Clarke Willmott
4 Experts
4 Contributions by Clarke Willmott
PRACTICE NOTES
Even with advanced procurement techniques, scheduling tools and project management applications, construction schemes can still run late and overrun. Any slippage triggers extra cost. This Practice Note explores the delay damages regime designed to safeguard an employer if delay occurs, highlighting the relevant FIDIC clauses and other standard form contracts used in the energy sector that address delay damages. See also Practice Notes: Delay and disruption in construction projects and Time and money claims.
The importance of time in energy projects
Construction and energy contracts devote substantial attention to time, particularly setting a completion date. Most building contracts provide for delay damages (also termed liquidated damages or liquidated and ascertained damages (LADs)). The core concept is that, on specified breaches by the contractor—commonly failure to complete on time, but potentially performance shortfalls—agreed damages become payable to the employer. Fixing those sums before contract award seeks to avoid
Construction
PRACTICE NOTES
Background
An energy asset’s output, together with the project’s capacity to achieve the contracted power generation and income, will generally ultimately set the level of investment that a funder is prepared to commit.
For employers and funders alike, it is essential that the construction contract embeds suitable testing, take-over and defects processes, so that the project yields optimum power and revenue, and any shortcomings affecting those outcomes are detected and addressed at the earliest possible stage of the delivery period.
This Practice Note examines why testing protocols and defect remedies within the FIDIC Silver Book, and other widely adopted energy sector contracts, matter, and highlights the practical issues that must be weighed when structuring and executing energy projects successfully.
For fuller overviews of the FIDIC Silver Book, refer to Practice Notes: FIDIC
Construction
PRACTICE NOTES
This Practice Note examines when the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) is engaged on UK energy projects and highlights practical issues that can arise. It should be read together with Practice Note: What is a construction contract under the HGCRA 1996? The HGCRA 1996 applies to all construction contracts, as defined in the Act, across the following jurisdictions:
England
Wales
Scotland
When drafting a contract, parties should assess whether the on-site works fall within the scope of the HGCRA 1996 and, if so, ensure the terms are compliant. This discussion frequently surfaces on energy schemes where some or all elements of the works may sit within the statutory exclusions...
Does the HGCRA 1996 apply to energy projects?
For the HGCRA 1996 to apply, the agreement must meet the definition of a ‘construction contract’ in section 104—being a contract for
Construction
PRACTICE NOTES
UK energy projects commonly follow three principal procurement routes:
engineering, procurement and construction (EPC) contract procurement
split EPC contract procurement
multi-party contract procurement
This Practice Note summarises each route and explores selected advantages, disadvantages and practical points to bear in mind. It is intended as a straightforward guide; seek professional legal advice before deciding on a procurement pathway for your specific scheme.
EPC contract procurement
The EPC route is the predominant procurement model for UK energy, as well as other large-scale, complex infrastructure developments. Under an EPC arrangement, a single contractor undertakes end-to-end delivery of the project, including design, engineering, procurement of materials, construction, and the testing of mechanical elements.
For additional guidance on EPC arrangements, refer to the following Practice Notes: Introduction to EPC contracts; EPC contracts—handover, testing and commissioning; and EPC contracts—limits of liability. The diagram below depicts the core contractual structure for a project procured via the EPC route with
Construction
22 Contributions by Clarke Willmott Experts
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Dispute Resolution
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Dispute Resolution
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