A Brief Introduction About the Engineering and Construction Agreement
The engineering and construction agreement is the most common form of agreement that is undertaken by the construction companies and is also used for completing complex infrastructure projects successfully. The engineering and construction contract aims to carry out the engineering design of the project while also making sure that the equipment and necessary materials are delivered. Failure to comply with the details mentioned on this contract will result in incurring monetary liabilities.
Who Takes the Engineering and Construction Agreement?
The project owner, who is also known as the EPC (engineering procurement construction) and the contractor will be involved in the engineering and construction contract, along with the other contractors and the client. The client will also bring along the project management consultants to assist the project, essentially making it a type of engineering procurement and construction contract
Purpose of the Engineering and Construction Agreement
The purpose of engineering and construction agreement is to specify the date and the parties that are going to be involved in the engineering and construction process. This agreement is executed between the owner of the project and the contractor. The contractor provides the requested services to the owner of the project while making sure the scope, terms, and conditions of the agreement are followed efficiently. For that purpose, it could include civil engineering construction contracts
Contents of the Engineering and Construction Agreement
- The engineering and construction agreement consists of the legal name of the parties involved, along with a description of the firms and the contractor.
- This agreement includes the date from which the agreement and term that it will be applicable.
- Followed by this are brief descriptions of the project plan and the professional capabilities of the contractor.
- Structure of the finance agreement.
- Description of the nature of the work
- Description of the consumables required including the estimated amount
- Description of payment and consideration of completion of work for payment
- Liability of payment and the liability of loss during construction
- Permissible loss during working
- Liability of injury to the workers
- Responsibility of hiring the workers and payment of wages to them
- Submission and review of the drawings and plans
- Authorizations and relevant licenses from the government
- Safety and emergency precautions in place during construction
- Compliance and indemnification for both the parties
- Limitation on liability
- Representations and warranties
- Payment of taxes
- Maintenance of records
- Subcontracting or assignments
- Rights of inspection and correction of defects including the timeline for such rectification
- Cooperation and non interference
- Disclaimers and other terms
- Termination and premature closing of the agreement
How to Draft the Engineering and Construction Agreement?
- To draft this agreement, firstly, it is important to mention the name of the agreement and the date.
- Secondly, it’s important to mention the location of the project.
- Then comes the temporary construction cost of the project.
- Then it’s important to mention the work description, which means all work the contractor has to perform.
- Details regarding the certificate of completion should also be included.
- Mode of payments and the type of contract — fixed or cost basis
- Timelines and schedules
- Inspections and non interferences
- Invoices and payments
- General performance
- Insurance and statutory payments and reserves to maintain
- Suspension and termination.
Benefits & Drawbacks of an Engineering and Construction Agreement
The main benefit of the Engineering and Construction Agreement is that this agreement allows engagement with one contractor, who is responsible for the management of the relationship with subcontractors, vendors, and other stakeholders involved in the construction of the project. This makes the task easier and makes sure that it is completed quickly, within the given budget.
The limitation of the Engineering and Construction contract is that it includes the cost, time, and effort of development of the agreement, which delays the decision making related to the project causing further delay in completion of the project.
What Happens in Case of Violation?
When the contractor fails to abide by the rules and conditions mention the agreement, or when the client fails to do what is mentioned in the agreement, it leads to the violation, which further leads to termination. The violating party will be liable to pay the expenses incurred, which shall be credited against the payment owed to other parties.
To conclude, the Engineering and Construction Agreement are the agreements between the business contractor and the company that deal with the contractor, in exchange for payment of the services provided. The four issues that are taken care of under this agreement are the scope of work, performance period, payment, and violation.
Sample for Engineering and Construction Agreement
A sample of the agreement can be downloaded from below.
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