• Interface

  Inherent in the BOP model is the concept that different contractors will be undertaking work in the same or adjacent areas of the project site at overlapping periods. For example, there is typically some overlap between the electrical BOP contractor and the specialist BOP contractor for the commissioning of the key components and equipment, following its installation (which relies on risk and responsibility for commissioning being clearly defined and allocated). 

  This generally involves the contractors and the procuring party entering into an Interface Deed to establish a framework for mutual consultation, sharing of information and facilities, and for standards of conduct on a reciprocal best for project basis. It also leads to consideration of how liability should be allocated as between the contractors and the procuring party, as well as the impacts of delay, disruption and damage by one contractor on the other project workstreams.

• Health and safety

  With different contractors responsible for discrete packages, it can be difficult to identify a single suitable contractor as ‘principal contractor’ for health and safety purposes for the whole project site. 

  As a result, the BOP model involves a typically higher degree of nuance and complexity in the selection and appointment of one or more ‘principal contractors’ by the procuring party, as well as to ensure there are protocols in place to clearly delineate the areas and activities under the control of each ‘principal contractor’. Typically the role is staged and, at various times of delivering the project, rotates between the key stakeholders.

• Integration of key components

  For battery storage projects in particular, clear delineation is required to ensure there is a suitable allocation of risk and responsibility for the batteries throughout the construction phase, from delivery of the batteries to the project site, during installation and in respect of commissioning. These risks will address the protection of the goods from damage, responsibility for insurance and the identification of defects (amongst other topics).

  There also needs to be a clear regime for the handing over of hardstands, in particular on wind farm projects, to enable the specialist wind turbine contractor to install the wind turbines on time, as well as for the maintenance of the hardstands during the construction phase to facilitate a smooth integration and commissioning of the wind turbines.

• Operations and maintenance (O&M)

  Most projects involve a separate engagement of a contractor to operate and maintain the facility for a fixed period once it has been completed and is ready to generate electricity. Typically the O&M role is performed by either a specialist O&M contractor, the electrical BOP contractor (having tested and commissioned the electrical components) or the specialist BOP contractor (who has supplied and installed the equipment which needs to be operated and maintained).

  This can create a further interface risk, as it is necessary to clearly delineate between delivery phase and O&M phase risks and responsibilities in the project documents. 

Key takeaways

Given the financing of renewable energy projects, each of the separate engagements of the civil BOP contractor, electrical BOP contractor and specialist BOP contractor generally need to be on bankable terms, to ensure the BOP model as a whole is bankable and that the project is viable from an investment perspective. In our experience, project funders have now adapted to the use of BOP contracting, and provided the above issues are addressed the BOP model is bankable.