Wrap Around Guarantee Agreement

Price structures may also vary depending on the needs of the facility owner. The most predictable pricing model for E-E-enterprises is a fixed price in which the EPC contractor is engaged for a single fixed price for the entire volume of work. Alternatively, P-E companies could opt for a less predictable structure, offering additional flexibility, such as a fixed price model. B in which the agreement sets a fixed price for the entire volume of work of the project, but which provides adaptations for escalation if certain criteria are met. Additional price models beyond fixed and enterprise prices are also possible. With respect to the ability of the CPA holder to assert a right against the technology licensee, the solutions considered in the market include the EPC contractor and the project owner who, during the construction period, reserves a standing ovation for the project owner (or earlier when the EPC contract expires before that date). The EPC contractor, project proponent and technology providers may also enter into a tripartite agreement that gives the CPR contractor a common right to enforce certain provisions of the licensing agreements. The EPC provider may also enter into a contract directly with the technology provider or another contractor with whom the technology provider has a relationship, in order to obtain technology risk coverage. From a risk allocation perspective, owners/lenders prefer that the technological risk be fully “wrapped” by the EPC contractor, so that the EPC contractor assumes responsibility (performance guarantees and liquidated damages) for each technological failure. Such a structure allows the owner/lender to access the generally higher damages and liability ceilings of a CBE contract and reduces the risk that the CEP contractor will attempt to remove responsibility for the lack of performance guarantee by charging technological problems. EPC contracts can take many forms, including the inclusion of variant structures and price models.

The most comprehensive structure – the one that entrusts the greatest responsibility to the EPC contractor – is the “complete package” in which the facility owner assigns the EPC contractor to manage all aspects of engineering, acquisition and construction.