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Best Practice In EPC&EPCM Contract Management

Day One:
18, January, 2018
Review of contract formation principles
•Tort versus contract
•What constitutes the contract documents – implied and express terms
•When is a contract effective
•Letters of intent
•Battle of the forms
Case Study
10:30-10:45: Coffee Break
Considerations in choosing the optimum contracting format
•Contracting options
•Priorities of the project owner
•Mechanics of project approval
•Requirements for total project cost certainty
•Schedule considerations
•Risk recognition in selection of contract mode
•Market dynamics-is it a buyer’s or seller’s marketplace
•Are there sufficient qualified bidders and subcontractors
•Maturity and ownership of the technology involved
•Political stability at the site
•Local regulatory restrictions and
•Optimization with respect to taxation
•Insurance considerations
11:45-12:30: Case study
12:30-13:30: Luncheon
Drafting the head contract – allocating risk and reward to the parties’mutual advantage – part 1
•General philosophy of the owner - and the contractor
•Pricing basis – fixed and firm or escalatable
•Payment mechanism and protections
•Schedule protection
•Changes – definitions and disputes
•Warranties – types and allocation of repair costs
14:45-15:30: Exercises and Case Study
15:30-15:45: Coffee Break
Drafting the head contract – allocating risk and reward to the parties’mutual advantage – part 2
•Limitations on liability - people, property, consequential
damages, overall
•Termination, cancellation, schedule extension and
•Allocation of other risks between contractor and owner
•Insurance as a risk management tool
•Guarantees, bonds and letters of credit
•Administrative requirements
•How the governing law affects contract terms
•Dispute resolution techniques
16:45-17:30: Exercises and Case Study
End of Day 1

Day 2
10, January, 2017
Bidding and negotiating the head contract – how to get the best price with manageable risk
• Factors influencing a decision to bid for an EPC or EPCM
◐ Price of bidding versus expected profit
◐ Ability to back up a bid with adequate subcontractor
◐ Availability of joint venture partners
◐ Available capacity within the contractor’s organization
◐ Adequacy of bidding period
◐ Number and quality of other bidders
◐ Financial condition of the owner – and contractor
• Preparation of an EPC or EPCM bid
◐ Identification of key players – joint venture partners and
nominated subcontractors and vendors
◐ Alignment of key bidding players – are appropriate
agreements in place
◐ Techniques for identifying key risks and either pricing or
excluding them
◐ Pricing strategy, currency protection, taxation and
◐ Techniques for addressing inadequacies in inquiry
• Negotiating techniques for attaining best price with
acceptable contract terms
◐ What is the relative bargaining power of the parties
◐ What risks can be transferred to subcontractors and
◐ Transfer of risks versus changes in price
◐ Can the bid be “sweetened” with incentives
◐ Evaluating the cost of money – payment terms, financing
10:30-10:45: Coffee Break
Managing the head contract – best practices in
EPC/EPCM contract execution
• The right start – project initiation methodologies
⊙ Adapting the proposal to the as-sold contract
⊙ Establishing a price base line
⊙ Informing the project team of key contract terms
⊙ Establishing communication channels
• Monitoring the contract execution
◐ Utilizing a risk listing to proactively control risks during
◐ “Gate” reviews for establishing project progress
◐ Change register for monitoring identification and
resolution of changes
◐ Periodic project audits by non-project personnel
• Notifications – how and when
• Establishing a paper trail
• Breach of contract – definition and remedies
• Roles of project sponsors and steering committees
• Closing out the project –
◐ Defining when the work is finished
◐ Close-out reports – actual versus as-bid costs, profit,
◐ Lessons learned – avoid repetition of identified bidding
and execution mistakes
• What is required after the “completion” of the work
◐ Who monitors warranty obligations
◐ Have all bonds and guarantees been closed out
◐ Retention payments
◐ Insurance requirement
Case Study
12:30-13:30: Luncheon
Negotiating and managing equipment supply orders and construction contracts
• Supplier and contractor selection
• Negotiating equipment orders and on-site construction
◐ Head contract requirements
◐ Changes
◐ Terms of payment
◐ Security
◐ Termination rights
• Managing the suppliers and contractors
◐ Setting the stage for a quality and timely project
◐ Effects of schedule delays
◐ Health and safety
◐ Claims management
◐ Bankruptcy – what if
• Supplier and subcontractor issues
◐ Pass-downs from head contract
◐ Payment protection
◐ Insurance and indemnification provisions
Continuing the relationship – operating and maintenance agreements
• Focus is on value added to the owner
• Incentives and/or penalties widely used based on
established criteria
• Contract represents long term relationship rather than
project duration
◐ Insurance
◐ Indemnities
◐ Warranties
• Often used to train owner’s personnel while providing
experienced contractor operators
15:45-16:00: Coffee Break
Case Study
The case studies discussed during the program will be focussed on application of the principles presented in the general sessions and will involve active participation by the attendees.
Benefits of Attending
Determining the correct form of EPC/EPCM contract to pursue can have a great effect on the cost and risk associated with your particular project & situation.
Learning the best practice in drafting EPC contract for allocating risk and reward to the parties' mutual advantage.
Adopting tailor-made EPC/EPCM contract methods to individual project or owner's needs for reaching best performance.
Planning a EPC/EPCM project to ensure successful delivery and stakeholder satisfaction.
Estimating and schedule task work and duration with confidence.
Knowing indemnities and limitation of liability and commonly accepted exceptions to capped liabilities.
Limiting your liability to safeguard a sustainable operation throughout project life-cycle.
Obtaining the best price with manageable risk through successful bidding & negotiating.
Sharing the best tips for winning negotiation strategies in EPC & EPCM contacts.
Managing the best contract execution strategies via effective monitoring and notification tools.
Analyzing the recent trends in arbitration - an analysis of some recent case law, including jurisdiction of courts and grounds for challenge of an arbitral award.

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