Contractor's EPCM Professional Liability in Oil and Gas Industry

Abstract

One of the contracts frequently used in the oil and gas industry for project delivery is the Engineering, Procurement and Construction Management (EPCM) contract, which originated from mining. Under this agreement, the contractor acts as the employer's representative and provides professional services for the design process, management, and monitoring of construction contracts to ensure the project's quality, budget, and timing. The main issue and question surrounding this contract is the principle on which the contractor's professional liability can be established. As a contractor for professional services, the liabilities associated with implementing design and management, procurement management, and construction management are based on the "standards of care" principle employed by leading engineering firms operating under similar conditions and in the same profession. If applicable, the contractor will be held liable for professional faults. Given the nature of the contractor's professional service and in line with Iranian law, the contractor's design, procurement, and management obligations are binding under this principle.

Keywords

• professional liability
• engineering procurement
• construction management contract