Management and performance of Engineering, Procurement, and Construction contracts (EPC) (part 2)

1. The construction survey within the scope of EPC contract must be consistent with Section 1 Chapter IV of the Law on Construction No. 50/2014/QH13; Chapter II of the Government’s Decree No. 46/2015/ND-CP dated May 12, 2015 on construction quality control and maintenance (hereinafter referred to as Decree No. 46/2015/ND-CP); Circular 26/2016/TT-BXD of the Minister of Construction on guidelines for construction quality control and maintenance; and regulations of relevant law provisions.

2. Management of construction design

a) The construction design within the scope of EPC contract must be consistent with regulations on design prescribed in the Law on Construction No. 50/2014/QH13; Chapter III of the Government’s Decree No. 46/2015/ND-CP; Section 1 Chapter III of the Government’s Decree No. 59/2015/ND-CP dated June 18, 2015 on management of construction projects (hereinafter referred to as Decree No. 59/2015/ND-CP); Circular 26/2016/TT-BXD of the Minister of Construction on guidelines for construction quality control and maintenance; and regulations of relevant law provisions.

b) Management of appraisal, assessment, approval and amendments to construction design:

–  Engineering designs made by the Contractor must be appraised, assessed and approved as prescribed in Articles 24 and 25 of Decree No. 59/2015/ND-CP and Point e Clause 2 Article 32 of Decree No. 37/2015/NĐ-CP.

–  The Contractor may create engineering designs for parts of the facility in accordance with technical stages which are submitted to construction authorities, investment decision maker, and investor for appraisal, assessment, and approval as prescribed.

–  The appraisal of construction design shall be consistent with Article 83 of the Law on Construction No. 50/2014/QH13, other than regulations in Clause 7 Article 83 of the Law on Construction No. 50/2014/QH13; Circular No. 18/2016/TT-BXD dated June 30, 2016 of the Minister of Construction on guidelines for assessment and approval for projects and construction designs and estimates (hereinafter referred to as Circular No. 18/2016/TT-BXD); and regulations of relevant law provisions.

– The appraisal, assessment and approval for construction design shall apply to each construction part or item or the whole facility/project.

1.  Prior to the procurement for EPC contract, the Contract shall submit requirements for the procurement to the Employer for its consent if agreed upon in the contract. The Employer’s consent will not diminish responsibility of the Contractor for the procurement for EPC contract.

2.  The Contractor may perform the direct procurement or subcontract the procurement for the EPC contract. If the procurement is subcontracted, the Contractor shall, prior to the selection of subcontractors, reach an agreement with the Employer on requirements for the subcontractor provided that requirements pertaining to engineering, origin, technology specified in the signed EPC contract remains unchanged.

1. The Contractor may begin the construction only when it satisfies all conditions prescribed in Decree No. 46/2015/ND-CP; Decree No. 59/2015/ND-CP; Circular No. 18/2016/TT-BXD; Circular of the Minister of Construction on guidelines for construction quality control and maintenance; and other relevant law provisions, namely: The engineering design of facility to be executed has been assessed, appraised, and approved as prescribed; a construction license for the part of facility to be executed has been obtained, except for cases eligible for exemption from construction licenses as prescribed.

2. The management of construction specified in the contract must be consistent with Chapter IV of Decree No. 46/2015/ND-CP; Circular of the Minister of Construction on guidelines for construction quality control and maintenance.

3. Management of selection of subcontractors: The selection of subcontractors must satisfy requirements prescribed in Article 47 of Decree No. 37/2015/ND-CP.

4. In case of any absent regulations on management of construction in this Circular, available regulations in Decree No. 37/2015/ND-CP and Circular No. 09/2016/TT-BXD dated March 10, 2016 of the Minister of Construction on guidelines for construction contract shall apply.

The parties shall reach an agreement on performance schedule of the contract prescribed in Article 14 of Decree No. 37/2015/ND-CP, in which the milestones of primary tasks must be specified: engineering, procurement, construction of main items which are consistent with schedule specified in the Bid, Proposal, and schedule of the project.

See more issues related to construction contracts:

– Types of construction contracts;

– A number of fundamental issues about construction contracts (part 1);

– A number of fundamental issues about construction contracts (part 2);