Jurisdiction(s):
United Kingdom

Key definition

EPC contract definition

What does EPC contract mean? An EPC contract (engineering, procurement and construction) is a turnkey design-and-build agreement under which a single contractor agrees to deliver a fully operational facility by a fixed date and price, taking responsibility for design, procurement, construction, commissioning and performance. In practice it is used on energy, renewables, process and infrastructure projects to provide “single point” risk allocation and bankability for project finance. The term is descriptive market usage rather than a concept defined by legislation or case law. Typical features include: lump-sum price; fixed completion date; performance guarantees; liquidated damages for delay and under‑performance; capped liability; limited relief events (force...

EPC contracts: handover, testing and commissioning—defining completion, certification and certifier impartiality, FIDIC taking-over, performance damages, snagging, sectional completion, and alignment with finance and O&M agreements.

Published by a LexisNexis Construction expert

Practice notes

'Handover' under an EPC contract

The notion of ‘handover’ within an EPC contract is of central importance. It identifies the moment when the EPC contractor’s primary obligations conclude and when the contractor’s potential liability for delay Damages falls away. It likewise marks the point at which the employer assumes possession of (and typically responsibility for) the site and, in many instances, when the facility can begin commercial operation. Closely connected to handover are the processes of testing and commissioning. Whether such steps are mandated under an EPC agreement will depend heavily on the character of the facility being delivered. Where the facility comprises Infrastructure, such as a road or a bridge, detailed testing and commissioning provisions are less likely to be necessary. By contrast, where the works include complex mechanical and electrical systems, testing and commissioning become essential. For power plants and intricate assets such as hospitals, these concepts are therefore of particular consequence. In truth, the more innovative and advanced the machinery or plant, the greater the need for comprehensive testing and commissioning provisions that are carefully framed and thoroughly applied to confirm performance and readiness throughout testing...

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Web page updated on 21/05/2026

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