Contratos de EPC (Engineering, Procurement and Construction)

Abstract

This study aims to present a detailed overview of the concepts and characteristics of Engineering Procurement and Construction contracts, widely known by the acronym EPC. These contracts have been extensively used in engineering projects both abroad and in Brazil for several decades. Despite their broad practical application, they continue to prompt discussions and in-depth studies due to their flexibility and the variety of contexts in which they can be employed. EPC contracts are sometimes confused with traditional construction contracts. However, they have their own specificities that distinguish them, one of the main differences being the responsibility assigned to the contractor, commonly referred to as the "EPC contractor." This type of contract delegates to the EPC contractor the full responsibility for carrying out a project from the initial stages of planning and engineering, through the procurement of materials and equipment, to the construction and final delivery of the project. This comprehensive responsibility is undertaken in exchange for a previously agreed fixed price, which covers all stages of the project. One of the most striking characteristics of this contractual model is the allocation of risks. The EPC adopts a structure where risks are largely concentrated on the EPC contractor, which is referred to as "single point responsibility." This means that the EPC contractor assumes all risks and commitments related to the project, ensuring to the client that the project will be delivered within the agreed quality, schedule, and cost parameters. Thus, the EPC contractor is obligated to deliver the completed project according to the client's requirements, minimizing any uncertainties for the latter. Therefore, the objective of this paper is to clearly and comprehensively present the main concepts involved in EPC contracts. Throughout the study, their legal nature, the complexity of their execution, and the numerous possibilities for applying this contractual model in large-scale projects will be addressed. The paper also aims to provide a broader understanding of how these contracts can be effective in balancing the interests of both the client and the contractor, especially regarding risk management and ensuring the quality of the final product. Additionally, the challenges that this type of contract presents in the current legal and practical landscape will be analyzed, particularly in light of the evolution of infrastructure projects in Brazil and around the world