Turnkey and EPC (Engineering, Procurement, Construction) Contracts

Description

Turnkey and EPC (Engineering, Procurement, Construction) Contracts establish comprehensive contractual frameworks where contractors assume complete responsibility for project development from concept design through commissioning and operational handover. Our EPC contract drafting service addresses the distinctive feature that contractor becomes responsible for virtually all project phases and deliverables, creating significant contractor financial exposure but also enabling contractor control over cost and schedule. We establish scope of work addressing that EPC contractor designs the facility (or oversees design by engineering firms), procures all equipment and materials, constructs the facility, and delivers operational facility meeting performance specifications. We draft engineering scope provisions specifying that EPC contractor prepares engineering designs, controls design quality, and prepares drawings and specifications for procurement and construction. We establish procurement scope addressing that EPC contractor procures all equipment, materials, and supplies required for project completion. We address procurement procedures including supplier selection (competitive bidding requirements), procurement contracts, and delivery schedule coordination. We draft construction scope addressing that EPC contractor executes all construction, oversees construction quality, maintains construction schedule, and ensures workplace safety. Our commissioning provisions address that EPC contractor performs startup, testing, and performance validation ensuring facility meets design performance specifications. We establish performance guarantees addressing that facility meets specified performance parameters (e.g., processing capacity, energy efficiency, product quality). We draft “performance test” procedures establishing how contractor demonstrates performance compliance, procedures for remedying performance shortfalls, and consequences for failure to meet guarantees. Our lump-sum fixed-price provisions address that EPC contractor bears cost risk, with limited change order relief. We draft change order procedures enabling client to request scope changes with documented impact on cost and schedule. Our schedule and milestone provisions establish completion milestones, critical path, and schedule float allocation. We address schedule delay provisions establishing contractor responsibility for schedule delays and remedies including liquidated damages. We draft force majeure provisions with provisions for schedule extensions and cost recovery for force majeure events. Our cost and payment provisions establish payment schedule aligned to completion milestones (engineering completion, procurement completion, construction completion), with retainage held until completion and performance validation. We address cost controls including contractor cost estimates for approval, budget limitations, and procedures for managing cost overruns. We establish change order pricing establishing how changed work is priced (fixed-price changes, cost-plus, variations to unit rates). Our insurance and bonding provisions require performance bonds guaranteeing contract completion, payment bonds, and comprehensive insurance coverage. We draft indemnification provisions addressing contractor liability for performance failures and design/construction defects. Our warranty provisions establish contractor warranties that work is properly designed and constructed, meets specifications, and is fit for purpose, with extended warranty periods post-completion. We establish limitation of liability provisions capping contractor liability (often contract value). Our commissioning and handover provisions address final testing and acceptance procedures, procedures for addressing non-conformances, and transition to client operations. We draft operations support provisions addressing whether contractor provides post-handover operations support and training for client operations personnel. Our staffing provisions address contractor staffing levels, professional qualifications required (engineers, supervisors, skilled workers), and staff continuity throughout project. We establish site management provisions addressing contractor site organization, site management procedures, and coordination with client and third parties. Our environmental and safety provisions address contractor responsibility for environmental compliance, safety management, and incident reporting. We draft provisions on design liability addressing that contractor is liable for design defects resulting in performance failures, and contractor professional liability insurance. Our dispute resolution provisions establish escalation procedures from site disputes to executive negotiations to mediation to arbitration. We address choice of law and governing jurisdiction. We counsel on risk allocation (contractor bears most risks as full-responsibility contractor but should allocate appropriate risks to client for client-controlled factors).