The construction contract covers provisions relating to construction works and related activities needed for completing the project in accordance with the project agreement. It could cover engineering, procurement, and construction contracting and further include support project facilities and major maintenance works.
In order to take advantage of specialised skill sets or to defray risks, the private partner may enter into a specific EPC contract for construction and/or maintenance of the project.
There will normally be only one construction contract to ensure that the private partner has a single recourse in the event of any problems arising from the construction of the infrastructure. Generally, this will reflect the terms of the private partner insofar as it relates to the construction:
• to ensure that risk is flowed down as much as is practicable from the concessionaire, but with necessary changes in default times, notice periods and longstop dates etc.
• to ensure that the private partner has sufficient time to deal with issues that arise from the public entity or from unexpected events.