Research On Risk Management Of EPC Project Based On FIDIC Contract Conditions

The contract is the most important basis for the contractor and the owner to carry out the rights and obligations, and the interpretation of the contract terms can effectively improve the effectiveness of risk management. EPC general contracting model has been recognized by the national community by the advantage of resource integration, owner’s inclination and comprehensive benefits, which gradually become the mainstream of the project contracting. In order to better regulate the EPC general contracting market. The FIDIC in 1999 published the Conditions of Contract for EPC/Turnkey Projects.Firstly, introduce the background and current research situation of the Conditions of Contract for EPC/Turnkey Projects.The largest features of contract for EPC/Turnkey is: the contractor undertakes most of the risk of the project. The contractor’s risk management level not only determines the project’s profit, but also can even decide whether the project can be successful. This paper analyzes the terms of the contract one by one from the contractor’s point of view, and determines the scope of the contractor’s risk, which provide a contract basis for the contractors to manage risk.Secondly, the study found that the definition of force majeure in the contract is subjective, which lack of quantitative indicators.Especially after the occurrence of natural disasters, there is a big difference in the attribution of responsibility. Taking extreme high temperature and low temperature as an example, this paper constructs the probability distribution function of maximum temperature and minimum temperature in a year, which is based on the theory of knowledge of the normal distribution. And proposes a quantitative method to define the force majeure, so as to clarify the fuzzy zone of risk responsibility in the contract.Finally, this paper puts forward the risk control measures for the contractor according to the different stages of the construction process. If the contractor is able to convert the risk to revenue through reasonable risk management, EPC general contracting model will be able to bring high profits to the contractor. Otherwise, the contractor may bear huge losses. Therefore, The most important for the contractor is to control the risk.