Key Features Of EPC Contract

EPC or turnkey construction contracts enable construction works of large-scale and complex infrastructure projects, where a contractor is obliged to deliver the complete facility to a developer who needs to only turn a key to start operating the facility.

- Ashok Upadhyay

Engineering, procurement and construction (EPC) contracts are the most common form of contract used to undertake construction works of large scale and complex infrastructure projects. Under an EPC contract, a contractor is obliged to deliver the complete facility to a developer who needs to only turn a key to start operating the facility. Hence, EPC contracts are sometimes called turnkey construction contracts. In addition to delivering a complete facility, the contractor must deliver that facility for a guaranteed price by a guaranteed date and it must perform to the specified level. Failure to comply with any requirements will usually result in the contractor incurring monetary liabilities.

Most international projects today are procured on the basis that one contractor assumes total responsibility for the design and execution of the works, including all engineering, procurement, and construction, so that the contractor effectively provides a fully equipped facility ready for operation at ‘the turn of a key’. Generally with an EPC contract, the client has less say over the project design and the contractor takes more risk.