Design and design risk in EPC contracts
Produced in partnership with Clyde & Co
Design and design risk in EPC contracts

The following Construction guidance note Produced in partnership with Clyde & Co provides comprehensive and up to date legal information covering:

  • Design and design risk in EPC contracts
  • Responsibility for the design
  • Scrutiny of the design
  • Final approval process for the design
  • Design risk under EPC—sector-specific issues

The issue of which party is responsible for design and how this risk is apportioned is central to all construction contracts. EPC contracts resemble design and build contracts insofar as they involve single-point responsibility for supply of an asset. However, a design and build contract will involve a design that has been generated by a third-party engineer or architect, although the contractor may bear some responsibility for that design—for example, in some jurisdictions it may be obliged to warn the employer of defects in the design, even though the design was prepared by a third party.

Under an EPC contract, the general position is that, subject to the requirements of the employer and project-specific concerns, a contractor carries out the bulk of design work for a project and, consequently, carries the majority of the design risk. The essence of the EPC contract is that the contractor will deliver a complete facility to the employer, who need only turn the key for the facility to become operational. This Practice Note looks at how this arrangement operates in practice.

Responsibility for the design

A main feature of the EPC contract is to provide the employer with a single point of responsibility. Most EPC contracts transfer almost all risk, including design risk, to the contractor. This is certainly the case in international EPC contracts

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