EPC Contract Review Checklist

In the high-stakes world of engineering, procurement, and construction (EPC) contracts, the devil is in the details. Navigating through these contracts can be daunting, but with a thorough checklist, you can ensure that nothing falls through the cracks. Here’s a comprehensive EPC contract review checklist designed to streamline your review process and ensure you cover all critical aspects.

1. Scope of Work

• Project Description: Ensure the contract clearly defines the scope of work, including all deliverables and specifications. It should detail the project's objectives, timelines, and the standards that must be met.
• Exclusions and Inclusions: Verify that the contract specifies what is included and excluded from the scope. This helps in avoiding disputes related to additional work or omissions.

2. Contract Price and Payment Terms

• Price Structure: Check the contract price and its breakdown. Understand whether it is a lump sum, unit price, or time and materials contract.
• Payment Schedule: Review the payment terms, including milestones, payment due dates, and conditions for payment. Ensure there are clear terms regarding retention and adjustments.

3. Schedule and Milestones

• Project Timeline: Examine the project schedule for realism and feasibility. It should outline key milestones and deadlines.
• Delay Clauses: Look for clauses related to delays, including liquidated damages and force majeure provisions. Ensure there are clear mechanisms for handling delays.

4. Performance Guarantees and Bonds

• Performance Bonds: Check if the contract requires performance bonds and review their terms.
• Guarantees: Review any performance guarantees or warranties provided by the contractor. Ensure they are adequate and cover all critical aspects of the project.

5. Risk Allocation and Insurance

• Risk Allocation: Ensure the contract clearly outlines the allocation of risks between the parties. This includes risks related to design, construction, and unforeseen conditions.
• Insurance Requirements: Verify that the contract specifies insurance requirements for various risks, including public liability, professional indemnity, and workers' compensation.

6. Quality Assurance and Control

• Quality Standards: Ensure the contract specifies the quality standards and procedures for quality control and assurance.
• Inspection and Testing: Review the provisions for inspection and testing of materials and workmanship. Ensure there are clear procedures for addressing defects.

7. Change Management

• Change Orders: Check the process for handling changes to the scope of work. This includes procedures for issuing change orders and how they affect the contract price and schedule.
• Approval Process: Ensure there is a clear approval process for changes, including documentation and communication requirements.

8. Dispute Resolution

• Dispute Resolution Mechanism: Review the contract's dispute resolution mechanism, including mediation, arbitration, or litigation procedures.
• Jurisdiction and Governing Law: Ensure the contract specifies the jurisdiction and governing law for resolving disputes.

9. Termination Clauses

• Termination Conditions: Examine the conditions under which the contract can be terminated by either party. This includes termination for convenience, default, or insolvency.
• Consequences of Termination: Review the consequences of termination, including the handling of completed work and payments.

10. Legal and Compliance Requirements

• Regulatory Compliance: Ensure the contract includes provisions for compliance with relevant laws, regulations, and industry standards.
• Permits and Licenses: Verify that the contract specifies the responsibility for obtaining necessary permits and licenses.

11. Communication and Reporting

• Reporting Requirements: Check the requirements for progress reports, meetings, and communication between parties.
• Document Control: Ensure there are provisions for document control, including the handling of project documentation and records.

12. Environmental and Safety Considerations

• Environmental Requirements: Review any environmental requirements and responsibilities, including waste management and environmental protection measures.
• Safety Standards: Ensure the contract includes provisions for safety standards and procedures to protect workers and the public.

13. Subcontracting and Delegation

• Subcontracting Terms: Examine the terms related to subcontracting, including approval requirements and subcontractor obligations.
• Delegation of Responsibilities: Ensure that the delegation of responsibilities to subcontractors is clearly defined and does not affect the contractor’s liability.

14. Confidentiality and Intellectual Property

• Confidentiality Provisions: Check the provisions for confidentiality and the handling of sensitive information.
• Intellectual Property Rights: Review the terms related to intellectual property rights, including ownership and usage of designs, patents, and other intellectual assets.

15. Project Close-Out and Handover

• Close-Out Procedures: Ensure the contract outlines the procedures for project close-out, including final inspections, testing, and documentation.
• Handover Process: Verify the terms for the handover of the completed project, including the transfer of ownership, documentation, and warranties.

By using this checklist, you can ensure a thorough review of EPC contracts, mitigating risks and enhancing the likelihood of successful project completion. Remember, a well-reviewed contract is the cornerstone of a successful project.