May 11, 2017
The Top Five Benefits of Master Services Agreement
Is your company realizing these top five benefits of Master Services Agreements?
Legal language is necessary in any contract, but it’s not necessary for every transaction. When a mining company and a drilling contractor enter into a Master Services Agreement, the benefits can reach beyond the assumption of risk and how a breach of contract is handled.
Lawyers play an important role in protecting interests, but when you have a Master Services Agreement in place, you can put a drill rig to work on a drilling project without having to wait for the legal departments from both sides to negotiate terms. They’ve already been negotiated in the Master Services Agreement so everybody saves time and money by not having to negotiate terms for each project.
You can realize additional cost savings utilizing a Master Services Agreement by having one drilling contractor onsite running multiple drilling projects. This allows one onsite drilling supervisor, onsite maintenance across multiple drill pads, shared resources and consumables and streamlined invoicing. Having one drilling contractor onsite for multiple drilling disciplines also means one less contractor to manage for compliance and performance.
Getting to work faster
In addition to saving time and money, the drilling contractor can mobilize and get started on a project faster, without having to wait for every term and condition of the relationship to be negotiated to mutual satisfaction. A Master Services Agreement ensures that drilling can start as soon as a scope of work is defined and accepted. This can save weeks and months – and time is money.
Negotiating a Master Services Agreement does not necessarily guarantee drilling projects will be awarded, but it can offer the opportunity to negotiate better terms for a long-term relationship with drilling contractors to achieve cost savings on a global, regional or national scale.
Master Services Agreements may take a bit longer to initially negotiate, but in the long term, they prove to be easier to renew, re-negotiate and amend. They are also easier to administer, monitor and use across different drilling disciplines. For example, when used with drilling contractors, a Master Services Agreement can cover all types of drilling across a mine including pre-collaring, surface, underground and water services drilling.
Improved confidentiality and risk management
Master Services Agreements allow a high-level view of the parties’ overall business relationship. Confidentiality addressed in a Master Services Agreement can cover the entire project including the proposal and statement of work to alleviate worries of exposing sensitive information.
For risk, if individual agreements are used for each project, a limitation of liability capping risk may not be reasonable or acceptable. But if the overall relationship is considered, there may be a greater opportunity to negotiate such a limit on the risk exposure arising from the relationship. This can be especially beneficial when you’re hiring a drilling contractor for multiple drilling disciplines.
A Master Services Agreement may seem daunting, but if you’re considering one with your drilling contractors, contact Boart Longyear for best practices and our experience in making Master Services Agreements work for both parties.
Imagine having a drilling project scope of work and being able to pick up the phone and have a rig turning in 7-10 days. That’s the real beauty of Master Services Agreements.
Please have someone from Drilling Services contact me to talk about best practices for drilling contractor Master Services Agreements.
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