1. Epc Contracts and Contract Structures
The contract structure determines how risk is allocated among the parties, and the choice of contract type and management of changes are the most important legal decisions on any project.
What Is an Epc Contract and How Does It Allocate Risk between Owner and Contractor?
An EPC contract is a lump-sum turnkey contract under which the contractor assumes sole responsibility for the complete design, procurement of materials, and construction of the facility to a performance specification, and the owner benefits from single-point accountability but pays a risk premium built into the lump sum price.
Construction contracts and project finance counsel can advise on the contract structure most appropriate for the specific project and develop the contract negotiation and documentation strategy.
| Contract Type | Risk Allocation | Best for |
|---|---|---|
| EPC (lump sum turnkey) | Contractor bears design, procurement, and construction risk | Owner wants single-point accountability and a fixed price |
| Design-bid-build (DBB) | Owner retains design risk; contractor bears construction risk | Owner wants competitive bidding and design control |
| Design-build (DB) | Contractor bears both design and construction risk | Owner wants single-point responsibility without full EPC |
| Cost-plus (reimbursable) | Owner bears cost risk; contractor earns a fee | Fast-track projects where scope is not fully defined |
| Guaranteed maximum price (GMP) | Contractor guarantees not to exceed a maximum price | Owner wants cost certainty with some scope flexibility |
Construction contracts and project development and finance counsel can advise on the contract type most appropriate for the specific project and develop the contract structure and procurement strategy.
What Are Change Orders and How Should They Be Managed to Avoid Disputes?
A change order documents an agreed modification to the scope of work, the contract price, or the contract schedule, and the change order process is the primary mechanism through which construction contracts accommodate the changes that occur during construction. Disputes arise most frequently when the contractor performs work that it believes is a change to the contract scope but that the owner contends is within the original scope.
Construction contracts and construction dispute counsel can advise on the change order management process and develop the change management and documentation strategy.
2. Delay Claims, Liquidated Damages, and the Critical Path
Delay is the single most common source of construction disputes, and the ability to recover additional time and money depends on the contract provisions, the critical path analysis, and the liquidated damages clause.
How Are Delay Claims Analyzed and What Is the Role of the Critical Path Method?
Delay claims are analyzed using the critical path method, which identifies the sequence of activities that determines the minimum time required to complete the project, and any delay to a critical path activity extends the project completion date by the amount of the delay. An owner-caused critical path delay entitles the contractor to both a time extension and additional money, while concurrent delay can limit the contractor's recovery.
Construction litigation and construction dispute counsel can advise on the delay claim analysis, assess the critical path and concurrent delay issues, and develop the delay claim prosecution or defense strategy.
How Are Liquidated Damages Provisions Enforced and When Can They Be Challenged?
Liquidated damages are a pre-agreed estimate of the damages the owner will suffer if the contractor fails to complete the project by the specified completion date, and they are enforceable if the actual damages would be difficult to estimate at the time of contracting and the agreed amount is a reasonable forecast of the owner's probable actual damages. A contractor challenging a liquidated damages provision must show that the actual damages would have been easy to calculate or that the amount bears no reasonable relationship to the owner's actual losses.
Construction litigation and breach of contract counsel can advise on the enforceability of the liquidated damages provision and develop the prosecution or defense strategy.
3. Force Majeure and Mechanics Liens
Force majeure events can excuse a party from performance obligations, and mechanics liens give unpaid contractors and suppliers a security interest in the project property enforceable even against a construction lender.
What Qualifies As Force Majeure in a Construction Contract and How Is It Invoked?
Force majeure clauses excuse a party from its performance obligations when performance is prevented by an event beyond that party's reasonable control that was not reasonably foreseeable at the time of contracting, and the typical enumerated events include natural disasters, war, government actions, and strikes. A party invoking force majeure must give timely notice, demonstrate that the event actually prevented performance, and take reasonable steps to mitigate.
Construction contracts and construction dispute counsel can advise on the force majeure provision, assess whether the event qualifies for relief, and develop the force majeure notice and claim strategy.
What Is a Mechanics Lien and How Does a Contractor Protect Its Lien Rights?
A mechanics lien gives contractors, subcontractors, material suppliers, and other project participants who have provided labor or materials a security interest in the improved property, enforceable through a judicial foreclosure action. The requirements for perfecting a lien typically include providing a preliminary notice to the owner, filing the lien within a specified period after the last date of work, and filing a foreclosure action within a specified period.
Mechanic's liens and construction litigation counsel can advise on the mechanics lien rights, assess the applicable notice and filing deadlines, and develop the lien perfection and enforcement strategy.
4. Construction Disputes and Dispute Resolution
Construction disputes are among the most expensive in commercial litigation, and the selection of the appropriate dispute resolution process and the timely assertion of claims are critical to success.
What Are the Most Effective Methods for Resolving Construction Disputes?
The most common dispute resolution processes include dispute resolution boards, which are panels of experts that issue recommendations on disputes as they arise, mediation, which is a non-binding process in which a neutral facilitates settlement negotiations, and arbitration, which is a binding process that can be faster and more technical than court litigation. The selection depends on the complexity and value of the dispute and the desire for a binding resolution.
Construction dispute and arbitration and mediation counsel can advise on the dispute resolution process most appropriate for the specific construction dispute and develop the dispute resolution strategy.
What Claims Arise Most Frequently in Construction Litigation and How Are They Proved?
The claims that arise most frequently in construction litigation include delay and disruption claims, in which the contractor seeks additional time and money for owner-caused impacts on the project schedule, differing site conditions claims, and construction defect claims, in which the owner asserts that the contractor's work failed to conform to the contract requirements.
Construction litigation and construction defect counsel can advise on the claims most likely to arise, assess the strength of the available claims and defenses, and develop the litigation prosecution or defense strategy.
27 Mar, 2026
