Engineering Contract

An engineering contract is a legally binding agreement under which a contractor provides engineering design, construction, installation or related technical services for a client, usually on a defined project such as a power plant, road or factory. It sets out the scope of work, technical specifications, price, payment milestones, completion dates, warranties and how risks such as delays, cost overruns and design errors are shared. Common forms include engineering, procurement and construction (EPC) contracts, in which one contractor delivers a finished facility for a fixed price, and design-and-build or cost-plus arrangements. Many international projects use standard forms published by the engineering federation FIDIC. Clients typically require a performance bond and hold back part of each payment as retention, sometimes replaced by a retention money guarantee, while tenders may require a bid bond. The term is unrelated to blockchain smart contracts.