EPC Contracts In The Energy Sector

An engineering, procurement and construction ("EPC") contract is a complex form of construction contract, commonly used in large-scale construction works of complex infrastructure projects. EPC contracts are used in many sectors including energy (especially power plant projects), transportation and telecommunications. Under an EPC contract, the EPC contractor is required to deliver a completely functioning facility to the employer by carrying out the design, engineering, procurement and construction until a set date, in return for a pre-determined price. An EPC contractor must conduct the detailed engineering and design of the project (obtain the employer's approval if stipulated), procure all the materials and equipment, construct the facility and deliver it to the employer. Generally, the employer simply turns the key to operate the facility and, because of this, EPC contracts are sometimes called turnkey contracts.¹ For EPC contracts in the energy sector,