A greenfield project, where new assets are built, a Build classification, implies significant project company risk, associated with design risk, permitting, construction cost and time for completion. The project company will need to invest significant efforts into a Build facility, often with little information on site conditions, how the chosen technology will work on the site and how different construction methodologies will work given the context of the site. Build projects will therefore raise a number of specific issues:
• Site conditions risk - A Build obligation often involves a greenfield site, one where complex works or structures have not existed before. The site would therefore involve little if any risk of existing structures, but equally there may be limited information on the nature of the site, in particular subsurface and hydrological conditions. What information there is may not be proven and may therefore involve the risk of inaccuracy or incompleteness. This raises specific concerns for project companies and potential investors, who may need to perform surveys and studies in advance of making an investment decision to assess this risk.
• Design flexibility - A Build scenario often involves a high degree of flexibility for the project company to adopt the technology most appropriate to the services to be performed, with the opportunity for private sector innovation and efficiencies. The challenge is encouraging such innovation while maintaining on the project company the risk of performance of the works.
• Certainty of time and cost - a greenfield project, with limited interface with other works, flexibility in design and a well defined scope of works, as is often the case for Build projects, makes it easier for the project company to enter into a fixed price and time construction contract (also known as an engineer-procure-construct (EPC) or turnkey contract). This will then facilitate the grantor placing more strict obligations on the grantor to deliver the works to a fixed price and by a fixed date.