the contract of new

plant to DIRTI. The price was $15million and DIRTI completed the contract.

4.2 SOLUTION TO CASE STUDY 2 Relevant case law includes the concept of fundamental breach with Harbutt's Plasticine Ltd.

v. Wayne Tank and Pump Co. Ltd. where the defendant used "thoroughly" and "wholly"

unsuitable for is purpose. The concept of fundamental breach has not been overruled;

however, in the case of Hunter Engineering Company Inc. v. Syncrude Canada Ltd., the

decision was to accept the freedom of contract and true "construction approach". In this case,

the heat exchanger did recover at 5% of the heat in the cooling water and it would be unlikely

that the concept of a fundamental breach would be applicable here and therefore the

limitation clause would be enforced.

4.3 SOLUTION TO CASE STUDY 3 Relevant case law includes the concept of fundamental breach with Harbutt's Plasticine Ltd.

v. Wayne Tank and Pump Co. Ltd. where the defendant used "thoroughly" and "wholly"

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unsuitable for is purpose. The concept of fundamental breach has not been overruled;

however, in the case of Hunter Engineering Company Inc. v. Syncrude Canada Ltd., the

decision was to accept the freedom of contract and true "construction approach". In this case,

the cleaning system did remove at least 70% of the chemicals and it would be exceptionally

unlikely that the concept of a fundamental breach would be applicable here and therefore the

limitation clause would be enforced.

4.4 SOLUTION TO CASE STUDY 4 A gratuitous promise is an agreement made without consideration and does not constitute a

contract and in this case, it would be a verbal agreement to amend the terms of the already

existing contract.

This is a question of equitability. The engineering firm, had it known the deadline was not

flexible would not have devoted an additional two weeks of effort finish the study. Because

the president of NEWCO gave a gratuitous promise, the engineering firm continued the effort

to demonstrate that the process could achieve the required qualities and quantities of liquefied

oil.

An agreement made before the signing of the contract but which is not written into the

contract will, by the parol evidence rule, will not give cause to the courts to order an

amendment to the contract unless it can be shown to be either a common mistake and that the

contract is subsequently inconsistent.

After the signing of the contract, however, in the understanding of the nature of human

interactions, it is necessary for the courts to prevent the actions or inactions of one party

causing the other party to breach the contract. In a case such as John Burrows Ltd. v.

Subsurface Surveys Ltd. et al., it was a sequence of late payments which were accepted

without an insistence that the contract was breached; XXX.

In such a case, the court may estop one party from enforcing the strict interpretation of the

contract which falls under the remedy equitable estoppel.

If a second contract has already been signed by NEWCO, I am not aware of which remedy

the courts would take in this case: either the courts could potentially require that NEWCO

pay damages for lost profits or the second contract could be declared illegal in which case the

second firm may, too, sue for damages due to misrepresentation.

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CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATION For the evolving of chemical engineering, next 20 years (2021–2041) of continued use of

fossil fuels (especially oil) as the predominant source of energy and chemical feedstocks,

where managing carbon, reducing the intense use of energy resources, and educational efforts

to promote sustainability thinking will be critical; and

The next 20-100 years (2041–2141) in which the use of fossil fuels will be phased out, and

where the ability to carry out green chemistry and engineering (built on fundamental

understanding of the full life cycle impacts and toxicology of chemicals), and having access

to alternative renewable sources of fuels and feedstocks will be critical.

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REFERENCES 1. American Chemical Society, Cesar Garza, Amy Paris, Hector Hernandez 2021

2. American Institute of Chemical Engineers 2003, Article III.

3. Anastas, P. T., J. Warner. 1998. Green Chemistry Theory and Practice. Oxford: Oxford

University Press.

4. Herbst, Andrew; Hans Verwijs (Oct. 19-22). "Project Engineering: Interdisciplinary

Coordination and Overall Engineering Quality Control". Proc. of the Annual IAC conference

of the American Society for Engineering Management

5. Poliakoff, M., J. M. Fitzpatrick, T. R. Farren, and P. T. Anastas. 2002. Green Chemistry:

Science and Politics of Change. Science 297:807–810.

6. Research Teams and Partnerships: Trends in the Chemical Sciences, National Research

Council, National Academy Press, Washington, D.C., 1999.

7. Sustainable Materials: With Both Eyes Open (Allwood et al. 2012)

8. Swindin, N. (1953). "George E. Davis memorial lecture". Transactions of the Institution of

Chemical Engineers.

9. The Grandest Challenges; Chris Hamlin CEng FIChemE, Ana Gonzalez Hernandez, 201

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