The EPC contract is essentially a form of construction contract that transfers the risks and responsibilities of a project from the employer to the EPC contractor. Since the EPC contractor gains a much higher degree of control over the project, contracting parties should consider negotiating the relevant terms and conditions and ensuring that project milestones are clearly stated in the EPC contract. While there are different standard contract forms for an EPC contract, parties should always ensure that all relevant conditions and steps are clearly stated in the EPC contract in order to meet their respective business needs and requirements, keeping in mind that each project and contract is unique and different. A carefully drafted and verified EPC contract minimizes the risk of future disputes between the parties. 2.5 Cooperation. Cooperation and coordination with the contractor and subcontractors to coordinate the work of the owner`s other contractors who may work on or near the construction site, with the work done by the contractor and subcontractors. The Owner shall not allow its operations and activities on the Website or those of its affiliates to materially interfere with the performance of the Work by the Contractor. Energy transfer works: engineering, procurement and terminal construction After being selected as the EPC contractor for the six crude oil gathering and storage terminals in the Bakken oil fields in the Great Plains oil fields and associated pumping facilities, our expertise was put to good use. We provided engineering, procurement and construction for the six terminals (each terminal having a working capacity of 200,000 to 600,000 barrels), including complete site preparation, construction, structure, mechanical, piping, electrical and instrumentation.
In Project Funding Documents, we have provided a lot of information about project documentation, as well as an overview that summarizes how EPC contracts and other project documents fulfill certain stand-alone roles. But they are also integrated into the complex package that includes the project documentation. As the preferred construction contract, EPC contracts are crucial to the success of countless large international construction projects. They are also a very important part of the integrated project documentation. EPC contracts have become the construction contract of choice for large international projects and project financing. Under EPC contracts, the project company concludes the contract with the EPC contractor. The main purpose of using EPC contracts for large construction projects is essentially to transfer all project design and construction risks from the project owner to the EPC contractor. Since the primary reason for using EPC contracts is to influence the transfer of as much risk as possible from the owner to the contractor, they significantly limit the scope and circumstances in which contractors can claim additional time and money. The contractor performs all project design work that determines what needs to be built, including the standards that must be met and the performance requirements of the finished project in a separate document.
1.4 Titles. The headings or titles in this Agreement are for convenience of reference only, do not form part of this Agreement, and do not affect the meaning or interpretation of this Agreement. Like any other contract, an EPC contract has some limitations, albeit fewer limitations. The disadvantages of hiring a turnkey contractor are: The client can assign detailed specifications to the construction company. It contains all the criteria that the contractor must meet. Nevertheless, the construction company can decide how to meet the standards. Let`s assume something goes wrong during the construction of the project. In this case, the EPC contractors are required to assume responsibility. EPC contracts contain certain performance specifications that must be met by contractors. In case of failure of the project, they are liable for liquidated damages (PLD). In cases where the project company`s obligations are largely limited to the payment of the contractor, force majeure provisions should be included in EPC contracts and should be common to all project financing documents.
To the extent that these provisions are not aligned and there are significant liability gaps maintained by the project company, it is usual for project providers to require some form of sponsorship support or guarantee to cover the risk. Parties to an EPC contract should be aware that the consequences of a force majeure event during the construction of a project can be severe, but are generally manageable, as a force majeure event only increases construction costs and delays completion.