Projects
EPC contract
EPC is a so-called "full cycle" contract - the contractor is responsible for the design, supply, construction, commissioning and start-up of the project.
The EPC contract is often used when the client does not have its own service capable of managing the construction project, does not want to interfere in such management and assume the associated risks. EPC is also one of the main contractual forms in projects that are financed with the help of banks or other financial institutions (especially project financing), as banks, when granting a loan, seek to ensure that the project company assumes as few risks as possible.
EPC-contract, of course, with the right choice of EPC-contractor is the most convenient and reliable solution for the customer: he needs to administer only one contract, the responsibility for terms, quality and production performance of the object is based on the principle of "one window", violations by one or more subcontractors do not give the EPC-contractor the right to extend the terms or release from liability.
EPC contract characteristics:
Performance by the EPC contractor of a full cycle of works: design, supply, construction;
High limit of contractor's responsibility;
The contractor has greater autonomy in the construction process, which reduces the overall construction time;
Most contractual risks, including the risks of unforeseen costs and delays, are borne by the EPC contractor;
A firm price, which in most cases can be a lump sum price. It should be noted that the definition of price as firm and lump sum does not exclude the circumstance that a price breakdown or estimate may emerge during the design process. Any excess cost of work, equipment or materials over the contract price is charged to the EPC contractor. Excluded are changes in the scope or composition of work initiated by the client, force majeure events, failure of the client to fulfill its obligations under the EPC contract.