Understanding and Negotiating Turnkey and Epc Contracts. Understanding and negotiating turnkey and EPC contracts (Book, 2002) [parabopress.com] 2019-02-12

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Understanding and Negotiating Turnkey and EPC Contracts, 2nd Edition

Understanding and Negotiating Turnkey and Epc Contracts

These exceptions reflect the idea that the contractor cannot in fairness be held responsible for errors in the employer's definition of the intended purpose of the works because those parameters are solely within the control of the employer. Since consumer electricity rates are generally inflexible, the price charged to the consumer may be insufficient for the power purchaser to meet its power purchase obligations to the project company. In certain limited instances, the employer has been allocated additional risk-for example, the employer takes the risk of obtaining planning and zoning permission for the works. For example, in some situations it may be necessary for the contractor to provide a fully equipped hospital. For example, in a power plant project, advance payments may be provided for the purchase of certain equipment and machinery such as the generator and the turbines. By using a lump-sum price and placing much of the completion risk on the contractor, the turnkey contract can provide the lenders with a significant amount of certainty and thereby confidence in the project. The use of several contractors may enable the employer to use local contractors, possibly under the supervision of experienced foreign contractors, particularly where it is in the employer's interest to effect a transfer of technical and managerial skills to the site country.

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understanding and negotiating epc contracts

Understanding and Negotiating Turnkey and Epc Contracts

In most projects, the following risk allocation operates: market risk will be assumed by the project company and the power purchaser to a limited degree-for example, in a power project ; design, construction and commissioning risk will be assumed by the contractor; and operation and maintenance-related risk will be assumed by the operator. Due to the contractor control over the works, the employer may want to limit the. The Association has the support of numerous specialists from member companies as well as various experts in their respective fields. One of the more significant risks in the power purchase agreement is the devaluation of the local currency. This method decreases necessary interfaces, thus simplifying the co-ordination of the project. However, it is important to consider this exception in light of sub-clause 4.

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Understanding and Negotiating EPC Contracts

Understanding and Negotiating Turnkey and Epc Contracts

It may also separate the responsibility for differing types of work, for example equipment systems work and heavy civil work, thus reducing contact between various industries not necessarily familiar with each other's working methods. As indicated above, revenue from the project's operation will fund loan repayments. The turnkey construction contractor will assume a large share of the risk that the works will not perform to the standards and criteria specified in the contract. The Safety Representative shall make routine daily inspections of the Site and shall hold weekly safety meetings with Design-Builder's personnel, Subcontractors and others as applicable. When used on such large projects the payment after completion provides a form of contractor financing of the project, requiring the contractor to obtain outside financing himself or to auto-finance the construction. The Red Book provision indicates that standard samples of materials and samples listed in the contract will be furnished at the contractor's cost.

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Understanding and Negotiating Turnkey and Epc Contracts

Although most lump-sum contracts provide for modification of the price in certain limited circumstances, such contracts usually provide that the contractor may not claim additional payment for work indispensably necessary to completion, even where omitted from the specifications of the contract. Where the- contractor may receive an extension of time under these circumstances, the project company should try to transfer as much risk as possible to the host government, the power purchaser or even the project lenders and insurers to avoid being in default. This book is a must for any serious banker. In addition, the as-built drawings must be prepared as the works proceed and be submitted to the employer's representative for his inspection but not specifically under the review procedure for contractor's documents. This breakdown will facilitate adjustment or revision of the contract price where provided for in the contract. Lenders might object to this. They therefore require the contractor to assume the risk of any defect or error in the design, including any defect or error in the employer's requirements.

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Understanding and negotiating turnkey and EPC contracts

Understanding and Negotiating Turnkey and Epc Contracts

It states that such projects require greater certainty about cost and, therefore, final price than is ordinarily the case generally driven by the concern of lenders. The duty of superintendence includes verifying the professional and personal qualifications of each individual hired. Without the detailed terms of Silver Book 7. Anlässlich des Jubiläums der deutschsprachigen Ausgabe erscheint es hier in einer attraktiven Sonderausgabe. The latter method of payment is not frequently used.

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Understanding and negotiating turnkey and EPC contracts (Book, 2010) [parabopress.com]

Understanding and Negotiating Turnkey and Epc Contracts

Under the Stiver Book, responsibility for contract performance, including all con50 4-23 4. The employer receives a completed project in accordance with his performance specifications. Red and Yellow sub-clauses 6. Such a period will run from a commencement date that is either calculated by a method provided in the contract or determined by one of the parties. The Contractor shall obtain the consent of the Employer as to their size, the referencing system, and other relevant details.

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Understanding and Negotiating Turnkey and EPC Contracts : Joseph Huse : 9781847039071

Understanding and Negotiating Turnkey and Epc Contracts

This review may include having the employee in question interviewed by the employer and the contractor before being removed. Contract Price and Payment General Comments Lump-sum price Adjustment of price for unforeseen circumstances Payment methods The interim payment procedure Retention money Advance payments Final payment and discharge Discussion of Specific Sub-Clauses 19. In order to protect against additional costs or delays, the Silver Book requires that several guarantees be put in place for different aspects of the contract. Designers in many jurisdictions traditionally have not been required to guarantee results, but rather method. Termination by Employer General Comments The validity and effect of a termination clause Drafting of the termination clause Default of Contractor Procedure for termination Grounds for termination Effects of termination for default of the contractor Termination for convenience Discussion of Specific Sub-Clauses 20. The contractor must deliver works that are fully operational to the specifications of the employer; any defect or fault is necessarily his responsibility except where the contract provides otherwise. The two latter ones are intended for cases when the contractor supplies the design.

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understanding and negotiating epc contracts

Understanding and Negotiating Turnkey and Epc Contracts

The fuel supply agreement lower right : this obliges a fuel supplier to deliver periodically a given amount of fuel at a certain level of quality to the operator. Everything relating to the works can, thus, be concentrated in a single point of responsibility-the contractor. Employer's Taking Over General Comments Discussion of Specific Sub-Clauses 15. The European International Contractors Turnkey Contract. The primary difference between the management contract and the turnkey model is that the management contractor generally assumes no responsibility for the work of the other contractors or for the performance of the design.

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Understanding and Negotiating Turnkey and Epc Contracts

It also takes a comprehensive look at the power sector from a historical dimension and looks at where Nigeria is, in terms of the legal and regulatory regime, and the direction in which the country may be headed. Accepting a liquidated sum rather than specific performance generally means the project is not complete to the expected performance level. However, some of the books contain additional labour-related provisions. This ambiguity is particularly important given the remedy that the contractor has if he is not satisfied by the employer's evidence. However, housing, feeding and transport of staff and labour are not specifically mentioned. This chapter is intended to assist drafters in identifying the needs and interests of the party, and gives some suggestions as to how to modify the Silver Book in relation to the drafter's interests. These funds will then be returned to the contractor by virtue of sub-clause 14.

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understanding and negotiating epc contracts

Understanding and Negotiating Turnkey and Epc Contracts

Under the turnkey method of contracting, the tender stage takes on greater importance. However, the employer will be able to pass on to the contractor the responsibility for the interfaces between the various construction packages. Defects liability: the parties will need to decide the period of time The definition of the scope of the works is found in the employer's requirements in the Silver Book. Projects~, The Construction This management contractor organises time, cost and quality control. This method of contracting is becoming increasingly prevalent for international infrastructure projects. ! The contractor is required to forward to the employer duly certified reports of the tests. I; ~;:~g~a;:o~ ~e3 The Contractor shall comply with all the relev~nt labou~ Laws applicabl~to t~e Contractor's Personnel, including ~aws.

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