Procurement advisory.

What procurement decides

The construction contract sets the cost, the schedule and most of the risk the project will carry for the next three years. It also determines whether lenders will fund it. A contract that transfers too little risk to the contractor is unbankable; one that transfers too much is either priced accordingly or attracts only bidders who have not read it carefully.

We run procurement as part of the sponsor’s team: writing the strategy, preparing the packages, managing the tender, evaluating bids and negotiating the agreements through to signature.

Procurement strategy

A single turnkey EPC wrap, a split of packages with the sponsor carrying interface risk, or an IPP structure where the contractor takes an equity position: each produces a different price, a different risk profile and a different financing conversation. We compare them against what lenders in the market will accept, what contractors are actually bidding on comparable work, and whether the sponsor has the capability to manage interfaces if it retains them.

Packages and specification

The scope of work and technical specification come from appointed technical advisers. We structure them into tender packages, define the boundaries between packages so nothing falls between them, and make sure the performance requirements are written as something a contractor can be held to rather than as an aspiration.

Tender process and qualification

Qualification criteria are set to produce a shortlist capable of delivering, which usually means testing recent comparable work in comparable conditions rather than headline company size. We manage the tender, the clarification process and the bid submission timetable, keeping it aligned with the development plan and the financing.

Bid evaluation

Bids are evaluated on price and on terms together, since a lower price with weaker liquidated damages, a lower liability cap or thinner performance security is not a lower price. We normalise bids onto a common basis, quantify the value of each qualification, and set out what the difference between bidders actually is.

Contract negotiation

Liquidated damages for delay and performance, aggregate liability caps, performance security and retention, defects liability, change order mechanics, force majeure and termination. These are the provisions lenders examine first, and the ones most often conceded early by sponsors focused on price. We negotiate them with the financing requirements in front of us.

Operations and long-term service

O&M and long-term service agreements determine operating cost for the life of the asset and carry availability guarantees that feed directly into the financial model. Procuring them alongside the EPC rather than afterwards preserves competitive tension, particularly where the original equipment manufacturer is also the likely service provider.

Bankability

Every material contract is tested against what the lenders will require at due diligence: security package, direct agreements and step-in, assignment, and whether the risk transfer holds together when read across the EPC, O&M and offtake agreements at once. Gaps between contracts are found by lenders’ counsel if they are not found first.

Specialist and local advisers

Technical specification, factory and site inspection and performance testing sit with appointed technical specialists. Local counsel covers contract law, enforceability, local content requirements, customs and tax treatment of imported equipment, which frequently affects the delivered cost more than the equipment price.

Procurement: common questions

Turnkey EPC or split packages?

Turnkey costs more and transfers interface risk to the contractor, which is what most lenders prefer. Split packages can be cheaper where the sponsor has genuine capability to manage interfaces and the financing can accommodate it. The decision belongs with the financing strategy rather than with the engineering team alone.

When should procurement start?

Early enough that contractor pricing informs the financial model and the financing conversation, and late enough that the specification is stable. On most projects that means running procurement in parallel with financing rather than in sequence.

Do you write the technical specification?

No. Specification and design are produced by appointed technical advisers selected for the technology and the jurisdiction. We structure their output into packages, manage the tender and negotiate the commercial terms.

What is most often conceded and later regretted?

Liability caps and the performance guarantee regime. Both are traded early because the price improvement is visible and the consequence is not, and both are examined closely during lender due diligence.

Related expertise

• Commercial negotiation support
• Contractual framework advisory
• Project development
• Selection of specialist advisers
• Project finance advisory