ABSTRACT
If a project sponsor has not cemented together an interlocking rebar of project contracts before it gives notice to proceed with the work to the EPC contractor, the project sponsor may have unwittingly created fundamental faults that can have the potential to rip apart the project’s technical feasibility and financial promise. Figure 2.3 of Volume I outlines what contracts might be employed to carry out a typical project. This Volume II focuses its attention on the key construction arrangements of a large project-the EPC contract. The EPC contract is the pedestal that must support the weight of all other project contracts. Unless the project sponsor and its advisors analyze what contractual burden the EPC contract must bear (and whether some of this mass is “dynamic” load that may shift as a result of economic and technical forces that will be placed on the project), permanent instability of a project’s economics may be the result. A project sponsor cannot eliminate (or usually even identify) all the risks that are present in its project. In the face of the unknown, the project sponsor must foster candid dialogue, unswerving trust and expert analysis among the project’s participants (and also those whom the realization of the project may concern). Success of a project can never be assured, but without the foregoing efforts, failure is. The purpose of this volume is not to unlock the secrets to a project’s success, but to expose the concomitants of failure. The following sample contracts should be used as a guide to expose potential weakness and suggest methods for reinforcement. The rest can only be left to providence and ingenuity.
