International Procurement And Construction (epc) Turnkey Contract Risk Control

Engineering, Procurement and Construction (EPC)/Tumkey Contract is mature in developed countries, like America and European countries. But to China, it's a relatively new thing. It's only used in few industries, for example, chemical industry and electric industry. The wide use of EPC Contract will meet a lot of problems. How to control the contract risk is the most important thing to the contractor. Contract parties always fix the price, fix the project period in the EPC Contract, and this is also the common way of EPC Contract. As the increase of contract profit and contract rights to the contractor, the contractor will take more risk subsequently.First part of the dissertation gives a general idea of the organization of FIDIC, its recent publication, like EPC/Turnkey Contract General Conditions, the background and the character of the EPC Contract. Also it gives a general idea of the contract risks which the contractor will meet.The ultimate goal of the contractor is to get profit. So the dissertation will focus partly on the financial risk of the contractor and raise some points to settle or release the financial risk. In this part, the credit of the owner, the contract price, cash flow, payment schedule, bank guarantee and exchange rate will be expatiated in details.The contractor will meet some other risks raise from the EPC Contract, like scope risk, project schedule, warranty, construction risk, bodily injury and property damage risk. The contractor should keep eyes on these risks and find ways to control them.The contractor is always required to bid for the projects with fixed price and fixed project period, there is quite a lot of unknown risks during the execution of the contract. The contractor should try his best to include change clause in the contract to empower the contractor to adjust the contract price and the project period when the contractor meets tremendous risksAssessment of the risks is the precondition of the management of the risks. At the last part of the dissertation, the ways to assess the risks is expatiated, and it suggested that combine two or more ways to assess the risks is more appreciated. How to manage the risks, there are four ways provided in the dissertation, and they are arranged by priority. If the risk is avoidable, try to evade the risk or transfer the risk to subcontractors or insurers; if the risk is unavoidable, try to release the risk or keep the risk.The whole dissertation will combine the classification of risks, the assessment of risks and the management of the risks, and will get the goal of settle or release the risks of the EPC/Turnkey Contract.