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Risk Management & EPC Contracts

Engineering, procurement and construction (EPC) contracts are the most common form of contract used to undertake construction works by pharmaceutical companies on large-scale and complex process plant projects. The major advantage is single point responsibility.

Under an EPC contract, a contractor is obliged to deliver a complete facility to a developer who needs only “turn a key” to start operating the facility, hence EPC contracts are sometimes called “turnkey construction contracts.” In addition to delivering a complete pharmaceutical facility, the contractor must deliver that facility for a guaranteed price by a guaranteed date and it must perform to the specified level. Failure to comply with any requirements will usually result in the contractor incurring monetary liabilities.