Who Is Liable For The Construction Risks In Project Finance?

In BOT project financing, it is generally the contractor, which takes full liability for the construction risks according to the commonly accepted rule that risks, should be borne by the party best able to take responsibility for them or manage them.The project company, which has limited financial resources, is not in a position to bear any significant part of the major construction risks and certain legal devices should be used to ensure that the construction risks are transferred from the project company to the contractor or other relevant parties.

First of all, it is important to ensure that the contractor accepts liability under the construction contract, without exception, for all of the relevant obligations, which fall to the concession holder under the concession agreement.