Principles of Project Finance

EPC Contractor to begin work earlier than Financial Close, and therefore

provide the EPC Contractor with temporary guarantees against which the

work can progress until Financial Close has been reached— cf. §7.1.2.)

The EPC Contractor should also ensure that the EPC Contract payment

schedule is linked as closely as possible to its own financial exposure to di-

rect costs and payments to subcontractors and equipment suppliers, so that

if the Project Company does collapse the EPC Contractor’s losses can be

limited.

§8.5.4 C

ONSTRUCTION

C

OST

O

VERRUNS

The effects of an overrun in construction costs against the budget on which the

funding structure has been based are:

• There may be insufficient funding available to complete the project, thus

forcing the Sponsors ...