Engineering Procurement And Construction Agreement Template for Saudi Arabia

An Engineering Procurement And Construction (EPC) Agreement is a comprehensive contract that assigns complete responsibility for project design, equipment procurement, and construction to a single contractor in Saudi Arabia. This turnkey approach provides project owners with a single point of accountability while ensuring compliance with Saudi Arabian legal requirements, including Sharia principles, local content mandates, and Vision 2030 objectives.

When do you need this document?

You need an EPC Agreement when undertaking large-scale infrastructure, industrial, or development projects in Saudi Arabia where integrated delivery is preferred. This includes power plants, petrochemical facilities, desalination plants, transportation infrastructure, and major construction projects under the National Transformation Program. The agreement is particularly valuable when you require guaranteed project completion dates, fixed pricing, and single-source accountability. Government entities must use this contract type for major procurement under the Government Tenders and Procurement Law, while private developers often choose EPC delivery for complex projects requiring specialized technical expertise and substantial capital investment.

Key legal considerations

Critical legal provisions include comprehensive scope definition covering engineering design, equipment procurement, construction execution, and commissioning activities. Risk allocation clauses must clearly distribute responsibility for design liability, construction defects, performance guarantees, and force majeure events. Payment terms should incorporate milestone-based schedules with retention provisions and performance security requirements. The agreement must include detailed insurance requirements, including contractor's all-risk insurance, professional indemnity coverage, and employer's liability protection. Dispute resolution mechanisms should specify arbitration procedures compliant with Saudi Arabian Commercial Courts Law, while intellectual property clauses must address technology licensing and local manufacturing requirements.

Legal requirements in Saudi Arabia

EPC Agreements in Saudi Arabia must comply with Government Tenders and Procurement Law (Royal Decree No. M/128) for public sector projects, establishing transparent procurement procedures and contract award criteria. The Saudi Building Code (SBC) mandates technical compliance for all construction activities, including structural, mechanical, and electrical specifications. Labor Law requirements (Royal Decree No. M/51) impose Saudization quotas and local employment obligations on contractors. Environmental Law (Royal Decree No. M/165) requires environmental impact assessments and compliance with national protection standards. The agreement must incorporate Islamic finance principles where applicable and ensure adherence to local content requirements under the National Industrial Development and Logistics Program (NIDLP). Performance bonds and guarantees must comply with Saudi banking regulations and insurance law requirements.