Questions this guide addresses
- Are the design, site, permitting and logistics risks included in the fixed price, and the limits of responsibility, documented?
- Do notice, substantiation, time extensions and cost compensation remain connected when delays, variations, force majeure or changes in law occur?
- Are payment recovery, guarantee calls, liability caps, termination compensation and enforcement of dispute decisions manageable even under the worst scenario?
Method and verification scope
- We organized six review areas—scope, time, payment, remedies, security and enforcement—using the FIDIC EPC/Turnkey structure and World Bank PPP contract guidance.
- ICC and UNIDROIT force majeure and hardship principles, and the UNCITRAL arbitration enforcement framework, were linked to notice, evidence and remedy procedures.
- This is an initial checklist for bid teams to complete using current source documents and local professional advice, not a legal opinion on a specific contract.
01 · Risk architecture
Map the connections between risks before reviewing clauses
The Middle East and Africa do not form a single legal market or share uniform procurement practices. Use of the FIDIC Silver Book alone does not establish a balanced contract. Check the order of precedence among General Conditions, Particular Conditions, Employer's Requirements, data sheets, pricing schedules and guarantee forms. Use a deviation register to show how amendments change the standard allocation of risks.
Place each risk within six review areas: scope, time, payment, remedies, security and enforcement. Each row should identify the event, party able to control it, contractual notice, required site records, available time or cost relief, and residual loss. Escalate for amendment or separate approval where a party bears responsibility without access to records, the site or change approvals, or faces unlimited loss with only time-extension relief.
02 · Scope & performance
Connect the employer's requirements to performance testing and acceptance
Single-point turnkey responsibility does not mean ambiguous scope can automatically be priced. Use an interface matrix for battery limits, connections to existing facilities, temporary works, utility quality, the right to rely on employer-provided data, precedence of standards, spares, training, commissioning support and permitting responsibilities. Specify whether geological, weather and existing-facility data provide a reliable baseline, and who bears additional cost and delay if they are wrong.
Mechanical completion, readiness for commissioning, first production, performance testing, Taking-Over and final acceptance are separate confirmation stages. Define objective test conditions, attendance, retesting and repair rights, partial taking-over, inability to test for reasons attributable to the employer, and certificate deadlines for each. Check for overlap between performance shortfall LDs, acceptance at a reduced price, replacement obligations and termination rights.
03 · Time & change control
Manage schedules, notices and variations as one process for preserving contractual rights
The baseline schedule should show dependencies among site handover, design approval, long-lead equipment, employer-supplied items, power, fuel, water, third-party connections, testing and permits. Even where an event entitles the contractor to more time, rights may weaken if notice deadlines, detailed claims, updates and concurrent-delay treatment do not align. Track early warnings, formal notices, cause-specific schedule analysis, daily records and cost evidence separately.
For variations, distinguish written instructions from an authorized person, price and time assessment, emergency work, continued work before agreement, changes in law or standards, and discretionary changes. Criteria are also needed to distinguish ordinary employer comments on drawings from substantive variations. A force majeure clause should connect foreseeability, notice, mitigation, time and cost relief, and termination after prolonged events, not merely expand the list of events.
04 · Country & site interfaces
Allocate site, local regulation, logistics, tax and foreign exchange responsibilities
Pre-bid local risk review should examine actual tasks, not just a general country rating. Allocate site access and possession, subsurface conditions, contamination and buried services, customs and import licenses, local sourcing and employment, visas and labor, tax registration, withholding, port and inland transport, third-party permits and security responsibilities by party. Link the employer's cooperation duties to the required documents, submission deadlines and relief for delay.
Change-in-law provisions should specify the reference date, covered laws, general, specific and discriminatory changes, inclusion of tax, customs, environmental and localization rules, cost and time adjustments, and mitigation duties. Exchange-rate movements, currency inconvertibility, overseas remittance restrictions and payment-bank constraints are different risks. Review payment currencies, price adjustments, FX reference dates, conversion and transfer guarantees, and late-payment interest separately.
05 · Cash & downside
Calculate payment, guarantees, liability caps and termination compensation as a combined maximum loss
For milestone payments, examine not just progress but which inspections, documents and approvals establish the right to claim payment. Reflect application receipt, certification periods, due dates, disputed and undisputed amounts, set-off, late interest, and rights to slow, suspend or terminate for delayed payment in cash flow. Check the amount, reduction, expiry, extension requests, call conditions and return timing of advance-payment, performance and defects guarantees.
Bring delay and performance LDs, excluded losses, third-party compensation, intellectual property, environmental and pollution liabilities, willful misconduct, gross negligence, insurance and the overall liability cap into one combined table. Treatment of unpaid work, dismantling and remobilization or return costs, already ordered goods, financing costs and guarantees should differ by the cause of termination. State or state-owned enterprise involvement does not automatically create a sovereign payment guarantee. Substantiate budgets, approval authority and funding for termination payments separately.
06 · Enforcement & governance
Include enforceability and integrity in the bid decision
When arranging Engineer or Employer decisions, DAAB proceedings, management discussions and arbitration in stages, define deadlines, provisional binding effect, the duty to continue work and conditions for advancing. Review governing law, seat, rules, language, number of arbitrators, interim measures and countries of enforcement together. New York Convention membership is a starting point, but it does not resolve local mandatory law, sovereign immunity, restrictions on enforcing against public assets or the location of counterparty assets.
Before contracting, verify the roles, fees, beneficial owners, conflicts of interest and public-official connections of agents, consultants, JV partners and major subcontractors. Include anti-bribery representations, record retention, audit rights, restrictions on further subcontracting, and investigation, suspension and termination procedures. The final bid pack should combine the deviation register, local-law and tax memos, payment and guarantee analysis, due diligence findings and approvers for unresolved risks.
An EPC contract risk review checklist
GREEN means both contract terms and evidence are confirmed. AMBER means further conditions, an owner and a deadline are set. RED means exposure is unbounded or remedies or evidence are absent.
| Risk area | Pre-bid evidence | Minimum contractual structure | Action for material risk |
|---|---|---|---|
| Scope and design data | Battery limits, responsibility matrix and list of reliable data | Right to rely on baseline data; cost and time relief for changes | RED if all data are for reference only with a fully fixed price |
| Site and permits | Site, permit and utility responsibilities with target dates | Employer duties, delay notices and relief | Require conditions if even uncontrollable public approvals carry no relief |
| Variations and law | Authorized persons, reference dates, regulatory and tax memos | Written and emergency procedures; provisional payment | Exception approval if specifications may change but the contract price cannot |
| Payment and foreign exchange | Payment waterfall, funding, banks and currency route | Undisputed amounts, late interest, suspension rights and credit enhancement | Consider No-Bid if funding is unclear or conversion risk is transferred |
| LDs, guarantees and liability | Combined LD, guarantee, exclusion and insurance table | Individual and overall caps; no double recovery; guarantee reduction | Do not finalize the price with unlimited liability plus on-demand guarantees |
| Force majeure and termination | Event-specific time, cost and settlement scenarios | Notice, mitigation, relief and cause-specific settlement | Escalate if events beyond control permit termination without compensation |
| Disputes and integrity | Arbitration and enforcement memo; party and agent diligence | Effective stages, enforcement, audit and termination rights | Stop if enforcement is unclear or material red flags remain |
Do not offset a RED status in payment and foreign exchange, total liability or enforceability with an average score.
Practical takeaways
- A standard contract is a starting point. Particular Conditions and technical appendices determine the actual risk allocation.
- Track each material risk through six items: event, responsible party, notice deadline, evidence, remedy and cash impact.
- Treat risks that cannot be priced or limited through contracts, insurance or guarantees as conditions for bidding or reasons not to bid.
Sources and further reading
Source titles are preserved in their original language. Figures retain the reference period stated by each source.
- FIDICConditions of Contract for EPC/Turnkey Projects — Silver Book ↗
A leading standard contract for EPC/turnkey risk allocation. Actual terms require review of Particular Conditions and attachments.
Published / revised 2017; reprinted 2022 · Accessed 2026-08-31 - World Bank GroupGuidance on PPP Contractual Provisions, 2019 Edition ↗
Official guidance on risk allocation, remedies, variations and termination in PPP contracts.
Published / revised 2019 · Accessed 2026-08-31 - International Chamber of CommerceICC Force Majeure and Hardship Clauses ↗
Official model clauses for designing force majeure and hardship events, notices and remedies.
Published / revised 2020 · Accessed 2026-08-31 - UNIDROITUNIDROIT Principles of International Commercial Contracts 2016 ↗
Principles on interpretation, performance and hardship in international commercial contracts.
Published / revised 2016 · Accessed 2026-08-31 - UNCITRALNew York Convention ↗
The convention on recognition and enforcement of foreign arbitral awards, and country status.
Published / revised 1958 · Accessed 2026-08-31 - United Nations Office on Drugs and CrimeUnited Nations Convention against Corruption ↗
Official guidance on the UN convention addressing corruption prevention, public procurement and international cooperation.
Published / revised 2003 · Accessed 2026-08-31