EPC Contract Performance: Right Understanding and Proper Application are Essential

The Engineering, Procurement, and Construction (EPC) contract model has been applied in Vietnam since the late 1990s.

Currently, EPC contracts are widely used by domestic and foreign investors for industrial construction projects in Vietnam. Investors choose the EPC model because they do not want to be deeply involved in the project implementation process, considering available resources, the complexity of the project, and the desire to transfer risks during contract execution to the EPC contractor, along with the contractor’s commitment to the project’s schedule, quality, guaranttee performance, and lump-sum contract value.

However, Vietnam currently lacks specific regulations regarding EPC contracts, especially for cases where domestic EPC contractors are selected. The parties involved often have different interpretations and understandings, leading to difficulties and disputes during the implementation, payment, and settlement of contracts.

Globally, when applying the EPC model, the EPC Contract Conditions issued by the International Federation of Consulting Engineers (FIDIC) are commonly used for negotiating EPC contracts. Using FIDIC’s EPC Contract Conditions ensures a unified understanding between the client and the EPC contractor regarding the nature, rights, and obligations of each party under the contract. In Vietnam, although FIDIC’s EPC Contract Conditions are also used in many EPC projects, these contract clauses are not always correctly understood and applied.

See the full article (in Vietnamese) at the link below.