Construction - Related Agreements

Certain agreements are critical to the construction and development of an algae biofuels project, including agreements on the following issues:

  • design and engineering;
  • procurement of necessary equipment (tanks, bioreactors, pumps, piping, and related components) and materials to construct “balance-of-plant” facilities, oil storage tanks, foundations, roads, and maintenance facilities;
  • performance guarantees, warranty, and insurance arrangements set forth in the agreements; and
  • operation and maintenance of the completed facility.

Engineering, procurement, and construction tasks are frequently combined in a single agreement referred to as an “EPC agreement.”  The EPC agreement may provide for, or anticipate the provision of, other services such as warranty services or operations and maintenance services for the completed facility.  Sometimes all the design and engineering, procurement, and construction services are addressed in a single agreement (a “full-wrap agreement”), and a single general contractor is responsible for the whole project.  However, it is more common to have separate agreements for different areas of the work, with a specialty firm engaged to provide proprietary process equipment and another contractor engaged for the balance-of-plant construction work.  Warranties, insurance, and other matters may also be addressed in a single agreement or individual agreements, depending on contractual structure.

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