Introduction to EPC contracts
Produced in partnership with Clyde & Co LLP
Practice notesIntroduction to EPC contracts
Produced in partnership with Clyde & Co LLP
Practice notes
Comparison with traditional building or engineering contract
The label 'EPC' contract (or 'turnkey' contract) is not a term of art. It is easier perhaps to start by identifying differences to other forms. The concept of the turnkey contract is a contract under which, once the project is complete and ready to be handed over to the user, it will require only the 'turn of a key' for the user to operate it. EPC stands for engineering, procurement and construction, clearly indicating:
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a high level of risk allocation and responsibility imposed on the contractor under such contracts, and
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a limited requirement for the client to be involved in the Works (other than essential monitoring)
This can be contrasted with traditional domestic building or engineering contracts whereby the risks and responsibilities (including in respect of design) are more evenly divided between the contractor and client, and the client through its representatives may have considerable involvement in decision making throughout the construction period. Many UK domestic contracts now use standard forms with contractor design liability and are then
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Jurisdiction(s):
United Kingdom
Key definition:
Turnkey contract definition
What does Turnkey contract mean?
In an turnkey contract (also known as an EPC contract), the contractor engineers, procures, constructs and commissions a project from its inception to completion. The name turnkey is sometimes used because the concept is that once the project is complete and ready to be handed over to the user, it will require only the 'turn of a key' for the user to operate it. This is a form of procurement frequently used for large international infrastructure or power projects, particularly where project financing is involved. For more information, see the EPC contracts subtopic. The most common standard form EPC contract is the FIDIC Silver Book.
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