Legal Management of Internal Risks in Industrial Projects with a Comparative Approach between Different Construction Contracts

Document Type : Original Article

Authors

1 Assistannt Professor of Law, Shahid Beheshti University

2 Ph.D. Candidate of Oil & Gas Law, Shahid Beheshti University

10.52547/jlr.2023.224900.2056

Abstract

Industrial projects are complicated in essence. From the feasibility study phase to the closing stage, projects frequently face various risks, and there is always the concern that they may not achieve their intended goals. Risk management is therefore known as one of the main factors for project success, which should be considered and planned for from the very first stages of the project. This paper studies the legal tools of project risk management in EPC, GC, and EPCM construction contracts in industrial projects by deploying approaches to maximize the contractor’s motivation to cooperate with the employer and seeks to find the most suitable legal tool that is able to create cooperation between parties and a logical balance in risk allocation with a focus on the project's internal risks more conveniently. Studies show that risk Management solutions are possible through aligning the contractor and the employer’s interests, optimal and fair risk allocating between the parties, and developing a win-win situation for both parties. Project delivery methods, payment methods, and contract clauses are the legal tools making risk management achievable. EPCM Contractual Model is a novel project delivery method, insisting on cooperation and non-competition between the contractor and the employer. Studying various aspects of the EPCM Model indicates how choosing the proper delivery method, as long as the other legal tools, help risk management be appropriately done.

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History

  • Receive Date: 05 December 2021
  • Revise Date: 29 December 2022
  • Accept Date: 10 January 2023

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