What Is an Epc Construction Contract

The EPC contract and the turnkey contract are very similar in nature. Sometimes these two types of contracts are used interchangeably, but have little difference. Skytanking has its own engineering team based in Brussels, which supports its customers in the planning, construction and commissioning of the refuelling infrastructure. Skytanking also operates airport tank farms and fire hydrant systems based on BOOT contracts. Unlike the EPC model, the EPC contractor is not directly involved in the construction of the project, but is responsible for the detailed planning and overall management of the project on behalf of the owner or client. While an EPC contract takes the form of a design and construction contract, the EPCM model can be considered a professional service contract. For each construction contract, the main considerations between the parties lie in the aspects of time, cost and quality. Although FIDIC contracts are recognized as an international standard for construction contracts and FIDIC`s general terms and conditions are considered appropriate in all cases, there are certain conditions that the parties should be aware of and that should consider whether these terms can be the subject of further negotiations. When planning and building tank farms, the parties often agree on a “build-own-operate-transfer” (BOOT) contract with a lifespan of several years after commissioning. In cases where the EPC contractor is a consortium composed of several companies, the EPC contractor will normally indicate in the EPC Treaty that these companies are jointly and severally liable to the employer. The EPC Contractor is also responsible for the work performed by a subcontractor (as defined below), as well as for any act or omission of the subcontractor. There are many companies in the fields of development and infrastructure, renewable energy and the energy industry that prefer the use of engineering, procurement and construction contracts to manage complex projects.

An engineering, procurement and construction contract (“EPC Contract”), sometimes referred to as a “Turnkey Contract”, is a construction contract in which the Contractor (“EPC Contractor”) is responsible for the design, procurement, construction, commissioning and delivery of a project (“Project”). The plant must achieve a certain level of efficiency, which is indicated in the contract as the “Specifications” section. The EPCM contractor has a duty to ensure that the engineering and design of the project conform to the technical and functional specifications of the project. The monitoring, management and coordination of the construction interface according to a detailed schedule is the primary responsibility of the EPCM contractor. The EPC contractor can stick to a strict schedule and will hire the right contractors for your project without you having to make any effort. An EPC contract is best suited for those who wish to build high-voltage power plants, as the nature of the project is complex and construction can involve a number of risks. A EPC treaty has several characteristics, one of which is that it is a global contract that defines the scope of the work to be carried out with a single point of responsibility (“works”). Other features include completion details, a guaranteed contract amount, and quality within a set time frame. Below we explain some of the main features of an EPC contract and the terms and conditions it contains. Here is an example of a “subcontracting and assignment” clause extracted from FIDIC`s contractual conditions for EPC/turnkey projects: EPC contracts are now an essential part of agreements in the energy and energy sectors. This is because an EPC agreement between the parties gives a single supplier the responsibility of overseeing the design and construction of an entire plant. Ultimately, the EPC contractor often hands over a set of keys to the developer, who can begin operations immediately.

This is a closer look at the words behind this commonly used chord. In addition to the delivery of the complete system, the EPC contractor must deliver it within a guaranteed time and price. The EPCM Contractor is responsible for entering into contractual agreements on behalf of the owner or client with other contractors, vendors, subcontractors and subcontractors as part of a tendering process. The EPCM contractor is engaged by the owner or client for the construction management role, while the owner or client is bound by various contractual relationships for construction-related work. From the point of view of an owner or customer, a disadvantage lies in being bound by various contractual relationships in the event of a dispute. Unlike the EPC model, in most cases, the owner or customer will be involved in a dispute with one or more of the other parties related to the construction of the project to which the EPCM contractor must offer assistance. “4.4. The Contractor may not subcontract all work to subcontractors. Scope of Energy Transfer Work: Engineering, Procurement and Terminal Construction After being selected as an epc contractor for the six crude oil collection and storage terminals in the Great Plains Bakken oil fields and associated pumping facilities, our expertise was applied.

We provided engineering, procurement and construction of the six terminals (each terminal having a working capacity of 200,000 to 600,000 barrels), including complete site preparation, construction, structure, mechanics, piping, electricity and instrumentation. The fundamental difference is the role of the EPC or EPCM contractor. In an EPC contract, the EPC contractor develops the project from start to final completion. The owner or client of the EPC project provides the EPC contractor with a detailed design, including technical and functional specifications, so that the EPC contractor can build the project within a certain time frame and deliver it to the “key rotation”. For this reason, EPC contracts are often referred to as “turnkey” projects. The scope of work should be clearly defined in the terms of reference; Therefore, changes in the scope of services in the EPC Treaties should not be customary. For this reason, an EPC contract is often a fixed-price contract or a global lump sum contract. Any cost outage is a risk that falls on the EPC contractor, so cost control is a top priority. An alternative to EPC is the commissioning of individual construction services from different contractors. This also comes into play in various places, e.B of tank farms.

In most cases, the EPCM model is structured on the basis of a reimbursable fee structure or a fee structure for unit rates. The former allows the EPCM contractor to receive an initial payment with additional fixed monthly payments, while the latter allows initial amounts with other payments after certain steps of the construction process have been completed. Another distinguishing feature of the EPC contract is that the EPC contractor enters into separate agreements with contractors, suppliers, subcontractors, subcontractors, etc. This is advantageous for the owner or client of the project as they will contact the EPC Contractor to assume full responsibility for the project and, in the event of a dispute between the EPC Contractor and any party to the sub-agreements, resolve the dispute without the owner or client being involved in the dispute. In most cases, the EPC Contractor has a right of recourse against a party to a subcontract who was liable for the loss or damage. .