The Hierarchy of Contract Documents
for Engineering, Procurement and Construction (EPC) Projects
(By Engr. Ronilo A. Ysmael, RME, LLB, MBA-PM)
I. Introduction
On many occasions, professionals involved in contract administration, management, supervision and engineering are faced in dealing with the several contract documents that pertain to the implementation of an EPC Project. The purpose of this short article is to summarize the hierarchy of contract documents that are executed by the major Parties involved in an EPC Project in order that the involved contract professionals are on “the same frequency” of understanding in resolving potential issues and conflicts that may arise during the implementation of said EPC Project.
II. The Contract Documents are enumerated according to hierarchy.
1. The Notice to Proceed or NTP
2. The Minutes of the Kick-off Meeting or KOM
3. The Contract Negotiation Agreement
4. The Notice of Award or NOA
5. The EPC Contract
6. The Special Conditions of the Contract
7. The General Conditions of the Contract
8. Bill Summary of Cost
9. Bill of Preliminaries
10. Bill of Quantities
11. Approved Specifications
12. Approved Drawings
13. Trade Preambles and Rules of EPC Measurement
14. Bid Documents:
a. Instruction to Bidders, ITB
b. Tender Specifications
c. Tender Drawings
d. Project Contractor’s Bid Submissions
15. Pre-bid Documents
a. Invitation to Bid, ItB
b. Minutes of Meeting
c. Draft EPC Contract
e. Pro-forma Appendices:
i. Appendix A- Appendix to Tender
ii. Appendix B- Specimen Form of Affidavit of Lien
iii. Appendix C- Specimen Form of Performance Bond
iv. Appendix D- Specimen Form of Advance Payment Bond
v. Appendix E- Specimen Form of Retention Bond
vi. Appendix F- Specimen Form of Sworn Statement of Compliance
vii. Appendix G- Specimen Form of Certificate of Site Inspection
ix. Appendix H- Specimen Form of Non-Disclosure Agreement.
The above list is the enumeration of the basic contract documents, enumerated according to their hierarchy predicated on the condition that as a general rule, the document issued and agreed upon with the most recent date takes precedence over the later ones issued and agreed upon.
III. The Notice to Proceed or NTP
Usually, this document is the most recent document issued by the Project Owner to the Project Contractor, properly received by the latter with the signature and acknowledgment receipt of the Project Contractor Manager. This NTP is a direct order of the Project Owner to the Project Contractor, to proceed with the commencement of the Project on its mobilization prior to Day 1 of the Project. The mobilization duration period varies depending on the final agreed mobilization period as finalized during the KOM.
IV. The Minutes of the Kick-off Meeting or KOM
The KOM is a formal meeting between the Project Owner’s management team and the Project Contractor team. Where prior agreements between the Parties are finalized.
V. The Contract Negotiation Agreement
After the successful bidding process for the project, and receipt of the Project Contractor of the Notice of Award or NOA from the Project Owner, upon the initiative of either or both major Parties, both major Parties meet and discuss on the negotiation table, in order to negotiate and finally clarify items in the agreed/approved EPC Contract, to document all the things that have been negotiated in so far as the implementation of the EPC Contract is concerned.
VI. The Notice of Award or NOA
This is the formal document issued by the Project Owner to the Project Contractor after the conclusion of the bidding process implemented by the Project Owner. This document provides the formal acceptance by the Project Owner of the bid of the Project Contractor for the Project based on the criteria used during the bidding process.
VII. The EPC Contract
This is the main consideration of the Project Contractor and the other Contractors who participated in the bidding process as the basis for tendering their respective bids for the Project.
VIII. The Special Conditions of the Contract
IX. The General Conditions of the Contract
X. Bill Summary of Cost and Bill of Preliminaries, Bill of Quantities
These documents provide details for the Bid Cost of the Project Contractor for the Project.
XI. Other Contract Documents
As enumerated in item II numbers 11 until 15 above.
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