E.P.C. Bonding Requirements

Engineer servicing solar panel on electric plant

E.P.C.: Engineering, Procurement, and Construction

In the E.P.C. negotiations, and that is in the negotiation of the engineering, procurement, and construction contract, one of the very important commercial aspects is the requirement of the contractor to bond around mechanics liens and the potential for mechanics liens. In the case where a potential disagreement can occur between a contractor and a subcontractor, one of the rights that a subcontractor has is to record a lien in the county records where the project is located. Frequently when this occurs, this causes serious implications for the project. It can raise issues as far as priority for the loan financing, loan agreements, and trust deed. It can also put the project into a default.

E.P.C. Negotiations

Normally what we recommend is that there be very stringent and clear bonding requirements in your E.P.C. contract, so that in the event of a recording of this nature, then there is a protocol that immediately can take place for the contractor to bond around the lien during the period of time that the contractor is attempting to negotiate a resolution of the outstanding invoice with the subcontractor.

Solar panels, roof or engineering team planning photovoltaic construction for renewable energy deve
Female maintenance engineer controls the work of wind turbines and windmills. Renewable energy

EPC Contractor has to execute and deliver the project within an agreed time and budget, commonly known as a Lump Sum Turn Key (LSTK) Contract.

Wind Power

Power Output

150 MW

Due diligence - Risk Mitigation - TerraPro Solutions

E.P.C.

Negotiations

Location

Location

Palm Springs

Verified by MonsterInsights