EPC contracts will typically contain provisions relating to the following:
- Price and milestone payment schedule
- Scope of work, usually including detailed design, procurement of parts (with lists of pre-approved subcontractors), construction, testing and commissioning, hand over to the Operator and provision of an initial spare parts package. The scope of work will include a high-level design already, upon which the detailed design will be based.
- High-level schedule, with, in particular, a scheduled completion date (sometimes referred to as Scheduled COD, or Commercial Operation Date)
- Details on performance tests including what tests must be undertaken, what constitutes a pass, and whether they may be repeated
- Pass through provisions for events outside of the project’s control, such as force majeure and change in law. In particular, these will be based on the offtake contracts
- Consequences of failing to meet obligations for each counterparty, and the rights which will arise therefrom. In particular, termination rights and consequences of termination
- Guarantees (delivery date and performance levels), including limitations of liability for the EPC contractor, rates of accrual and performance security (liquid bank bond, vs parent company guarantees)
- Variation procedures