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The Art of Negotiation: Tips for a Successful EPC Contract

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The Art of Negotiation: Tips for a Successful EPC Contract

Planning and research ahead of time are the foundation of every successful contract negotiation. At Dorar Tammam Contracting (DTC) , today we will talk about negotiation for EPC contracts.

Following the creation of a thorough checklist, one should determine the contract terms that will most effectively serve its interests and formulate a concrete plan for negotiating their inclusion.

Participants in a project would be wise to resist the temptation to depend too heavily on a form contract or previous agreement, however how tempting it may seem.

Key aspects that are likely to be contested include the Dorar Tammam Contracting (DTC)  EPC contractor’s standard of performance, payment terms, revisions, delay damages, and consequential damages, thus they should be prepared for negotiations using language and techniques that account for these potential issues.

A party that comes into talks without having prepared will be at a huge disadvantage. A contractual party should also take into account the following, in addition to early preparation and due diligence.

Maintain command of the paperwork

The side that does the drafting and editing has an upper hand. It’s important to put some thought into your word choice. There are several advantages for the party that develops the language as opposed to the side that just comments on the wording.

Select the most suited contractual model

It’s crucial to choose the right Dorar Tammam Contracting (DTC)  EPC contracting model (such as whether or not to “wrap”) and price model for your project (e.g., fixed, firm, or target pricing).

Develop a sensible budget plan

Budgetary disagreements develop regularly as a result. The chance of disagreements grows greatly if either the contractor or the owner significantly underestimates their costs.

Set a realistic schedule

A feasible and reasonable project timetable is essential. Overly ambitious and unattainable timetables in Dorar Tammam Contracting (DTC)  EPC contracts are certain to fail.

Analyze the reliability of project teams

A project’s success is directly tied to the caliber of the team working on it. Interpersonal tensions, incompetent leadership, divisive personalities, and sloppy channels of communication are common causes of disputes.

Therefore, before beginning the project, it is in the best interest of all parties to identify and settle on their respective Dorar Tammam Contracting (DTC)  project teams.

Establish boundaries and divide responsibilities

Both the scope of the job and the duties must be laid out in a transparent matrix. Extra time and money will be needed to fix problems caused by vague statements of the project’s scope and unclear allocations of those responsibilities.

Identify tech risks/mitigation

Complex systems and machinery are typically used in EPC projects. Each party to a Dorar Tammam Contracting (DTC)  EPC contract must assess the potential technological threats to the project and write contingency plans into the agreement.

Informed compliance with rules and regulations

It is imperative that the parties to the contract take the time to research and learn about the laws and regulations that affect their industry.

Get assurances on cost, performance, and security

Guarantees (such as parent guarantees, performance and payment bonds, lien waivers, and letters of credit) should have their terms discussed and agreed upon prior to the execution of the contract.

Every EPC contract needs to include a clause resolving questions about the adequacy and legality of these instruments.

Preparing for the Unexpected

Surprises are inevitable in every discussion. Results improve with the increased effort put into planning and investigation. This is as easy as it sounds.

Conclusion

The performance guarantees in a Dorar Tammam Contracting (DTC)  EPC contract make for more complex negotiations than those seen in more standard contracts.

When setting performance goals and associated punishments, it is common practice to strike a balance between the two, establishing a series of dates by which ever more ambitious results must be achieved. To learn more, contact Dorar Tammam Contracting (DTC) .

About DTC

Founded in Saudi Arabia in 2004, Dorar Tammam Contracting Company (DTC) has grown to become one of the Gulf leading construction contractors.

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