Publication number: ELQ-71960-1
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A Practical Guide to EPC Contracting and Claim Management
This guide provides in-depth information on how to negotiate and manage contracts for large-scale projects.
This EPC Guideline is intended to be a practical manual for state authorities, state owned companies and privately owned companies working in the EPC sector.
According to the purpose of this guideline as a “practical manual for the daily project work” the didactic concept is aligned with the typical process steps of a large scale industrial project.
At the outset, chapter B illuminates the “broad picture” of the use of EPC contracts in large scale projects. This includes the nature, purpose and fields of use of an EPC contract, as well as the different process phases for planning, developing, tendering and executing a large scale project under an EPC contract.
Chapter C deals with the drafting process of an EPC contract which is – for both the commercial as well as the technical project team – the most important task to complete in the tender preparation phase. In order to offer some advice for that phase, this chapter provides detailed explanations as to the contents of an EPC contract, and the interrelations and interactions between the different subject matters that should be covered by the EPC contract. It also describes associated risks for and interests of the involved parties. In order to manage the transfer between theoretical explanation and specific contract drafting, each sub-chapter of chapter C contains a theoretical part in which the relevant subject matter and its implications on the project are explained. This is followed by a practical part stating and explaining an example contract wording. Whenever convenient, illustrating examples from the authors’ practical experience are stated in order to enhance the practical value of this guideline.
After the EPC contract is drafted and placed with the potential contractors, the next project step usually consists of the evaluation and negotiation of the Contractors’ quotations. Chapter D deals with this phase and provides some practical hints for the evaluation of the bids and the negotiation of the EPC contract provisions with the contractors.
The next phase of project execution is summarized in chapter E . Readers will find some guidelines for organizing the project execution and for resolving disputes that are likely to occur in any large scale project.
Finally, chapter F concentrates on the period in time when all construction works have been completed and the project result has been handed over to the Employer. The purpose of this chapter is to flag implications between EPC defect liability provisions, commercial operation and maintenance of the fully constructed and commissioned industrial plant.
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