IChemE form of contract for Engineering, Procurement and Construction Management (EPCM) ‘Blue Book’This Practice Note examines the form of contract for engineering, procurement and construction management (EPCM) contract, known as the ‘Blue Book’ which was published by the Institute of Chemical Engineers (IChemE) in March 2023.Construction management is now a widely known procurement route: however it is a radically different procurement route from those used in other IChemE contracts, particularly in relation to the EPC model of risk allocation often used in them. Most other contracts emphasise performance by a contractor, who bears much of the risk in terms of design and construction. EPCM has no single ‘contractor’ who carries out the work. Trade contractors (referred to as ‘Contractors’), directly contracted to the Purchaser under Works Contracts, provide design, supply and installation of goods and materials for the Plant. Their activities are managed by the EPCM contractor (referred to in this Practice Note as the ‘EPCMC’). Performance risk is diffused among the several Contractors. The EPCMC must provide services for managing their performance in the construction of the Plant. See also Practice Note: Construction management for more on the construction management route generally, and for more on the other forms of IChemE contracts, see Practice Notes: IChemE Conditions ‘Burgundy Book’ 2nd Edition, IChemE Conditions 5th Edition—'Red Book' and IChemE Conditions 'Green Book' 4th Edition.OverviewThe Blue Book is intended for use particularly in the process sector though may also be suitable for nuclear power, tunnelling, high voltage distribution or performance-driven projects. It can be used to take one of two alternative forms:•Option A, which uses a contract price based on a conventional adjustable lump sum which comprises reimbursable costs and rates for the Services•Option B, which is a Target Cost pricing option, the contract price being calculated and paid on a Target Cost basis similar to the IChemE 'Burgundy Book' (See Practice Note: IChemE Conditions ‘Burgundy Book’ 2nd Edition)In terms of the contractor's obligations, the Blue Book generally follows the format of the IChemE 'Red' Book: however instead of obligating the EPCMC to carry out a particular activity, the EPCMC must instead 'arrange for' or 'ensure' or 'procure that' those activities are carried out by contractors under works contracts. Throughout the contract, the language reflects the provision of management ‘services’, principally seeing to it that particular activities are carried out by the contractors. This obligation must be performed with reasonable skill and care, so that, eg the EPCMC might be in breach of contract if it gave an instruction to a contractor which was late or contained incorrect information.The contract also has similar content to the Red Book. It comprises:•general conditions, with 50 individual clauses•optional conditions which amend and replace parts of the main conditions to provide options for target cost contracts (‘Option B’) and non UK contracts. The main general conditions is for lump sum contracts (‘Option A’)The parties must also prepare a specification to be included in the contract and populate Schedules 1–20, or so many of them as are relevant. The schedules in the blue book are not templates or additional provisions. In the same way as in the other IChemE form they are guidance notes on the preparation of the schedules which particularise the main provisions and supply information necessary to bring them into effect. So, for example, Schedule 1 needs to be drafted so that it describes the Services the Contractor will provide, and care paritcularly needs to be taken in relation to Schedules 15, 16 and 17 relating to the provisions for taking over, performance tests and performance guarantees.EPCMC's obligationsThe EPCMC must provide the Services in timely manner which follows a regular sequence set out it an programme. It do so to normal standards of professional skill and competence appropriate to its role as an EPCM contractor with relevant experience of providing EPCM services of equivalent size and scope as the services under the contract. The services themselves are to be set out and described in Schedule 1.The EPCMC must provide management of the performance of Works Contracts by the Contractors as if it were the Purchaser. (see clause 9 and the general guidance in Schedule 7). Works contracts are critical to the proper functioning of an EPCM arrangement because together they cover all the design, supply and installation of the plant as managed by the EPCMC.As an example of how the EPCMC's role is described, in terms of setting out, the EPCMC must arrange for the appropriate contractor to set out the relevant parts of the works. This means that it is the responsibility of the EPCMC to ensure that the relevant contractors are responsible for the accurate setting out of the parts of the Plant which are to be installed and constructed by them within the time allowed for that activity in the Contract and in accordance with their Works Contract.The EPCMC must ensure that it has sufficient resources in terms of personnel, IT services and the like as well financial support to enable it to properly deliver the services on time and on budget.The EPCMC has also secondary obligations including reporting, ensuring maintenance and the provision of training.Purchaser's obligationsThe Purchaser must provide the EPCMC with relevant 'documentation' related to the Works and the Plant.This may take the form of details of works contract packages, including details of contractors from whom tenders are to be invited.Documentation relating to the works may include a wide range of information about the site, its ownership, rights to which is subject, planning applications and decisions, any notices or other documents issued under Environmental Protection legislation and other regulatory approvals as well as information, drawings and documents showing the intended design of the works or to the site.The Purchaser must provide an indemnity to the EPCMC against loss or damage caused as a result of breaches of the agreement by the Purchaser.The Purchaser also has or may have obligations under the contract for carrying out certain works and services related to the plant, and the Purchaser must carry those out.There are other obligations of the Purchaser which may arise depending on how Schedule 1 is written—as an example, skilled personnel may need to be provided to operate and maintain the plant after the issue of the take over certificate.The EPCMC is not liable for the consequences of any errors or omissions arising from work which had been carried out by the Purchaser.Statutory obligationsBy clause 7, both the Purchaser and the EPCMC must comply with ‘acts of Parliament, statutory instruments and other sources of law. It would include the Housing Grants Construction and Regeneration Act 1996 as well as health and safety legislation and other statutes which are applicable to the works under the contract.The Purchaser is responsible for obtaining all permits required for the use of the site in connection with the operation and maintenance of the Plant apart from any permissions which are to be the responsibility of the EPCMC. The EPCMC has an obligation to establish, put in place and manage plans for health and safety on the site and for environmental protection and the disposal of waste.If any new legislation is enacted after the date of the contract which affects health and safety, environmental protection or waste disposal and which increases the cost of the works to the EPCMC, the EPCMC will be entitled to a variation.ManagementWorks contractsThe EPCMC manages the process whereby contractors enter into works contracts with the Purchaser (Clause 9). For each intended works contract the EPCMC issues to the Purchaser a proposed scope of works as a package comprising the items of plant and equipment, and which are to be delivered to the site and incorporated into the Plant by a contractor. Documents showing this intended scope and commercial terms for the engagement of the contractor are to be agreed between the Purchaser and the EPCMC. If there is disagreement, the Purchaser decides on the documentation to be used.At the same time the EPCMC also proposes a list of potential contractors as bidders for the works contracts. There is then a similar iterative process between the Purchaser and the EPCMC over the list of bidders, with the Purchaser making the ultimate decisions on who should be invited to tender.The Purchaser must provide conditions of contract for the works contracts which should be consistent with the terms of the EPCM contract, and must be such as to facilitate the EPCMC's performance under it.Schedule 7 makes clear that the works contract conditions will be very important to the success of the project managed in this way and they will need to be drafted in such a way that it can be operated and managed by the EPCMC as intended by the scheme of the Blue Book. Even though the “Employer” under that Works Contract is the Purchaser, the Works Contract must contain provisions obligating them to comply with instructions of the EPCMC. The Blue Book contains guidance in Schedule 7 and in Guidance Note U about drawing up works contracts. It does not provide any suggested contract form for the works contract. Taken together, the detail in clause 9, Schedule 7 and Guidance Note U suggest that the preparation of a works contract to operate in conjunction with the Blue Book will require the same level of work which was initially required to draft the Blue Book and that absent a standard form of works contract, the parties will need to devote sufficient resources to the preparation of a bespoke 'works contract' for each individual project. Commentary about the essential terms to be included in a works contract in order for an EPCM arrangement to work satisfactorily is beyond the scope of this practice note.The EPCMC then invites tenders from the agreed list of tenderers for each works contract which together will supply the goods and materials which will comprise the plant. After tenders are returned, the EPCMC puts to the Purchaser its proposals for the appointment of works contractors for the supply of goods, materials and work in connection with the plant. The Purchaser has the final decision on which contractors are selected from the tender returns.The EPCMC has a right to require the Purchaser to reconsider its decision on the basis if in its opinion there were doubts about the reliability or competence of a selected contractor in the performance of the works contract.Works contracts will then be entered into between the Purchaser and those contractors whose bids were successful.The EPCMC is to be responsible for certifying payments to works contractors. The effect will be that the Purchaser will become liable to make those payments under the terms of the relevant works contract. The EPCMC might be liable to the Purchaser for breach of contract if it over-valued the amount due to the contractor because of failing to exercise reasonable skill and care.Purchaser's representativeThe Purchaser's representative might be an individual within the purchaser's organisation or could be a separate firm or consultancy. It is appointed with full authority to act on behalf of the Purchaser and under the contract has a role in managing the EPCMC. The Purchaser's Representative must act reasonably and in a timely manner. Acts or omissions of the Purchaser's Representative are treated as being those of the Purchaser. Most of the acts and functions of the Purchaser referred to in this note (with the exception of payment) are in practice and under the contract exercised by the Purchaser's representative on the Purchaser's behalf. The Purchaser's representative is entitled to give certain instructions to the EPCMC and the EPCMC must comply with those instructions. The EPCMC can give their notification if it believes that any Purchaser's Representative instruction either constitutes a variation or prevents or hinders the EPCMC from fulfilling its obligations or that of any contractor under the relevant works contract.Site managementThe EPCMC is responsible for maintaining a management team on the site or allocated to the project. which should include the staffing levels required of the EPCMC in terms of numbers and required qualifications who will be resident on the site. The EPCMC is responsible for health and welfare of its staff.The EPCMC must use reasonable skill and care to manage the construction of the plant so that it is ready for the carrying out of takeover procedures on or before the time for the completion set out in the contract (Schedule 11).Time, progressThe Purchaser may notify the EPCMC if progress is too slow to allow completion of the works on time, where the EPCMC is responsible for the delay. The parties must try to agree a course of action including using additional resources to remedy the delay. In such a case the EPCMC must use reasonable endeavours to implement the agreed action. Failing agreement, the Purchaser will instruct the EPCMC as to the actions which must be taken and these must be followed by the EPCMC.The EPCMC must prepare and submit a programme of work which addresses the time periods shown in Schedule 11 and provide key dates for when the EPCMC proposes to commence the works, and the order of procedure in which the works are to be carried out and completed. The EPCMC must monitor performance against the programme and report back periodically to the Purchaser. The EPCMC uses reasonable endeavours to ensure performance of the contractors in accordance with the approved programme. ‘Reasonable endeavours’ is not an onerous commitment but it is appropriate where the requirement is to make sure that another person carries out a particular activity.Costs and budgetsIf the Contract does not already include one, clause 13.1 requires the EPCMC to be responsible for providing a ‘Plant budget’. Schedule 22 emphasises the importance of providing a budget for the front end design, procurement, construction and testing of the plant, against which the actual costs can be monitored. The EPCMC is responsible for administering the costs and forecasting expenditure against the Plant budget and then monitoring actual expenditure against forecast cost in the Plant budget during the carrying out of the works.DelaysIn clause 14.4, the EPCMC must give notice of delay if it is delayed in the performance of its obligations due to certain specified events as soon as practicable upon it becoming aware of those delays.The EPCMC also notifies the Purchaser of the extension to the date/period for completion which the EPCMC considers to be fair and reasonable to take account of the delay.The Purchaser must notify the EPCMC of its initial assessment of the extension of time which the Purchaser considers appropriate within 14 days of the notice of delay. When deciding upon an appropriate extension (clauses 14.2 and 14.4), the Purchaser must consider factors such as force majeure, variations, breaches of the contract (or any works contract) by the Purchaser or a failure by a contractor to perform its obligations under a works contract and the extent to which those events must have affected progress of the works or completion of the Plant.An extension of time will be made by a variation order issued by the Purchaser stating the appropriate extension to the date or dates for completion stated in the contract. The approved programme is then revised accordingly (clause 14.3).The EPCMC is entitled to an extension of time due to breaches of a works contract by the Purchaser or breaches of the contract by the Purchaser or any failure by a contractor to perform its obligations under a works contract.Damages for delayIf delivery of the services measured against the period in Schedule 11 is delayed for a reason not entitling the EPCMC to an extension of time, it must pay to the Purchaser liquidated damages at the rate specified in the contract (Schedule 12). However, the EPCMC will have no liability to pay damages in excess of the maximum stated in Schedule 12.If the EPCMC becomes entitled to an extension of time for further delay occurring after liquidated damages have become payable, entitlement to apply LADs is suspended until the Purchaser’s culpable delay ends. Suspension does not invalidate entitlement to LADs paid before the period of further delay started.If the purchaser terminates the contract for its convenience or for default by the EPCMC, liquidated damages are unaffected up to the date of termination but after that date the right to liquidated damages will cease.Force MajeureNotice is to be given by the EPCMC as soon as practicable if the plant is delayed by an event of force majeure. Notice must be given of the effects of the force majeure event and any subsequent change in its effects. Force majeure is defined in clause 14.6. Each party must bear its own costs of the force majeure event, other than costs incurred by the EPCMC on the site, and those costs will be added to the contract sum to be paid on completion of the works. The parties have termination rights if the force majeure is then continued beyond 120 days. Both parties must use reasonable endeavours to minimise these delays.VariationsBy clause 16.1 a variation can be any change to the Plant, to the Services, to the Works, or to the Site from what is stated in the contract or in relation to the site or any prescribed methods of working. The EPCMC may not make any variations unless ordered to do so by the Purchaser, and clauses 16.2 to 16.4 govern how the Purchaser can instruct the EPCMC to carry out a variation. By clause 16.5, if the EPCMC considers that the variation might prevent or hinder it in fulfilling its obligations, it may give notice to the Purchaser. The EPCMC may object to a variation order if compliance could put it in breach of its obligations or require resources or a skillset beyond the limitations of its capacity.Disagreements arising in this way over variations are referred for dispute resolution in accordance with the contract.Valuation of VariationsClause 17 governs the valuation of variations and provides that additional prices are to be as set out in Schedule 18 (see below “Payment”) and any additional prices used to calculate the cost of a variation are to be agreed between the Purchaser and the EPCMC. In the absence of agreement, the Purchaser decides the amount which in the circumstances is reasonable having regard to Schedule 18.If the EPCMC intends to claim any additional payment (other than that arising from a variation) it must notify the Purchaser’s representative.ClaimsBy clause 18, for claims other than variations, the EPCMC must notify the Purchaser of its intention to claim as soon as reasonably practicable after becoming aware of the event which gave rise to the claim. The EPCMC must also establish and maintain records relevant to the event and any additional documents as directed by the Purchaser. Within a further 14 days from becoming aware of the grounds for a claim the EPCMC submits its claim to the Purchaser supported by a statement of those grounds and summary of the material facts. Relevant records may be requested by the Purchaser together with reasonable additional information as necessary to evaluate the EPCMC's claim. If agreed, the claimed amount will form part of the contract price. There is a similar process if the Purchaser wants to make a claim against the EPCMC.Care of the worksClause 29 provides that up to the issue of the Take-Over Certificate (TOC) the plant and all temporary works are under the control of the EPCMC. The EPCMC must ensure that contractors are responsible for making good any loss or damage to the Plant or Works and that they take out and maintain works insurance for that purpose.The EPCMC will only be liable for loss and damage to plant occurring before the issue of the TOC and then only to the extent caused by its own negligence, act, or omission. The EPCMC's liability is limited to the insurance deductible provided in the agreement (or value of each claim to which the deductible is applied) plus any cost the EPCMC would have incurred if the carrying out of rectification of any defect in the plant has been started immediately before the loss or damage to it had been sustained.The Purchaser indemnifies the EPCMC against any loss incurred by the EPCMC in making good loss and damage in excess of the EPCMC's liability irrespective of fault. The EPCMC is only responsible for making good loss or damage to the extent that the Purchaser proves that it has funds to recover the cost.Mutual indemnification provisions apply to personal injury. The EPCMC indemnifies the Purchaser against personal injury to any of the EPCMC's employees and subcontractors irrespective of the Purchaser's fault; the Purchaser indemnifies the EPCMC against personal injury to any of the Purchaser's staff or those of its affiliates or the Purchaser's Representative irrespective of fault. The same provisions apply similarly to the parties' respective equipment and other property.InsuranceClause 30 requires the Purchaser to provide a policy of joint names insurance covering the Purchaser, the EPCMC and linked entities (such as companies in the same group) against all damage to the plant or materials on the site or temporary works due to any cause arising before the TOC. This includes physical damage due to defective design. The policy must have a waiver against subrogation. The EPCMC must arrange insurances for its own equipment on the site. It must also arrange insurances for third party public liability and personal injury in respect of its employees. In addition the EPCMC arranges professional indemnity insurance in respect of its liability arising out of or in connection with the carrying out by it of the Services.Completion proceduresBy clause 31.2 the EPCMC notifies the Purchaser when in its opinion the plant is complete except for minor defects and ready for inspection. This triggers a process of inspections and tests on completion, and if satisfactory, the issue of a completion certificate. Schedule 14 provides guidance for how the criteria for completion should be set out. The EPCMC arranges for the carrying out of tests. If tests on completion are not satisfactorily carried out, a completion certificate can be issued provisionally subject to the uncompleted tests while the EPCMC continues to arrange for the Plant to be completed and for the repetition of those tests.When the Plant is shown to be complete, the EPCMC notifies the Purchaser and the taking over procedures in the contract can start.Takeover procedures also have to be carried out in accordance with each works contract. Works contracts will need to reflect the same procedures agreed in the EPCM Contract but as applicable to the portions or sections of the Plant for which each contactor is responsible. The practical way in which these procedures are applied to Works Contracts is not considered in the Blue Book. Works contracts have to be devised at the outset to use the procedures agreed between the Purchaser and the EPCMC as reflected in Schedule 6.The Purchaser or its representative may observe the carrying out of tests but is not required to attend. The EPCMC is entitled to carry out the tests in the absence of the Purchaser and each test will be deemed to have been carried out correctly unless the Purchaser objects.When all the taking over procedures have been successfully carried out the TOC will be issued by the Purchaser to the EPCMC stating that the plant has satisfied the requirements of the specification and Schedule 15. On the issue of the TOC, the Purchaser becomes responsible for all aspects of the operation and maintenance of the plant and has the right to operate it. If the issue of the TOC is delayed, the EPCMC may in writing request that the Purchaser issues it. The Purchaser may then issue a TOC with a list of items to be completed during the defects liability period. Test results can be assessed so that if any prior use by the Purchaser of the plant shown to have affected those results leading to a deferred takeover procedure, this would be taken into account in the assessment.The EPCMC is entitled to add to the contract price any additional costs incurred due to a deferred TOC.Between the TOC and the issue of the final certificate the EPCMC has a right of access (subject to minor considerations) to inspect the plant on the site. It does so at its risk. The EPCMC may also with the Purchaser's consent at this stage carry out further tests. As a result of those tests, the EPCMC may request the issue of a TOC. The Purchasers may then issue a TOC with a list of items to be completed. Again prior use by the Purchaser can be shown to have affected the results of a deferred takeover procedure the results are assessed taking this into account. After the TOC and during the defects liability period which follows it, clearance of the site must be arranged by the EPCMC. This requires the EPCMC to instruct the relevant contractors to dismantle their temporary works and remove all their equipment and other possessions from the site.Performance testsUnder clause 34, performance tests may be provided for in the contract, if so stated in Schedule 16. The cost of any delay is included in (ie added to) the Contract Price unless the delay was caused by the lack of skill and care by the EPCMC in the provision of the services. Note however that the performance tests cannot under any circumstances be extended beyond the end of the defects liability period.Every performance test has to be carried out to completion unless one of the parties orders the test to be stopped because its continuance would be unsafe or would damage the plant or other property. The parties agree the evaluation of the performance tests, but absent agreement, the Purchaser will determine the result. Again, account has to be taken of any operation of the plant by the Purchaser before the performance tests. In the course of carrying out the performance tests adjustments could be made to the plant to ensure compliance. On passing the performance tests, the Purchaser must issue the acceptance certificate.AcceptanceIf the contract provides (eg in the specification) for performance tests (many do not), by clause 35.3 the Purchaser must issue an acceptance certificate when the plant has passed all of the performance tests. If no performance tests are provided for in the contract the TOC will be treated as an acceptance certificate. An acceptance certificate can list all known defects which the EPCMC must arrange to make good.If the acceptance certificate is not issued but the EPCMC believes it is entitled to one, by clause 35.6 it may give a notice to the Purchaser with a draft certificate and a request that the Purchaser issues it. If the Purchaser does not then issue the acceptance certificate or provide its reasons for not doing so within 14 days, the draft certificate provided by the EPCMC will be treated as the acceptance certificate.DefectsUnder clause 36, at any time before the plant is taken over or during the defects liability period the Purchaser may notify the EPCMC of any matter it decides to be a defect. The EPCMC must give instructions to the contractor responsible for the defect. The cost of arranging to make good the defect forms part of the contract price except where the defect has resulted from the negligence of the EPCMC. Where defects are made good after the takeover certificate, the Purchaser may require the EPCMC to arrange for an appropriate takeover test to be repeated. Defects liability provisions will then apply to the rectified work. The liability for defects provisions contain a novel provision (in clause 36.8) that if plant cannot be used because of a defect to which the defects liability period applies, the defects liability period is extended by a period equal to the period during which it cannot be used'. Similarly, the defects liability period is extended by any period during which the plant cannot be used by reason of the EPCMC arranging for contractors to put the plant into such condition that it is able to pass the relevant takeover tests.Final certificateBy clause 37.2, the EPCMC is entitled to a final certificate when the defects liability period has expired, all defects have been made good and an acceptance certificate has been issued.The EPCMC may issue a draft final certificate to the Purchaser if no final certificate has been issued when the EPCMC is entitled to a final certificate and has issued a notice to the Purchaser to issue it. The Purchaser must then within 14 days either issue the final certificate or require the EPCMC to arrange for the completion of any remedial work or outstanding tests on the plant.On completion of all the remedial work, the EPCMC re-submits its request for the issue of a final certificate. If the Purchaser fails to comply with the request, the draft final certificate provided by the EPCMC is deemed to be the actual final certificate effective for the purposes of the contract.PaymentContract priceBy clause 40.1 the Purchaser pays to the EPCMC the contract price in monthly instalments, although provision can be made for payment against the accomplishment of milestones set out in a milestone schedule. Clause 38.1 provides that the contract price itself must be calculated in accordance with Schedule 18. In the Blue Book that schedule contains guidance on the elements comprising the contract price and how they are built up into a lump sum, while Schedule 19 provides guidance on the creation of the payment mechanism, including any milestone schedule. If any services are provided for which Schedules 18 and 19, are inapplicable, the parties must agree the amounts to be included in the contract price for those items. Schedules 18 and 19 are then treated as having been amended appropriately.If the EPCMC incurs additional cost because of a breach of the contract by the Purchaser or a breach by a contractor under a works contract, the additional cost forms part of the contract price.By Clause 39 the Purchaser has rights to carry out audits of the EPCMC's books and records which the EPCMC is obliged to keep and maintain for up to six years from the date of the final certificate. The Purchaser’s audit rights start not later than 365 days after the final certificate, or if there are more than one, after the last final certificatePayment can be made either by monthly instalments or, if provided for in Schedule 19, on the achievement of milestones the EPCMC will apply for payment with evidence that the milestone has been achieved. Unless the EPCMC is paid on the basis of fixed payment dates or the achievement of milestones) it will submit each month to the Purchaser an interim request for payment which itemises:•its assessment of the amount it considers to be due for the services it has provided up to the end of the previous month; and•any other fixed amount which has become due under the Contract payable; together with•any other amount to which the EPCMC has become entitled to be paid under the contract. (eg amounts which are expressly to be added to or included in the contract price); and as a deduction•the total amount of all sums previously notified by the EPCMCThe EPCMC issues a payment request for these amounts in accordance with Schedule 19 and within 14 days the Purchaser's representative must issue a certificate against that request to the EPCMC and to the Purchaser stating the amount it considers to be due and how it is calculated. Payment must be made within 28 days from the request for payment, so that the 28th day is the final date for payment. A pay less notice stating any reduction the Purchaser intends to make to the certified sum must be given by the Purchaser no later than one day before the final date for payment.Suspension for non-paymentBy clause 40.9, if the Purchaser does not make payment of any amount due under a certificate by the final date for payment the EPCMC is entitled to give the Purchaser notice of its intention to suspend performance of all its obligations under the contract. If non-payment continues for seven days from the date of the EPCMC's suspension notice then the EPCMC may suspend further performance of its obligations under the contract.Purchaser suspension and terminationClause 41.1 entitles the Purchaser to instruct the EPCMC to suspend the services for any reason and the EPCMC must comply.If the EPCMC receives such an instruction it must notify the Purchaser of:•parts of the works which need to be continued to maintain safety and security of the plant, and•steps that need to be taken under any works contracts to give effect to the instructions to suspendThe EPCMC and the Purchaser must then agree actions to be taken following the suspension. If there is no agreement, the Purchaser will give instructions as to the steps to be taken following the suspension.The Purchaser may instruct the EPCMC to resume some of the services and the EPCMC will comply with this instruction as soon as reasonably practicable.If performance of all the services is suspended for a continuous period of 56 days (other than as a result of the EPCMC's default) and provided that at the time the services are still suspended, the EPCMC may issue a notice to the Purchaser's representative requiring the Purchaser's representative to instruct it to resume the services.Purchaser termination for convenienceBy clause 42.1, the Purchaser may issue notice of termination instructing the EPCMC to cease performance of the services for any reason whatsoever. Termination is to take effect on the date for termination stated in the notice or if none is so stated seven days from the date of the notice.The EPCMC undertakes no services after the termination date other than work which is specifically instructed by the Purchaser. The Purchaser's representative must issue a TOC for any part of the plant for which a TOC has not already been issued as from the termination date. If the EPCMC's employment is terminated the plant has to be taken back by the Purchaser.In a notice of termination the Purchaser must either terminate all of the works contracts or notify contractors that the EPCMC no longer has authority and identifies the person who will exercise the authority of the EPCMC under the Works Contracts going forward.The EPCMC must ensure that contractors cease all work and the EPCMC must deliver back all documentation to the Purchaser.Termination by Purchaser for EPCMC defaultGrounds for termination include insolvency or corruption by the EPCMC (clause 43.2) together with other default grounds including wholly suspending or abandoning the services; failing to proceed with the services regularly and diligently and committing any other 'material breach' of the contract. (clause 43.3). In any of those events, the Purchaser issues a notice to the EPCMC of such default. Where the default is capable of rectification, and the EPCMC does not commence rectifying it within 14 days of the notice, then by clause 43.4 the Purchaser may issue a notice of termination to the EPCMC. That notice of termination will state the date of termination (seven days from the date of the notice if not so stated). On the termination date the EPCMC stops work and delivers to the Purchaser all documentation. Following termination of the EPCMC's employment, the Purchaser may itself or through others complete the services. The Purchaser has no obligation to make any further payment to the EPCMC until the final accounting procedures under the contract have been completed. The EPCMC must inform contractors that the EPCMC no longer has any authority under the works contract. The Purchaser's representative issues a takeover certificate for any part of the plant for which a takeover certificate has not yet been issued.For final accounting, the Purchaser issues a default statement giving a full statement of account from which is calculated the amount to be paid either by the EPCMC to the Purchaser or by the Purchaser to the EPCMC. These should allow for previous payments made and any sum payable to the Purchaser by the EPCMC and the default statement provides for the balance.EPCMC termination for Purchaser defaultIn any of the events stated in clause 44.2 (Purchaser insolvency, bribery/corruption, prolonged suspension by the EPCMC suspension or by the Purchaser, the EPCMC may issue a notice terminating its employment. The termination date is the date of the first notice of termination. On the termination date, the Purchaser’s representative is deemed to have issued a TOC for all parts of the plant which have not been taken over.Liabilities and remediesBy clause 45, if the Purchaser has incurred loss and damage as a result of failure by the EPCMC to exercise reasonable skill and care the Purchaser must submit a claim for the amount of loss and damage it has incurred. If the Purchaser and the EPCMC cannot agree the amount of the Purchaser's loss and damage, the amount is 'determined' by the Purchaser.ExclusionsHowever, by clause 45.2, neither party is liable to the other for wastage, loss/contamination of any process consumable including fridge stock, chemicals, biochemical, catalysts and utilities. There are exceptions to these exclusions including amounts which have been recovered from insurers or amounts which are covered by other remedies under the contract such as liquidated damages or amounts recovered from third parties.Under clause 45.3, the liability of the EPCMC is to be limited to the amount which would be reasonable for the EPCMC to pay having regard to the contractual obligations of others for example contractors under works contracts for any such loss or damage, which bears resemblance to a net contribution clause. For more information on these types of clauses, see Practice Note: Net contribution clauses in construction contracts.With certain exceptions the liabilities of each party to the other is limited to the damages, remedies and reimbursements expressly provided for in the contract. (That is to say all other remedies under the general law including implied rights for damages for breach of contract are excluded.)The agreement provides for a total aggregate liability of each party to the other to be limited by a specific amount provided for in the contract.For more information on exclusions and limitations on liability generally, see Practice Note: Limiting liability in construction contracts.Dispute resolutionBy clauses 46 and 47 in the UK option of the contract there are two options for the resolution of disputes: arbitration and adjudication. In either case there is an initial procedure where disputed decisions may be referred to the Purchaser’s Representative for the purposes of settlement, with the obligation of both parties to negotiate in good faith. Although many of the projects for which the contract will be used will not be subject to the Housing Grants Construction and Regeneration Act, adjudication is included for those domestic projects which are so covered. Because UK domestic adjudication can be commenced by either party at any time following the crystallisation of a dispute, the initial settlement procedure can be ignored by any party commencing adjudication. It will, however, apply to arbitration.When drawing up contract conditions, some thought may need to be given to tying works contracts within the ambit of the arbitration provisions so that a dispute involving the Purchaser and the EPCMC which also relates to a dispute between the Purchaser and a Works contractor could be ‘joined’ to enable both disputes to be heard at the same time before the same arbitrator.See also: Arbitration for construction lawyers—overview and Adjudication practice and procedure—overview.