NCM - Project Sales

Question 1

What is NCM?

Answer 1

NCM (New Collaboration Model) provides a set of rules, processes and standard contracts to ease cooperation between BU and RU for international projects

Question 2

What are the aims of NCM?

Answer 2

Compliance with international tax requirements by adhering to the arm’s length principle and reduces internal negotiation

Question 3

What is the arm’s length principle?

Answer 3

Main principle: The price for any intercompany transaction has to correspond with the price independent third parties would have agreed upon under similar circumstances

Question 4

NCM must be applied when following criteria are fulfilled (5)

Answer 4

1) Project A, B, C
2) Project has offshore portion provided by BU
3) Project has onshore portion provided by RU
4) Project is in a country with a RU
5) BU provides substantial contribution

Question 5

NCM Scope Split - Steps

Answer 5

Step 1: On/Off Split
Step 2: Evaluation of Capabilities
Important for arm’s length

Question 6

NCM Profile 1 & 2

Answer 6

1: Supervision, Erection, Commissioning
2: Any function of 1 and/or construction

Question 7

NCM BoA-6

Answer 7

RU negotiates the end customer contract but the respective conditions have been agreed with BU in advance. Subcontract with BU (in compliance of nearly all end customer conditions)

Question 8

BoA-6 Conditions

Answer 8

1)Transfer of title
2) Financial guarantees
3) Payment securities, no internal letters of credit
4) Currency
5) Applicable Law
6) Dispute resolution between BU/RU

Question 9

NCM Open Consortium

Answer 9

• Split of price, scope, responsibilities BU/RU
• Separate invoicing
• BU Assumes full liability for cost resulting from any default of its own

Question 10

NCM Contract Split

Answer 10

Separate customer contracts BU/RU, can also be done afterwards in the form of novation

Question 11

Cross Border Staffing

Answer 11

1) Delegation concept requested and included in bid

Question 12

When does MoU has to be signed?

Answer 12

No later than PM040

Question 13

NCM - Profit Calculation on/off

Answer 13

On: Based on arm’s length and project profile. Basis: functional and risk analysis - needs to be comparable to 3rd party
Off: Residual Profit

Question 14

Collaboration Assessment Question

Answer 14

1) Project specific capabilities assessed?
2) Evaluation of local country information?
3) MoU been concluded?
4) Calculation sheet jointly signed?
Carried out in LoA Tool

Question 15

NCM Standard Documentation

Answer 15

Subcontract BoA-6, Consortium Coordination Agreement, Contract Split Coordination Agreement

Question 16

People to be nominated before PM080 (3)

Answer 16

Project Managers
WPC (checks RU profit within margin or not)
Steering Committee Member

Question 17

NCM Consortium Agreement - Which Business Models?

Answer 17

Open and Silent consortium

Question 18

When can NCM Standard Contracts be modified?

Answer 18

Only for country specific clauses or contracts