Turnkey construction and engineering contracts are contracts signed for engineering, acquisition and construction. This is a form of procurement that is often used for major international infrastructure or energy projects, mainly when it comes to project financing. Its popularity is attributed to the fact that, under a turnkey contract, the risk of design and construction in the project lies with the contractor. This model contract contains certain general conditions of the contract that are normally applied in the vast majority of turnkey contracts, although there are other conditions that must be modified to take into account the circumstances of each contract and that are qualified as special conditions; The Annex to the Treaty contains a guide for the elaboration of these special conditions which modify the general conditions. In addition to this guide, several documents are included in the annexes: tender letters, contractual agreement and model dispute resolution agreements. All these documents are part of the documentation that must be submitted by companies applying for a turnkey project, especially when it is carried out in an international environment. The following guidelines must be followed to establish a turnkey contract: this standard contract of turnkey projects must be adapted to all the many industrial and manufacturing projects, large and small, especially E&M (Electrical and Mechanical) and other process installation projects implemented worldwide by all types of employers who implement their turnkey projects at a fixed price and with a strict two-party approach I would not want to. In accordance with the usual approach of turnkey contracts, the contractor carries out all engineering, purchasing management and construction (EPC – Engineering, Procurement and Construction) and provides a fully equipped and operational (“turnkey”) installation. Although there are many types of construction contracts (1) used in project financing, the majority of project sponsors and all project promoters prefer turnkey contracts. Turnkey contracts are based on the idea that when construction is complete, all you need to do is the key, and the project will work as expected, which induces the nature of the business and is therefore a preferred type of contract for big budget long-term projects.
The purpose of a turnkey contract is, as far as possible by contract, to transfer all design, engineering and construction risk from the project company that owns the project to the EPC contractor that builds the project. An EPC contract reduces and controls risk in the form of written commercial terms. Indeed, EPC contracts were designed specifically to transfer risk to the contractor. You put the contractor in charge of all project activities, from the design phase to the construction phase. The most important terms to include in a key contract are listed below: a turnkey contract essentially includes provisions relating to the transfer of risk, commissions of contractors, and the rights and obligations of the project owner and contractor. In addition to technical and operational terms, standard platform clauses such as party names, effective date, waivers, remedies, modifications, communications, dispute resolution, choice of law, and salvatorial clauses should be included. EPC contracts are also called turnkey contracts, because the concept is that once the project is finalized and ready to be handed over to the user, only the “key rotation” is required for the user`s operation. . .