Engineering Procurement and

Construction (EPC)
Contracts –
Standard Documents

By:
R. K. Shekhawat
Sr. Professor (Projects)
IRICEN, PUNE
 EPC Contract Bidding Process

Two Stage Bidding

• Request for Qualification (RFQ): To pre-qualify and
shortlist eligible bidders based on specified
eligibility criteria.
• Request for Proposals (RFP): To invite financial
bids from pre–qualified bidders. Bidders at this
stage engage in a comprehensive scrutiny of the
project before submitting their financial offers.

Bid document will consist of RFQ, RFP and draft

Contract Agreement.
 (A) Salient Features of Model RFQ Document
Information in Model RFQ Document
• Details of Project: Description (Scope of Work), Length,
Indicative Cost etc.
• Cost of RFQ Participation
• Method and manner of submitting Application
• Eligibility Criteria: Technical and Financial
• Criteria for participation by JV/Consortium and Foreign
firm(s).
• Method of Evaluation and Basis for Pre-qualification.
• Validity Period: 120 days
• Schedule of RFQ process finalization
 Minimum Eligibility Criteria: Technical Capacity
Experience of projects divided into two categories
Railways Sector (For NL, GC, Doubling): Railways, metro rails,
LRT, monorail, high speed rail, highways, expressways,
bridges (road/railways) and Tunnels (road/railways).
Core Sector (For NL, GC, Doubling):Hydroelectric dams,
barrage, ports, airports, thermal/steel/cement plants, oil &
gas pipelines, irrigation canals, water supply (pipelines/
treatment plants), sewerage (pipelines/treatment plants),
power transmission lines and real estate development
(excluding flats unless they form part of real estate complex
or township).
 Categorization of Eligible Projects
Category-1/2: Projects in Railway/Core Sector, and:
• Undertaken as PPP project.
• The applicant entity should have held minimum 26%
equity in the project, during entire year.
• For NL, GC and Doubling works: Capital cost of eligible
project should be more than 30% of Estimated Project
Cost. Can be reduced up to 20% in case of projects with
Estimated project Cost of Rs. 1000 Crores or above.
 Category-3/4: Projects in Railway/Core Sector, and:
• For NL, GC and Doubling works: Should have received
payments for construction work executed, fully or
partially.
Receipts of less than 15% of Estimated Project Cost shall
not be reckoned as receipt from Eligible Projects.
Shall not include payment for supply of goods or
equipment, except when this forms part of contract. Cost of
land not to be included.
 Technical Capacity
In last 5 financial years preceding application due date,
must have received total payments for construction or
undertaken construction works in PPP projects, for more
than 2.5 times the Estimated Project Cost (Threshold
Technical Capacity).
For NL, GC, Doubling etc.:
o At least half of the Threshold Technical Capacity shall
be from the Eligible Projects (Category 1 and/or 3).
o Should have undertaken at least one Eligible Project
(Category 1 and/or 3) of value not less than 35% of
Estimated Project Cost and received payments not less
than 75% value of such project.
 Financial Capacity

The Applicant shall have a minimum Net worth equal to

Rupees ***, at the close of preceding financial year.

(***) This amount should be about 10% (ten percent)

of the Estimated Project Cost.

Methodology for working out “Net Worth” has been

detailed in the RFQ document [Clause 2.2.4(ii)].
 Test of Responsiveness
The Authority reserves the right to reject any application
which is non-responsive. An application is responsive if:
• Received as per Format [Appendix-I].
• Received by Application Due Date.
• Signed, sealed and bound as stipulated [Cl. 2.12 & 2.13].
• Accompanied by POA [Cl. 2.2.5 or 2.2.6(c)].
• Contains all requisite information and documents.
• Contains certificates from Statutory Auditor for each Eligible
Project [Appendix-I].
• Contains attested copy of receipt of payment for RFQ.
• Accompanied by Joint Bidding Agreement for consortium [Cl.
2.2.6(g)].
• Does not contain any condition or qualification.
 Evaluation Criteria

• For assigning scores to the Applicant, experience is

measured in terms of “Experience score”, which is
Eligible Receipts from Eligible Projects (in Crores)
multiplied by the applicable factor and added together:

Category Factor
Category 1 0.75
Category 2 0.50
Category 3 1
Category 4 0.75

For Eligible Project(s) situated in a developed country

which is member of OECD shall be further multiplied by a
factor of 0.5
 Shortlisting of Applicants

• Sum total of the Experience Scores for all eligible Projects

will be “Aggregate Experience Score” of an Applicant.
• Applicants shall be ranked based on their “Aggregate
Experience Scores”.
• Authority would shortlist up to 6 (six) pre-qualified
Applicants for participation in the Bid Stage (RFP Stage).
 (B) Salient Features of Model RFP Document

It is a “Letter of Invitation” to shortlisted applicants through

RFQ process. It contains:
 Brief Introduction, background & scope of work.
 Feasibility Report prepared by the Authority/Consultant.
 Schedule of Bidding Process.
 Instructions for submission of bids and documents to be
submitted.
 Bid Security details.
 Process of Evaluation of bids.
 Details of pre-bid conference.
 Bid validity: 120 days from Bid Due date.
 Consequences of Fraud & Corrupt practices.
 Bid Security: 2% of the Estimated Project Cost. Can be
reduced by the Authority for projects with Estimated
Project Cost of Rs. 2000 crores or more, but not less than
0.5% of the Estimated Project Cost.
 Can be provided in the form of DD or BG.
 To be refunded to unsuccessful bidders not late than 180
days from Bid Due date.
 Bid security can be forfeited if the Bidder:
• Submits non-responsive bid.
• Indulges in corrupt/fraudulent/coercive practice.
• Withdraws bid during validity period.
• In case of selected bidder fails to- sign & return LOA
copy/ sign agreement/furnish Performance Security.
 Evaluation of Bids
Test of Responsiveness
Only responsive bids, as per following criteria, to be
considered:
• Received as per Format [Appendix-I].
• Received by Bid Due Date.
• Signed, sealed and bound as stipulated [Cl. 2.10 & 2.11].
• Accompanied by Bid Security [Cl. 2.1.6].
• Accompanied by POA [Cl. 2.1.8 & 2.1.9].
• Contains all requisite information and documents.
• Does not contain any condition or qualification.
 The Bidder adjudged as “Responsive” and quoting “lowest
price” shall be the declared as “Selected Bidder”.
 LOA shall be issued to Selected Bidder and he shall sign
and return a copy of LOA as acknowledgement, within 7
days of receipt.
 Agreement to be executed within stipulated time frame.
 (C) Salient features of Model EPC Agreement
• Only core requirements of design and construction,
having a bearing on quality and safety of assets, are to be
specified.
• Enough room is left for the contractor to add value.
• This would provide the requisite flexibility to the
contractor in evolving and adopting the efficient designs
without compromising on the quality and safety.

Model Contract Agreement (MCA) comprises of:

 Article – 1 to 26
 Schedule- A to P
Article – 1: Definitions and Interpretations
Article – 2: Scope of the Project
Schedule-A: Site of the Project
Annex-I: Site (Site, Route Length, Land, Details of existing
Structures & facilities on adjoining railway track, Permanent
Way, Important Bridges, Major Bridges, Minor
Bridges/Culverts, Tunnels, Railway Flyovers, RUB/ROB, Level
Crossings, Railway Stations, Railway Yards, FOBs,
Transmission lines crossing the ROW, Underground power
line crossing the ROW, Signalling infrastructure and
Telecommunication infrastructure.
Annex-II: Dates for providing ROW.
Annex-III: Alignment Plans.
Annex-IV: Environment Clearances and Forest Clearances.
Schedule-B: Development of the Railway Project
Annex-I: Description of Railway Project (Construction of
Track & Civil Works, Signalling & Telecommunication and
Electrification of existing line).
Schedule-C: Project Facilities
Schedule-D: Specifications and Standards
Annex-I: Specification & Standards for Construction.
Annex-II: Time Schedule for review of Drawing by the
Authority.
Article – 3: Obligations of the Contractor

 To undertake survey, investigation, design, engineering,

procurement and construction of the Railway Project .
 To undertake all necessary superintendence to plan,
arrange, direct, manage, inspect and test the Works.

Schedule-E: Applicable Permits

Article – 4: Obligations of the Authority
 Shall be responsible for correctness of the Scope of
Project, Project Facilities, Specifications & Standards and
the criteria for Testing of the completed Works.
 Provide Right of Way for construction not less than 90%
of project length within 15 days of signing agreement.
 All environmental and forest clearance within 15 days.
 GAD approval of ROBs/RUBs from Road authority within
60 days.
 Shifting of utilities within 180 days of notice given by
contractor.
 Provide Traffic & Power block as specified in agreement
(Schedule-O).
Article – 6: Disclaimer

Except for the correctness of Scope of the Project, Project

Facilities, Specifications & Standards and criteria for testing
of the completed works, the Authority makes no
representation regarding the accuracy, adequacy,
correctness, reliability and completeness of any assessment,
assumptions, statement or information provided by it. The
contractor confirms that it shall have no claim whatsoever
against the Authority in this regard.
Article – 7: Performance Security
• Equal to 5% of the Contract Price. The Authority may
increase it to 7.5% for complex projects.
• Contractor to submit within 15 days of the date of this
Agreement, in form of BG (Format at Schedule-F/Annex-I).
• Contractor may seek extension for another 15 days on
payment of Damages @0.05% of the Contract Price for
each day’s delay.
• Performance Security may initially be provided for 2 years
and contractor must extend it at least 2 months prior to
date of expiry thereof.
• In case of Contractor Default, the Authority shall be
entitled to encash and appropriate from the Performance
Security the amounts due to it as Damages.
 The Authority shall release the Performance Security
within 60 days of expiry of Defects Liability Period/
extended DLP.
 From every payment, 6% amount to be deducted as
guarantee money during the Construction Period
(Retention Money) subject to maximum 5% of the
Contract Price.
 The Contractor may, upon furnishing BG (Format at
Schedule-F/Annex-II) ask the Authority to refund the
Retention Money deducted. The refund shall be made in
tranches of not less than 1% of the Contract Price.
 Article – 8: Right of Way

 The Authority shall provide ROW by the date specified for each part of the
Site referred to therein, but in no case later than 180 days of the
Appointed Date, and in the event of delay for any reason other than Force
Majeure or breach of this Agreement by the Contractor, it shall pay to the
Contractor, specified Damages.
 The Authority may withdraw any part of Right of Way and the works
forming part of Agreement, upto 10% of the Contract Price.
 If the Right of Way is not provided within 240 days of the Appointed
Date, for commencing construction on any part of the Site included in the
Appendix, the affected Works shall be deemed to be withdrawn unless the
Parties agree to the contrary, and such Works shall not be computed for
the purposes of the aforesaid ceiling of 10% of the Contract Price
hereunder.
 Damages associated with obligations of Authority
• Damage for not providing ROW (Rs./day/m)
= 0.10 × C × 1/L × 1/N
C = Contract Price (Rs.), L = Length of Project (m),
N = Completion Period (days)
For 100 km long project with completion period of 1000
days & CP Rs. 600 Crore, damage works out to Rs.
6000/day/km.
• For ROB/RUB GAD approval, each ROB will be treated as 1
km of ROW for the purpose of damages.
• For Power/Traffic block, damage rate would be Rs.
1000/day for each hour of block not provided.
• Aggregate damages payable as above shall not exceed
2.5% of the contract price.
 Damages associated with obligation of Contractor

• Delay in Performance Security:

Damages @0.05% of CP/day. (e.g. CP = Rs. 1000 Crore,
Damages/day = Rs. 50 lakhs).
• Delay in Project Completion:
Damages @0.05% of CP/day subject to a maximum of 10%
of CP.
Bonus for early completion @0.03% of CP/day, subject to a
maximum of 3%.
• Delay in submitting the ESP, SIP or RCC beyond specified
period:
Damages @0.2% of the Performance Security/day of delay.
Article – 10: Design & Construction of the Railway Project

o Within 20 days of the appointed date, the Contractor to

appoint its Representative and Design Director.
o Within 15 days of date of agreement, Authority to
appoint “Authority’s Engineer”.
o Within 30 days of appointed date, contractor to submit
“Programme” containing Organization, Detailed
programme as per Milestones [Schedule-I] and Monthly
cash flow forecast.
o Design & Drawing: Appointment of “Proof Consultant”,
preparation of ESP, SIP & RCC, action in case of delay by
the Contractor, extension of time for completion etc.
 Article – 11: Quality Assurance, Monitoring & Supervision
• Contractor to submit QAP within 30 days of Appointed
Date.
• Contractor to ensure that Construction, Materials and
Workmanship are in accordance with requirements
specified in Agreement, Specifications & Standards and
shall not use any materials which are generally recognised
as deleterious under Good Industry Practice.
• This Article also covers Methodology for Quality checks,
Inspection & Technical Audit by Authority, External
Technical Audit, Inspection of construction records,
Monthly progress reports, Inspections, Samples, Tests,
Rejection, Remedial works, Delays during construction,
Quality control records & documents, Video recording,
suspension of unsafe Construction Works etc.
 Article – 12: Completion Certificate
o Not less than 30 days prior to likely completion, the
Contractor shall submit documents required for CRS
Certification. Tests to be conducted in accordance with
Schedule-J, at contractor's’ cost.
o Provisional Certificate: On completion of tests, Authority’s
Engineer to issue the “Provisional Certificate” (Schedule-
K). If certain works are not, a list of outstanding items
(Punch List) to be appended. Items in Punch List to be
completed within 90 days issue of Provisional Certificate.
In case of delay, damages on the contractor.
o Completion Certificate: Upon completion of all items in
Punch List, Authority’s Engineer to issue “Completion
Certificate” (Schedule-K).
Article – 15: Defects Liability
 The Defect Liability Period (DLP) is 2 years from date of
issue of Provisional certificate.
 For important bridges, other specified structures, S&T
equipment comprising new technology, there shall be
extended DLP of 2 years beyond original period.
 Contractor to rectify the defect within 15 days or such
reasonable period as determined by Authority’s Engineer.
 In case of failure of contractor to rectify the defect,
authority can do so and recover additional 20% as
damages.
 Any materials or works with defects replaced/repaired
during DLP would be further warranted for 12 months.
 Article – 17: Payments
 Lump Sum Price to be paid for the defined scope of work.
 “Advance Payment”: 10% of Contract Price is paid, in 2
instalments of 5% each, for mobilisation expenses and
acquisition of equipment. It carries interest @ 9.5% per
annum and is recovered from Interim payments.
 Interim payments made on completion of a specified
item/stage and valued according to proportion of price
assigned in Schedule-G.
 For example, Civil & Track work divided in Items of
Earthwork, Important Bridges, Major Bridges, Minor
Bridges, RCC Box/Pipe Culverts, ROB, Flyovers, Track
Works, Tunnels, Other Engg. works, Inventory for Civil &
Track works, Integrated Testing & Commissioning.
 Each item is further divided in Stages and assigned %
weightage for payment. For example, Important Bridges
divided in stages of Foundation, Sub-structure and Super-
structure.
 Contractor to submit “Stage Payment Statement” by the
7th day of month in the form given in Schedule-M. Within
10 days of receipt, Authority’s Engineer to broadly
determine amount due to Contractor and release 90% of
the amount. Within further 10 days payment to be
credited to Contractor’s account.
 The Authority’s Engineer may, for reasons to be recorded,
withhold from payment if (i) estimated value of work that
Contractor has failed to perform in accordance with
Agreement and (ii) estimated cost of rectification of any
such Works.
o Within 60 days of receiving the Completion Certificate,
Contractor to submit “Final Payment Statement”, with
supporting documents.
o After Final Payment Statement, Contractor shall give a
“written discharge” confirming that Final Payment
Statement represents full and final settlement of all
monies due to Contractor.
o Within 30 days after receipt of Final Payment Statement
and written discharge, and there being no disputed items
of claim, Authority’s Engineer shall deliver “Final
Payment Certificate”.
o Price adjustment as per specified PV formulae.
o Retention Money: @6% of interim payment, total not
exceeding 5% of CP, to be refunded within 15 days of
issue of completion certificate.
Article – 21: Termination

o Various defaults of contractor, listed in agreement, if not cured within 60

days of occurrence, the contract can be terminated on contractor’s default,
after issuing 15 days’ Notice.
o Upon termination on contractor’s default, Railway shall -
• Encash Performance Security or Retention Money whichever is more.
• Encash B.G. for outstanding advance and interest.
• Pay to the contractor for an unpaid work.
o Various defaults, listed in agreement, if not cured within 90 days, the
contractor can terminate the contract on authority’s default, after issuing
15 days’ Notice.
o Authority may terminate Agreement for its own convenience, after
issuing 30 days notice.
 Article – 24: Dispute Resolution

 Conciliation: In the event of any Dispute, either Party may call

upon an officer not below the rank of GM, or such other person
as the Parties may mutually agree upon, to conciliate and assist
in arriving at amicable settlement.
 If still not settled, either Party may refer the Dispute to
arbitration, which shall be held in accordance with “Rules of
Arbitration of the International Centre for Alternative Dispute
Resolution, New Delhi” or such other rules as mutually agreed
by the Parties, and shall be subject to the provisions of the
Arbitration Act.
 If the Party against whom Award has been granted, challenges
the Award in a court of law, it shall make an interim payment of
75% of the Award, pending final settlement of the Dispute.
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