Protecting Your Investment: The Care of the Works Clause in EPC Contracts
Building a new project is a significant undertaking. As a conservative investor, you want to ensure everything runs smoothly and unexpected costs don’t derail your plans. This is where the “care of the works” clause in an Engineering,Procurement, and Construction (EPC) contract becomes crucial.
Think of it as a clear division of responsibility. The contractor takes full accountability for any damage caused by their own mistakes during construction. This means if faulty materials or poor workmanship lead to repairs or replacements,the contractor foots the bill.
The clause also safeguards you from unforeseen events outside the contractor’s control. Acts of God, like earthquakes or floods, and actions by other parties involved in the project wouldn’t fall under their responsibility.
The key is setting a clear “risk transfer date.” Once construction is complete and you’ve accepted the project, the responsibility for any loss or damage shifts to you. So, ensuring proper inspections and a smooth handover are vital.
By understanding the care of the works clause, you can enter your EPC contract with confidence, knowing exactly who is responsible for what. It’s a conservative approach that protects your investment and ensures a successful project.
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