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EPC Contract Risk Review

Contract risk review that reads an EPC bid's conditions and every annex together, prices each risky clause with its sum open, and checks what each supplier quote passes down.

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Follow one clause from the read to the price ↓
The problem

The liability cap sits in the conditions; the annex that escapes it does not

A lump-sum invitation arrives as a stack: conditions of contract, scope, schedule, guarantees and damages, insurance, interfaces. Counsel takes the conditions, engineering takes the annexes, and the risk list reaches the estimator late, as a spreadsheet of clause numbers and gut feel.

The costly clauses are the ones that only mean something together. A limit of liability reads as protection until an annex says its damages sit on top of it. And when the supplier's quote caps everything at a small share of its own price, the prime keeps the difference, often without anyone pricing it.

Built forBid directorsContracts counselBid risk managersCost estimatorsBid engineering managers

The Problem Today

The clauses that sink a lump-sum bid hide across a contract and its annexes, read late and by different people.

Read by hand today

  • Conditions
  • Annexes
  • Quotes
  • Risk list
  • One clause, two placesA cap in the form, an exception in an annex
  • Supplier caps go unpricedThe prime accepts more than the quote passes down

The Solution

  1. Read togetherThe form and each annex, each clause tied to its page
  2. Each clause pricedExposure times likelihood, with the sum and its sources open
  3. Flow-down checkedWhat the prime accepts against what each supplier quote carries
  4. Three people signCounsel confirms meaning, the risk manager places, the director signs

Built-in controls

  • Counsel confirms what each priced clause means
  • Agents never sign or change the bid
  • Unsigned supplier quotes are never credited

What You Get

The bid price carries each contract risk as a signed number, with the clause and the reading behind it.

  • Every step has three namesCounsel's reading, the risk manager's number, the director's signature
  • A price build file that agreesOnly signed lines load, and the file matches the bridge
  • Gaps found before signingSupplier caps set against what the prime accepts
One clause, one morning

A 10% cap, an annex that sits on top of it, and $21.6M of contingency

A lump-sum compression platform bid: 1,380 pages in 14 documents, a 60-day window and a price freeze 16 days out. Here the biggest step in the contingency gets its reading, its number and its signature.

demoBidder, owner, suppliers, people and amounts on these screens are all sample data.

  1. 0108:30

    The bid of record is $1,120.0M, and 24 risks still wait for people

    Bid risk manager

    The bridge stacks the price as it stands: cost estimate $976.0M, contingency $61.0M, margin $83.0M, signed lines only. Under it the contingency climbs clause by clause, 17 steps signed. The tallest unsigned step is R-07, Clause 42 with Annex D, at $21.6M proposed. Below, all 286 clauses in 1,380 pages, split by where each one landed.

  2. 02Before the desk

    11 places where an annex changes a clause in the conditions

    Contract reader and clause finder

    Laid out step by step, the read starts with the contract reader, which took 14 documents and 1,380 pages read only, keeping document, page and clause for each passage. The clause finder sorted 286 clauses by the contractor's playbook. The cross-reference step found 11 places where an annex changes a clause; Annex D 4.6 is one, and counsel reads what it means.

  3. 0308:40

    156 clauses are proposed as accepted, and still need counsel's sampled read

    Contracts counsel

    Each of the 14 documents shows its pages and how many clauses carry commercial effect: 118 in the conditions, 34 in the scope, 16 in the guarantees annex. The playbook proposes 156 as accepted as written, but none of them is accepted on an agent's word. Counsel reads a sample and signs, and the sign-off gate stays open until she does.

  4. 0409:00

    A 10% cap in Clause 42.1, and Annex D 4.6 puts its damages outside it

    Bid risk manager

    Both passages open side by side with their pages: the conditions cap total liability at ten percent of the contract price, $112.0M at this bid. The annex says its liquidated damages are in addition to that limit. Read with them are the exceptions in 42.3 and the capacity damages of up to $68.0M. A liquidated damages cap means little until both are read together.

  5. 0509:04

    Priced over the gas forecast at 31.8%, inside the desk's possible band

    Bid risk manager

    The exposure is the contract's own number, $68.0M. The likelihood comes from integrating the damages over the owner's test-year gas forecast, which gives $21.6M, an effective 31.8%, inside the desk's 25 to 35% band. She places it with that basis showing. Nothing changes in the bid yet: the reading waits for counsel and the signature for the director.

  6. 0609:06

    Counsel opens both passages before she confirms what they mean

    Contracts counsel

    Counsel owns the meaning. Her button stays shut until she has opened Clause 42.1 and Annex D 4.6 herself, so a confirmation is a reading, not a click. She confirms that the annex damages sit outside the cap. The step now reads ready to sign, and her name sits on the first of the three lanes.

  7. 0709:08

    The director's signature lifts the bid of record to $1,141.6M

    Bid director

    The bid director checks the sum before he can sign. Once he does, contingency steps from $61.0M to $82.6M, the bid of record becomes $1,141.6M, and the Clause 42 limit moves with the price to $114.2M. The bridge shows 18 of 41 signed. Each signed risk on it carries three names, and agents hold none of them.

  8. 0809:09

    The compressor supplier caps all liability at $9.3M, against $128.8M accepted

    Bid risk manager

    The flow-down puts eight unsigned quotes in five packages against the head contract. For the compressor package the contractor accepts performance and fuel damages outside the limit and delay damages up to $56.0M, $128.8M in all, while the quote caps everything at 5%, or $9.3M, once for all claims. That leaves $119.5M with the contractor. The quote is unsigned, so no recovery is credited.

  9. 0909:10

    The price build file matches the bridge at $1,141.6M

    Cost estimator

    The estimate is built line by line, and contingency lines load only once signed. With the signature in, R-07 waits for the estimator, who loads it into the price build file. The file and the bridge agree at $1,141.6M, checked by the ledger after the change. What goes to the estimating system is what the three people signed.

How one signed reading changed the price of record

The bid as the bridge shows it after R-07 was signed. Only signed lines count.

Cost estimateNine cost lines in the price build file$976.0M
Contingency before R-07$34.6M estimator's allowance and 17 signed risks$61.0M
R-07, performance damages outside the cap$68.0M exposure at an effective 31.8%$21.6M
Margin$83.0M
Bid of record$1,141.6M

demoSample data, from the working solution.

Around the bid

Risks, positions and the gates before the bid goes out

The register, the asks, the engineering queue and the sign-off, on the same bid.

Priced risks41 risks across 53 clauses, $79.1M if all land. Risks under $1.0M go as a lot, and the bid director opens a random sample of three first.
Questions and walk-away items6 of 9 walk-away positions signed and 31 of 49 questions sent. The ask goes to the owner once signed; fallback lines stay internal.
Sign-off gatesSeven gates still open, from accepted clauses read by counsel to gaps over $5.0M with positions. Neither signature opens while a gate is open.
Technical bases for engineeringQuestions about gas, noise or equipment go to the bid engineering manager with a clock, to confirm or dispute the basis behind a likelihood.
A clause on its pageClause 42.1 on page 141 of 1,380, with where it landed, the risk it sits behind and who opened it.
Audit trailEach reading, price, signature and setting, with who and when. The morning reads in order: placed, confirmed, signed, loaded, checked.

demoSample data, from the working solution.

Three lanes on each priced clause, and who holds each

A number reaches the bid only when all three are signed.

Bid risk manager
Sees
The agent's exposure and likelihood, with sources
Signs
Places the number, or changes it with a reason
Contracts counsel
Sees
Both passages, opened on their pages
Signs
Confirms or disputes what the clause means
Bid director
Sees
The sum, checked before signing
Signs
Signs each change to the bid and the walk-away items
Cost estimator
Sees
Signed lines waiting for the file
Signs
Loads them into the price build file
Bid engineering manager
Sees
Technical bases behind a likelihood
Signs
Confirms or disputes them
The agents

What each bid-desk agent does, and the line it may not cross

Each hands its work to a named person.

Contract reader

Reads each page read only and keeps document, page and clause for each passage.

  • Never summarizes without a citation
Clause finder

Finds the clauses with commercial effect and sorts them by the playbook.

  • Never guesses a meaning; unclear goes to counsel
Cross-reference agent

Reads the form and annexes together and finds where an annex changes a clause.

  • Never decides which text prevails
Exposure pricer

Prices each risk from the contract's own numbers and the desk's scale, with sources.

  • Never signs or changes the bid
Flow-down checker

Compares each head-contract duty with each supplier quote.

  • Never credits a recovery from an unsigned quote
Position drafter

Drafts questions for the owner and walk-away positions.

  • Sends nothing to the owner
Bid ledger agent

Keeps the bridge, the price build file and the audit trail in step.

  • Never loads a line no one signed

What the contract risk review reads

Read only, from the systems the bid desk already uses.

Document managementThe invitation, conditions and each annex, with pages
Supplier quotesEach quote's price, liability limit and terms
The contractor's playbookWhich clause positions are accepted, asked or walked away from
Owner's data in the tenderForecasts and site data a likelihood can rest on
Estimating systemThe price build file, line by line

What bid directors and counsel ask about contract risk review

What is a contract risk review?

A contract risk review reads a contract before signing to find the clauses that can cost money and decide what to do about each. Here the agents read the conditions and every annex together, price each risky clause with its sum open, and check what supplier quotes pass down; counsel, the bid risk manager and the bid director sign.

How does it handle a liquidated damages cap that an annex escapes?

The cross-reference agent finds where an annex changes a clause in the conditions and shows both passages on their pages. Counsel reads what they mean together; the agent never decides which text prevails.

Is every clause priced?

No. Clauses with a cost are priced as risks. Others become questions for the owner, walk-away items, or clauses proposed as accepted as written, which counsel samples and signs before the bid can be signed off.

How are back-to-back subcontract gaps found?

The flow-down checker sets each head-contract duty against each supplier quote, counts one supplier cap once however many claims share it, and credits nothing from an unsigned quote.

Who can change the bid price?

Only the bid director, by signing a step after counsel has confirmed the reading and the bid risk manager has placed the number. The estimator then loads the signed line, and the price build file must match the bridge.

Does it send anything to the owner?

No. The position drafter drafts questions and walk-away positions. Counsel checks and sends questions, and the bid director signs walk-away items.

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