A factory project succeeds when the building, utilities and production equipment work together. Construction contracts should reflect those interfaces instead of treating each package as isolated. Before signing, define who designs, obtains information, coordinates contractors and proves that the completed facility can meet the investor’s requirements.
Define scope and interfaces
List drawings, specifications, exclusions and responsibility for design information. Identify the boundaries between civil works, utilities and equipment installation. If multiple contractors are involved, assign coordination and access obligations. A fixed price is meaningful only against a defined scope. Resolve inconsistencies between the employer’s requirements and contractor qualifications before they become variation claims on site.
Allocate site and permit responsibilities
State who supplies surveys, geotechnical information and authority submissions. Distinguish responsibility for preparing an application from the risk of obtaining approval. Track access, utility connections and dependencies outside the contractor’s control. Verify the investor’s own obligations before imposing an aggressive completion date. A delay caused by missing employer information should be addressed in the agreed programme and notice process.
Control changes and price exposure
Set a written variation procedure identifying who can instruct work, how price and time are assessed and when urgent work may proceed. Address material cost movements and currency exposure expressly. Keep site records that support or challenge a claim. Informal instructions from different managers can undermine cost control; ensure the operating team knows the contractual authority limits.
Define testing and acceptance
Separate mechanical completion, commissioning, performance testing and final acceptance. State test conditions, required documents and the treatment of minor defects. Agree remedies for failed tests and responsibility for retesting costs. Do not release all security merely because equipment has arrived. Warranty periods and maintenance obligations should be coordinated with when the facility can actually be used for its intended purpose.
Make remedies and records usable
Review delay remedies, liability caps, guarantees, insurance and termination rights together under the applicable law. Check guarantee wording, issuer and expiry against the programme. Preserve notices and evidence contemporaneously rather than rebuilding the file after a dispute begins. A termination plan should address site security, materials, design rights and replacement contractors so the project can continue where legally and practically possible.
Investor checklist
- Agreed scope and contractor interfaces.
- Site, information and permit responsibilities.
- Written variation and price-adjustment process.
- Objective testing and acceptance criteria.
- Coordinated security, remedies and notice records.
For transaction-specific support, see our commercial contract services and investment legal advice.
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Frequently asked questions
Does a fixed price eliminate all variation claims?
No. The scope, exclusions and change mechanism still matter.
Is equipment delivery the same as acceptance?
No. Installation, testing and contractual acceptance should be distinguished.
Can the investor rely only on a delay penalty?
No. Review enforceability, caps, security and the practical ability to complete the project.
