Managing risk and design responsibility in energy projects and the FIDIC contract
Managing risk and design responsibility in energy projects and the FIDIC contract

The following Construction guidance note provides comprehensive and up to date legal information covering:

  • Managing risk and design responsibility in energy projects and the FIDIC contract
  • What are the perceived and real risks for energy projects?
  • A consideration of risk allocation in the FIDIC Silver Book
  • Practical points for energy project risk management

Energy projects involve both perceived and real risks that impact on cash flow, availability, performance and profit and influence investment decisions. The risks are associated with environmental, technological, financial, political and commercial issues depending on the type of energy project. It is critical to identify, address and mitigate the risks as far as possible in order to achieve a viable and bankable energy project.

This Practice Note explores the perceived and real risks facing energy projects, design responsibility under the FIDIC Silver Book 1999 and 2017 editions (an engineering, procurement and construction (EPC) contract commonly used on energy projects) and practical ways to reduce risks on an energy project. For a detailed introduction to the Silver Book, see Practice Notes: FIDIC contracts—introduction to the Silver Book 1999 and FIDIC contracts—introduction to the Silver Book 2017.

What are the perceived and real risks for energy projects?

Projects are more likely to run smoothly and cost efficiently if risk is allocated and addressed from the outset. The table below considers some of the risks associated with various energy projects.

Type of energy project Risks and issues
Wind farm • long lead-in ordering times for turbine component parts meaning draw-down