EPC contracts are also called turnkey contracts because the concept indicates that once the project is completed and ready to be delivered to the user, only “key rotation” is required for the user. Normally, the EPC contractor must execute and deliver the project within an agreed time frame and budget, commonly known as the Lump Sum Turn Key Contract. Although there are many types of work contracts (1) used to finance projects, the majority of proponents and all project lenders prefer turnkey contracts. Turnkey contracts are based on the idea that when construction is complete, all you need to do is turn the key, and the project will work as planned, which has the effect of facilitating business and therefore a preferred type of contract for big-budget long-term projects. The main conditions to be included in a turnkey contract are: a turnkey contract contains, first and foremost, provisions relating to the transfer of risks, the commissions of the contractors, as well as the rights and obligations of the project holder and the contractor. In addition to technical and operational conditions, standard boiler platform clauses must be included, such as the names of the parties, the effective date, exceptions, remedies, amendments, communications, dispute resolution, choice of law and separation. This standard contract for turnkey projects is intended to be suitable for all industrial and builder projects, large and smaller, in particular E-M (Electrical and Mechanical) and other process installation projects implemented worldwide by all types of employers who wish to implement their turnkey projects and with a strict bipartisan approach. Under the usual turnkey contract approach, the contractor carries out all engineering, procurement and construction management (EPC – engineering, acquisition and construction) and provides a fully equipped and operational facility (“turnkey”). The objective of a turnkey contract is to transfer, as far as possible by contract, all the design, design and construction risks of the project company that owns the project to the EPC contractor who builds the same thing. An EPC contract reduces and controls risks in the form of written terms and conditions. Indeed, the ePC contracts were specifically aimed at transferring risks to the contractor. They make the contractor responsible for all project activities, from the design phase to the construction phase.
When developing a turnkey contract, the following guidelines must be followed: this contract model contains certain general conditions that are generally applied in the vast majority of turnkey contracts, although there are other conditions that need to be changed to reflect the circumstances of each contract and which are characterized as special conditions; The contract schedule contains a guide to the development of these specific conditions that change the terms and conditions of sale. In addition to this guide, the annexes contain several types of documents: tender letters, contract agreements and templates for the litigation agreement.