EPC Contracting for Power & Energy Projects

July 30-31, 2024 | Denver and Online

If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for seven days after the event

“I came away from this course with a much better grasp of the context of so many terms and concepts I’d heard. It brought together contract management, regulatory frameworks, and legal issues in a way that connected them well without being overly complex.” Senior Project Manager II, Duquesne Light Company

“EUCI trainings are consistently well planned and executed.” Sr. Pre-Construction Manager, EDF Renewables

“This course did an excellent job at both laying out an overview of important issues and providing practical solutions to actual issues faced by EPC contractors on an everyday basis.” General Counsel, Gridworks

An EPC contract is utilized for the development of power and energy projects and comprehensively addresses all aspects of the design, procurement, and construction of the project. It sets forth the duties, obligations, and responsibilities of the parties, defines the scope of work, allocates risk among the parties, and sets forth the financial obligations and entitlements of the parties. Understanding the provisions, mechanisms, and concepts regularly utilized in an EPC contract is critical to successfully developing a project from inception to commercial operation.

This course will cover everything from conception to completion, with the end goal of teaching the attendees everything they need to know in order to go back to their organizations with a vast and holistic knowledge of the contracting process in order to participate in in-depth conversations.

Learning Outcomes

Review the differences between EPC vs. other contracts and their primary objectives
Evaluate site conditions and feasibility, including location, surface conditions, environmental factors, and more
Discuss the RFP and bid process and the real property concerns in power projects
Study the key issues in EPC contracts (i.e., schedule, performance, equipment, delays, indemnity, warranties, termination, etc.)
Examine contractor prerequisites and learn how to avoid and manage claims

Agenda

TUESDAY, JULY 30, 2024

8:30 a.m. – 5:00 p.m. : MOUNTAIN TIME

Introduction & Overview

What are EPC contracts and why are they used?
- Overview of EPC contracts
Differences between EPC contracting and other contracting mechanisms
Primary EPC contract objectives
- Formalize the commercial agreement
  - Define parties’ relationships and respective obligations
  - Specify scope, timing, and price
  - Identify guarantees and penalties
- Provide structure for project delivery (i.e., contract administration)
- Create an enforceable agreement
- Identify and allocate risk

Evaluation of Site Conditions & Project Feasibility

Location
- Labor
- Delivery of major equipment
- Availability; deliver of materials
- Zoning and permitting
Surface conditions
- Slope/grade; sediment and erosion control
- Regional watershed
Subsurface conditions
- Site investigations
- Foundation design
- Blasting/cutting
- Drainage
- Caverns, fissures, and voids
Environmental
- Protected Flora and Fauna

RFP & Bid Process

Identify and solicit bid opportunities
Review of bid specifications
- Technical evaluation
- Standards of performance
- Contractor obligations
- Owner obligations
Develop and submit commercial bid and pricing
- RFIs: Q&As
- Subtrade engagement
Contract review and negotiations

Real Property Concerns in Power Projects

Site location and project feasibility
- Required physical characteristics
- Preliminary site investigations
- Interconnection – proximity to regional transmission grid
- Satisfying balancing authority requirements
Securing the Project site – primary issues in land purchase and/or lease agreements
Real property rights for project performance
- Site access
- Delivery of major equipment
- Power distribution (i.e., transmission)
NIMBY
- Issues with adjacent landowners

Power Purchase Agreements (PPAs)

What is a PPA and what is it used for?
Overview of PPA process
- Project Development
- RFQ
- PPA negotiation
- Asset performance
Key issues in PPAs
- Term
- Pricing; curtailment
- Liquidated Damages
Regulatory Approval and Conditions Precedent

Key Issues in EPC Contracts for Power and Energy Projects

Schedule
- LNTPs and Commencement Date
- Project milestones – interim and final
  - Common interim milestones
  - What is Substantial Completion?
  - Final Completion
- Schedule Liquidated Damages
  - Daily and aggregate LD liability caps
  - Claw-back provisions
Price and payment
- Work schedule
- Payment schedule – deliverables and milestones
- Cash Flow & Drawdown Schedule
- Time and Materials & Unit Pricing
- Retainage
- Alternative Payment Arrangements
- Liens and Lien Waivers

Performance
- Defining performance metrics and tests
- Measuring performance
- Performance Guarantees
- Performance Liquidated Damages
  - Daily and aggregate Performance LD liability caps
  - Buy-downs and “off ramps”
Major equipment
- Contractor vs. Owner-supplied
- Offloading, inspection, and installation
- Delivery schedule and demurrage
- Commissioning and performance
- Warranty
Delays
- Excusable events
  - Force Majeure
  - Adverse Weather
  - Wind
  - Owner-Caused Delay
  - COVID-19 Impacts
  - Materials cost escalation and supply chain disruptions
  - Change in Law
- Compensable vs. non-compensable delays
- Concurrent delays
- Notice requirements
- Recovery Plans
  - Acceleration
Changes
- Scope change
- Change Order Process
- Pricing change (markups)
- Schedule change
Site conditions
- Differing site conditions
  - Soils
  - Caverns, fissures, and voids
  - Other
- Pre-Existing Hazardous Materials
Limitations damages
- Overall limitation of liability
- Mutual waiver of consequential damages
- Exclusions
- Daily and aggregate LD liability caps
Warranties
- Term
- Scope of service warranty
- Notice and Contractor response time
Indemnity
- Commercial vs. EPC contracting
- Indemnitees
- Scope
- Indemnification process
- Exclusions

WEDNESDAY, JULY 31, 2024

8:30 a.m. – 12:00 p.m. : MOUNTAIN TIME

Key Issues in EPC Contracts for Power and Energy Projects (Continued)

Termination
- Termination for Convenience
- Default and Termination for Cause
- Notice and opportunity to cure
- Contractor’s right to terminate
Payment and Performance Security
- Contractor Security
  - Bonds: Letter of Credit
  - Parent Guarantee
- Owner Security
  - Letter of Credit
  - Parent Guarantee
- Project Financing
  - Assignment
  - Estoppels and consents
  - Representations and warranties
  - Lien subordination
  - Audit rights
Other
- Tax Exemptions
- Insurance
  - Builder’s Risk
  - Risk of loss
- Domestic content and local hiring requirements
- Collective Bargaining Agreements
- Non-solicitation provisions
- FCPA and anti-bribery
- Dispute Resolution

Contract Administration in EPC Contracts for Power & Energy Projects

Contractor prerequisites
- Licensing
- Contractor Safety Program
- Code of Conduct
- Diversity Requirements and EEOC
- Cybersecurity – information security
- Invoicing
- Quality management, inspection, testing, and documentation
- Major subcontractors
- Equipment and material procurement
- Taxes
Development of exhibits
- Technical specification – conformance specification and Standards of Performance
- Environmental and site description
- Permits – contractor and utility
- Reporting requirements (daily, weekly, monthly, quarterly)
- Spare parts list
- Commissioning and testing plan
- Key personnel
- Contractor safety program
- Major subcontractors and approved equipment suppliers
- Optional pricing schedule
- Training programs
- Document submittals

Avoiding and Managing Claims

Common claims and their causes
Best practices for avoiding and managing claims and disputes
Navigating the disputes process