"Approval" or Review of Contractor's documentation -A bone of contention!

With many years of experience in the construction industry, I have often been asked to give an opinion on this subject.

Let me concentrate on an EPC contract. This is meant to be a one-stop shop for the Employer (or Owner) to approach a Contractor to undertake the Engineering (Design), Procurement and Construction of a project. Thus the intention is that the Employer having satisfied himself that the Contractor (by pre-qualification) has the required resources, management, supervision, labour and plant & equipment to undertake the project on time, to the quality specified and for the (usually) Lump-Sum price quoted.

Thereafter, it should be the intention (FIDIC's own opinion) that the Contractor should be given freedom to carry out the work in his chosen manner, provided the end result meets the performance criteria specified by the Employer. Furthermore, FIDIC considers that the EPC Contract is not suitable for use if the Employer intends to supervise closely or control the Contractor's work, or to review most of the construction documents.

But, too often, I have experienced the scenario whereby the Employer or his representative not only requires to review the Contractor's documents but also "approve".

Such circumstances can lead to huge and unreasonable delays to the Contractor's programme for the Works, for if the Employer, in his review process, not only takes an unreasonable period to undertake such a review but then decides the Contractor's documentation does not comply with the provisions of the Contract.

It is now that we find ourselves in the position whereby we have to look at certain facts. The Contractor by signing an EPC Contract is undertaking to deliver the project in full compliance with the Employer's Requirements. A clause is usually included in such contracts to the effect that the Contractor is responsible and/or liable in the event that any of the works do not comply.

However, it is not unusual to see a clause in such contracts that says, despite the fact that the Employer may review or approve the Contractor's documents, he will not be responsible or liable for having done so.

So we have the situation that the Contractor holds full responsibility and liability as is intended in an EPC contract but the Employer takes no responsibility and/or liability!

In my opinion, Contractors should not enter into Contracts where this is the case unless in negotiations such clauses are amended to reflect the intentions of an EPC Contract as outlined above. However, in cases where such clauses do exist, I have even advised Contractors to ignore such provisions and to clearly and unequivocally confirm to the Employer that they intend to proceed regardless for they as the EPC Contractor are fully responsible and/or liable but will not give consideration to such demands when they have an absolute obligation to complete the works on time.