Milestone schedules in renewable energy EPC Contracts

A milestone, for those who don’t know, is a point in time, when you can stop what you’re doing and say “look at what we did.”  It’s an instant, and what you should be able to see from where you sit at that moment is a picture of parts, accumulated into a measurable outcome.  Sounds almost poetic.

Where the difficulty comes in is that the picture that an Employer expects to see for the same measurable outcome may be very different from that presented by the Contractor.  Put these various milestones together in a milestone schedule, and you have the potential for a lot of different expectations along the project programme.

It’s therefore very important that milestones are:

• Clearly definable and measurable – Both parties should be able to agree easily that a milestone has been achieved when looking at the same evidence.  Should turbines be delivered to site, or is a holding point enough?  Should modules be connected, or is it fine that they’re installed on the mounting structure?
• For a discrete piece of work or activity – the boundaries of activities making up a milestone should be known
• For an appropriate amount of work – milestones for very small packages of work may become onerous to monitor. (If, however, they are for overly large pieces of work, it may be difficult to monitor if and when delays start occurring)

The milestone schedule should naturally be linked to the project programme of works.  This PoW will be refined after the completion of the contract, but the key project deliverables should be defined upfront, as these will inform the milestone schedule.

Things that should be considered in the milestone schedule (as they will undoubtedly be linked to the payment schedule – so many schedules) are:

• completed detailed facility design
• procurement and delivery milestones
• construction milestones
• testing and commissioning milestones, including completion certificates

The Contractor will need to be able to demonstrate that the milestone has been completed in accordance with the contract, and in order for the Employer to verify this, they will need to be able to provide relevant documentation, such as:

• Purchase orders/waybills/delivery notes/inspection sign off slips
• Construction progress reports
• Quality inspection reports and check sheets/snag lists
• Up to date construction programme of works
• Up to date project risk register

The contract should outline the Employer’s right to request relevant documentation in order to carry out the verification of completed milestones.  It should also explain whether or not the Contractor is allowed to make claims for a portion of a milestone.