Drafting EPC Contract Negotiation Checklist Vietnam: 20 Items with General Contractors

An EPC contract (design, equipment supply, construction) hands the general contractor nearly all responsibility from drawings to plant operation. In return, the employer has a single point of contact, and in principle a fixed lump-sum price. It is precisely this concentration of risk that makes this drafting EPC contract negotiation checklist Vietnam not a list to skim: every skipped item can become a multi-billion-VND dispute later. This article is for employers, project management teams and in-house legal teams preparing to sit at the negotiation table with a general contractor, updated for the new legal framework effective from 01/07/2026: the Construction Law 2025, Decree 210/2026/ND-CP, and the Ministry of Construction's new model EPC contract.

1. Who this checklist is for and how to use it
2. Detailed checklist
3. Common mistakes when doing this checklist yourself
4. After completing the checklist
5. Frequently asked questions
References

1. Who this checklist is for and how to use it

This drafting EPC contract negotiation checklist Vietnam is for employers and the employer's consultants at the preparation and negotiation stage, before signing. Each item is an independent negotiation point: mark ☐ not yet addressed, ☑ closed in the draft, ⚠ needs further counsel. The order follows the logic of a real negotiation: establish the legal framework, lock scope and price, then set the risk-governance mechanisms during performance.

A note on timing: from 01/07/2026, the legal framework for construction contracts has fundamentally changed. The Construction Law 2025 (135/2025/QH15) replaces the 2014 Law; Decree 210/2026/ND-CP replaces Decrees 37/2015/ND-CP and 50/2021/ND-CP; new model EPC contracts were published under Decision 1040/QD-BXD dated 26/6/2026, replacing models under Circular 02/2023/TT-BXD. If your team is still using templates or clauses drafted under the old framework, review them in full before negotiating.

2. Detailed checklist

A. Negotiation preparation

Item 1: Determine the legal framework applicable to your EPC package ☐

Do: Identify your project type (public investment, PPP or private project), and thus which provisions of the Construction Law 2025 and Decree 210/2026/ND-CP are mandatory and which matters the parties may freely agree.
Why: Decree 210/2026/ND-CP applies to both employers and contractors, but some provisions are designed specifically for contracts in public-investment and PPP projects. Applying a mandatory public-project rule to a private project, or missing a mandatory obligation, skews the contract off the current legal framework.
How: Build a two-column comparison table: mandatory rules per project type versus freely negotiable matters. The main basis is Article 82 of the Construction Law 2025 on construction contract classification, where design, equipment supply and construction is precisely the EPC model.
Note: Do not assume all EPC contracts share the same legal regime. State-funded and 100% private projects face different levels of regulatory intervention, particularly on advance payment, performance security and payment.

Item 2: Lock the employer's requirements and the basic design dossier ☐

Do: Finalize the employer's requirements document: project objectives, functions, applicable technical standards, delivery milestones, operation and training requirements. Attach the approved basic design or technical design dossier.
Why: In EPC, the general contractor is responsible for detailed design based on the employer's requirements. The vaguer the requirements, the larger the space for scope disputes. EPC dispute practice shows most conflicts begin with unclear wording in the initial requirements, not with contract clauses.
How: The employer's requirements must be annexed to the contract and ranked in priority within the contract-documents clause. Every referenced technical standard must state its version and year of issue.
Note: Avoid unmeasurable qualitative requirements such as "best quality" or "most modern technology". Each requirement should attach to a verifiable acceptance criterion.

Item 3: Check the general contractor's legal capacity and experience ☐

Do: Verify the general contractor meets construction capacity requirements under construction law, including a capacity certificate appropriate to the grade and type of the EPC works, plus a track record of similar EPC projects in scale and technology.
Why: A general contractor lacking legal capacity is a risk from signing: the contract may be partially or wholly invalid, and the employer loses time on the fallout instead of the project. With foreign general contractors, additionally check conditions for operating in Vietnam and the plan for using domestic subcontractors.
How: Require capacity certificates, recent financial statements, and a list of completed EPC projects with confirmation from past employers. Verify independently, not just from self-declared dossiers.
Note: Pure construction experience does not equal EPC general-contractor experience. Ask specifically for projects where the contractor handled all three of design, procurement and construction.

Item 4: Choose a reference contract model for the negotiation ☐

Do: Agree with the general contractor on the base text for negotiation: the new model EPC contract published under Decision 1040/QD-BXD dated 26/6/2026 (effective 01/07/2026), or a FIDIC Silver Book adapted to Vietnamese law.
Why: Negotiating without a common base text drags on and drops clauses. The Ministry of Construction model is harmonized with the Construction Law 2025 and Decree 210/2026/ND-CP, while the FIDIC Silver Book is strong on international risk allocation but some provisions on security, advance payment and liquidation need adaptation to be enforceable in Vietnam.
How: Use the EPC model under Decision 1040/QD-BXD as the frame, cross-checking each clause against the FIDIC Silver Book structure on key risk-allocation points such as force majeure, variations and dispute resolution, then close a unified clause set before going into detail.
Note: Never reuse a draft based on the old models under Circular 02/2023/TT-BXD or Circular 30/2016/TT-BXD without review — they have been replaced in the new framework.

B. Core contract clauses

Item 5: Scope of work and responsibility boundaries ☐

Do: Fully describe the general contractor's scope across all three of design, equipment procurement and construction, with an exclusion list, interface boundaries between phases, and coordination duties with the employer's other contractors if any.
Why: EPC is a lump-sum contract on a locked scope. Any gap in the scope description becomes the contractor's excuse to claim extras or refuse work. The more detailed the exclusion list, the fewer disputes about what is in or out.
How: Express scope through three linked layers: contract clauses stating principles, a scope-of-work annex listing details, and the employer's drawings and technical requirements. The three layers need a clear priority order for conflicts.
Note: Be careful with "including but not limited to" in scope descriptions. If used, attach a mechanism for determining extra work beyond the list and pricing it.

Item 6: Contract price form and price adjustment conditions ☐

Do: Lock the contract price form — normally lump sum — and close the list of adjustment cases: employer-requested scope changes, force majeure, policy changes affecting prices.
Why: EPC's essence is the employer trading price certainty for transferring all performance risk to the contractor. If the adjustment clause is left open, the nominal lump sum becomes a de facto cost-plus contract. Decree 210/2026/ND-CP details methods and procedures for amending construction contracts (implementing Article 84(4) of the Construction Law 2025), so the adjustment mechanism must fit this framework.
How: For each adjustment case, the contract must state three elements simultaneously: who may propose, the notice deadline, and the formula or method for determining the adjusted price. Missing one of the three makes the clause hard to apply in a dispute.
Note: Ordinary material price fluctuations should not justify adjustment in a lump-sum EPC contract, unless the parties agree upfront on a fluctuation threshold and adjustment formula.

Item 7: Schedule, delay penalties and early-completion bonuses ☐

Do: Lock the overall schedule and binding milestone dates, per-day delay penalties, penalty caps, and a bonus mechanism for early completion.
Why: Delay is the most common EPC dispute — a delay in one phase drags the whole design-procurement-construction chain. Article 418 of the Civil Code 2015 allows agreed penalties, but the penalty must be expressly stated to apply; a silent contract leaves the employer only with actual-damages claims, far harder to prove.
How: Tie each milestone to an objectively verifiable event such as acceptance or handover, not abstract dates. State extension grounds such as force majeure or employer-caused delay, with a notice and approval procedure for extensions.
Note: Penalty caps should be calculated on the employer's realistic expected losses — not set so low as to be symbolic nor so high as to be unworkable in enforcement.

Item 8: Contract advance payment ☐

Do: Agree the advance amount, disbursement conditions, advance payment guarantee, and the recovery schedule, compliant with the new framework of Decree 210/2026/ND-CP.
Why: This is one of the most notable changes in the new framework. Advance payment may not exceed 30% of the contract price at signing, including contingencies if any, except special cases permitted by the competent investment decision-maker. Contracts with advance payment exceeding VND 1 billion must have an advance payment guarantee. Advance funds must be gradually recovered and fully recovered when cumulative payments reach 80% of the contract price.
How: State the exact advance amount, disbursement timing tied to events such as signing and submission of a valid advance guarantee, the deduction ratio in each payment, and the completion point of recovery. Require the guarantee from a reputable bank under a pre-agreed form.
Note: Many old drafts still carry advance levels from the pre-01/07/2026 framework. For new negotiations, update to the 30% / VND 1 billion / 80% figures, and check the Decree's minimum advance levels per contract type.

Item 9: Progress payments ☐

Do: Design the payment mechanism: payment milestones or tranches, supporting documents per tranche, the employer's confirmation and payment deadlines, and the interest rate for late payment.
Why: Cash flow is the contractor's lifeline and the employer's management lever. Late payment stalls construction; over-lax payment strips the employer of quality leverage. Decree 210/2026/ND-CP details payment and final settlement of construction contracts (implementing Article 87 of the Construction Law 2025), so the contract's payment mechanism must be compatible.
How: Tie each tranche to a verifiable milestone — approved design completion, equipment on site, accepted construction quantities. Set concrete deadlines for each step: the contractor's payment dossier, the employer's or consultant's confirmation, then the money-transfer deadline.
Note: Agree late-payment interest upfront — a silent contract forces reliance on general provisions with harder proof. Also retain a reasonable percentage until final acceptance to secure warranty obligations.

Item 10: Performance security ☐

Do: Agree the contractor's performance security measure, normally a bank guarantee, with the security level, validity period, and conditions for release or drawdown.
Why: Performance security is the employer's safety net when the contractor commits serious breach or abandons the project. Decree 210/2026/ND-CP details security measures and levels for construction contracts (implementing Article 83(4) of the Construction Law 2025), with stricter requirements for public-investment and PPP projects.
How: Require an unconditional, irrevocable guarantee from a mutually approved bank, valid for the entire performance period plus a cushion. State clearly the cases where the employer may demand payment from the bank and the advance-notice procedure to the contractor.
Note: Scrutinize the issuing bank's guarantee conditions. A guarantee with complex conditional strings or from an unreliable bank reduces the real value of this security.

Item 11: Quality, testing, acceptance and handover ☐

Do: Set applicable quality standards, equipment testing and commissioning procedures, partial and final acceptance steps, trial-run conditions, operation training, and handover to the employer.
Why: EPC is only truly complete when the plant operates at the committed parameters — not when the concrete shell is done. Disputes typically erupt at commissioning: equipment runs but below design capacity, or meets capacity but exceeds energy-consumption thresholds. Without a definition of "pass", both sides argue from different criteria.
How: Each operating parameter needs three components: the committed value, the measurement method, and the measurement conditions. State the permitted number of re-tests, who bears costs of failed runs, and the employer's rights when the plant repeatedly misses targets.
Note: Tie the operation-training obligation and the as-built dossier / technical document handover to the final payment. This is the practical lever to ensure the contractor does not abandon the last mile.

Item 12: Construction and liability insurance ☐

Do: Identify mandatory insurances during performance: construction all-risk, third-party liability, equipment insurance during transport and installation, plus who buys and the minimum coverage.
Why: EPC projects are typically high-value with high technical risk. One incident during construction or commissioning can cause losses exceeding the contract price. Clarifying who buys which insurance at negotiation avoids discovering, after an incident, that neither side insured the risk.
How: List each insurance type in an annex, stating the buyer, validity period, minimum coverage, and the duty to provide the other party with a copy of the policy before the corresponding work begins.
Note: With foreign general contractors, check whether insurance bought abroad is recognized and enforceable in Vietnam, particularly for third-party compensation obligations in-country.

Item 13: Change management and extra work ☐

Do: Set the change-management procedure: who may request changes, written form, deadlines for the contractor's pricing and proposal, approval authority, and the pricing method for extra work.
Why: No EPC project follows the initial design 100%. The difference between a successful project and a disputed one lies in whether changes are managed by clear procedure or by verbal orders fought over later. Decree 210/2026/ND-CP details procedures for amending construction contracts, so the contract's internal procedure must be compatible.
How: Set the golden rule: no changed work is performed without a written, approved change order, except emergencies affecting safety. For each change, the contractor must simultaneously present the scope change, schedule impact and price before performing.
Note: Be careful with changes caused by the contractor's own design errors. In EPC the contractor is responsible for design, so rectifying design defects is in principle at the contractor's cost — not extra work.

Item 14: Subcontractors and the general contractor's responsibility ☐

Do: Agree conditions for the general contractor to engage subcontractors: permitted subcontracting scope, subcontractor selection criteria, duties to notify and obtain employer approval, and the principle that the general contractor remains fully responsible to the employer for subcontractor work.
Why: Decree 210/2026/ND-CP regulates subcontract management more clearly than the old framework. In the EPC model the general contractor cannot do everything itself, but the employer contracted with the general contractor, not the subcontractors. Without tight control, the employer may face a multi-tier subcontract chain it cannot control.
How: Require the general contractor to submit a proposed subcontractor list with credentials before the main contract is signed, provide that every subcontractor change needs written employer approval, and state that the general contractor may not assign the entire contract to a subcontractor.
Note: Limit the number of subcontract tiers. Each intermediary layer dilutes responsibility and quality, and complicates fault-finding when incidents occur.

Item 15: Risks, force majeure and risk allocation ☐

Do: List the project's main risks and allocate each to the party best able to control it, while defining force majeure events, notice procedures, mitigation duties, and each party's legal consequences when force majeure occurs.
Why: The strength of the FIDIC Silver Book — and the spirit of EPC — is allocating risk to the party that can manage it at the lowest cost. A generic force majeure clause listing disasters and war without procedures and consequences is useless when the event actually occurs.
How: For each major risk — geology, material price fluctuation, policy changes, site-clearance delays — state who bears it and the handling mechanism. For force majeure, set notice deadlines, proof duties via competent authority documents, and the time threshold after which either party may terminate.
Note: In a fast-changing policy environment, agree separately on legal-change risk: which changes count as force majeure, which the parties absorb themselves, and the contract-adjustment mechanism for each case.

Item 16: Construction warranty ☐

Do: Agree the warranty period, warranty scope, defect-notification procedure, rectification deadlines, and warranty-security measures such as retaining part of the contract price or a warranty guarantee.
Why: EPC defects often surface only after a period of operation. If the contract ends at handover without a strong warranty mechanism, the employer self-funds repairs of the contractor's design or construction defects.
How: Run the warranty period from the date of final acceptance and handover — not from construction completion. Set the contractor's response deadline after receiving notice, and the employer's right to engage another party to rectify and deduct from the warranty money if the contractor is late.
Note: Distinguish construction warranty from manufacturer equipment warranty. The contractor must fully transfer manufacturer equipment warranties to the employer, avoiding the situation where the construction warranty has expired only to discover the equipment is no longer warranted.

Item 17: Intellectual property in design dossiers and confidentiality ☐

Do: Determine ownership and usage rights of design dossiers prepared by the general contractor, the employer's scope to use, copy and transfer to operators and maintainers, plus both parties' duties to protect technical and commercial information.
Why: In EPC, the general contractor authors the design dossiers but the employer pays for the plant. Without clear agreement, the employer may struggle when it later needs to repair or upgrade without the design files, while the contractor worries its designs will be reused on other projects.
How: Grant the employer unlimited usage rights of the design dossiers for operating, maintaining, repairing and upgrading that plant, while restricting the contractor from using the project's proprietary designs for third parties where proprietary technology is involved.
Note: Confidentiality duties should survive contract termination — typically two to five years — and should list which information is confidential rather than staying generic.

Item 18: Taxes, fees and duties with foreign general contractors ☐

Do: Specify which party bears each tax and fee arising from the contract, the withholding mechanism if the general contractor is a foreign contractor, and each party's declaration and payment duties under Vietnamese law.
Why: With foreign general contractors, contractor tax is the easiest post-signing dispute: whether the contract price includes taxes, who bears extra tax when the tax authority reassesses. Unsettled upfront, every payment tranche can become a fight.
How: List each potentially applicable tax and state the corresponding bearer. Agree a cooperation mechanism for tax inspections, including duties to provide documents and to allocate any reassessed costs.
Note: Specific tax rates depend on income type and the double taxation treaty between Vietnam and the contractor's country in each case — seek project-specific tax advice rather than applying generic figures.

Item 19: Suspension and termination ☐

Do: List the cases where each party may suspend or terminate, the notice procedure, cure periods before termination, and legal consequences: payment for performed work, equipment and materials on site, dossier handover, damages.
Why: Article 85 of the Construction Law 2025 governs suspension and termination of construction contracts, detailed by Decree 210/2026/ND-CP. Meanwhile the Civil Code 2015's provisions on contract termination set the general framework for unilateral termination rights and consequences. A high-value EPC contract without detailed termination clauses leaves both sides tugging at each payment item for years when things collapse.
How: For each termination case, the contract should follow a unified script: written notice, cure period, inventory and confirmation of performed work, a pricing mechanism for work in progress, equipment removal and site handover deadlines, then liquidation and final settlement.
Note: Distinguish termination for one party's fault from termination due to force majeure or agreement. Each case carries different compensation consequences, and lumping them together complicates application.

Item 20: Dispute resolution mechanism ☐

Do: Design a multi-tier dispute path: negotiation within a set time, mediation, then commercial arbitration or court, with governing law, language and venue.
Why: Decree 210/2026/ND-CP states the principle of respecting the parties' agreement on dispute resolution methods, ensuring objectivity, equality and cooperation. For EPC contracts with foreign general contractors, commercial arbitration is often preferred for confidentiality, the ability to appoint technically knowledgeable arbitrators, and cross-border award enforcement.
How: Set a concrete negotiation deadline — e.g., 30 days from a dispute notice — before escalation to arbitration or court. State the arbitration center, number of arbitrators, procedural language and venue. The governing law should be Vietnamese law for the portion performed in Vietnam.
Note: Avoid generic dispute clauses like "resolved in accordance with the law" without naming the body. Such a clause is not entirely invalid but triggers a jurisdictional fight as the very first step.

C. Liquidation and final settlement after completion

After the plant is finally accepted and handed over, the EPC contract is not finished until the parties liquidate and settle it. Decree 210/2026/ND-CP sets the normal liquidation deadline at a maximum of 45 days from when the parties complete their obligations, extendable but not exceeding 90 days for large, complex contracts. Employers should write these deadlines into the contract from negotiation, with the final-settlement dossier list the contractor must provide and sanctions for late submission.

3. Common mistakes when doing this checklist yourself

Mistake 1: Negotiating on an old-framework model. Many teams still use drafts based on Decree 37/2015/ND-CP, Circular 02/2023/TT-BXD or Circular 30/2016/TT-BXD without updating. From 01/07/2026 these instruments have been replaced by the Construction Law 2025, Decree 210/2026/ND-CP and the new models under Decision 1040/QD-BXD. Negotiating on expired text means many clauses must be redone from scratch.

Mistake 2: Leaving the price-adjustment clause open. The contract states a lump sum but allows adjustment in generic cases such as "when necessary" or "by later agreement". In practice the contractor will invoke the open clause for every extra, and the employer loses the core benefit of the EPC model.

Mistake 3: No written change-management procedure. Changes are ordered verbally or by message, performed, and only then argued about money. The employer is then in a weak position because the work is done, while the contractor is in a strong position to demand high prices. The no-document-no-work principle should be a contract clause.

Mistake 4: Ignoring the foreign general contractor's tax duties. The contract price does not state whether it includes contractor tax, nor who bears tax when the authority reassesses. The result: every payment tranche spawns a fight, plus the risk of reassessment with penalties.

Mistake 5: A sketchy dispute clause. Simply stating disputes will be "resolved in accordance with the law" without specifying arbitration or court, governing law, language and venue. When a dispute arises, both sides spend months arguing about who has jurisdiction.

4. After completing the checklist

When all 20 items are marked ☑ in the contract draft, the next step is an independent legal review of the whole draft before signing — especially three clause groups: risk allocation and force majeure, the price-adjustment and change-management mechanisms, suspension and termination. For EPC contracts with foreign general contractors, add tax advice on Item 18 and confirm the feasibility of the arbitration clause in Item 20.

During performance, use this very checklist as a management tool: whenever a change arises, re-check Item 13; each payment tranche, re-check Items 8 and 9; at the first sign of delay, activate Item 7 instead of waiting until the breach becomes serious.

If your team is working through this drafting EPC contract negotiation checklist Vietnam on a specific EPC contract and needs counsel from drafting through signing, contact FLAT Law Firm at hotline 0988424851 for project-specific advice.

5. Frequently asked questions

5.1. Can the lump-sum price of an EPC contract be adjusted?

In principle, the lump-sum price of an EPC contract does not change during performance, except in cases the parties have pre-agreed in the contract: adjustment due to employer-requested scope changes, force majeure, or policy changes affecting prices. Decree 210/2026/ND-CP details the methods and procedures for amending construction contracts, implementing Article 84(4) of the Construction Law 2025. When negotiating, the employer should close the list of adjustment cases and the pricing mechanism for extra work, instead of leaving an open clause.

5.2. What is the maximum advance payment under Decree 210/2026/ND-CP?

Advance payment may not exceed 30% of the contract price at the time of signing, including contingencies if any, except special cases permitted by the competent investment decision-maker. Contracts with advance payment exceeding VND 1 billion must have an advance payment guarantee. Advance funds must be gradually recovered and fully recovered when cumulative payment value reaches 80% of the contract price. This is a notable new point compared with the pre-01/07/2026 framework, which employers must update when negotiating.

5.3. Can the FIDIC Silver Book be used as-is for EPC projects in Vietnam?

It can be referenced, but should not be applied verbatim. The Ministry of Construction has published new model EPC contracts under Decision 1040/QD-BXD dated 26/6/2026, effective from 01/07/2026, harmonized with the Construction Law 2025 and Decree 210/2026/ND-CP. The FIDIC Silver Book is good international practice for risk allocation, but provisions on performance security, advance payment, liquidation and dispute resolution must be adapted to Vietnamese law, or they risk partial invalidity or unenforceability.

5.4. What should a foreign general contractor note when signing an EPC contract in Vietnam?

Three major groups of issues: (1) legal personality and construction capacity in Vietnam, including capacity certificates and the use of domestic subcontractors; (2) contractor tax obligations on Vietnam-sourced income, clarifying which party bears the tax and the withholding mechanism; (3) governing law and dispute resolution, preferably agreeing on arbitration with clear venue and language rather than defaulting to courts. Each group should be carefully checked by both sides' counsel before signing.

5.5. For EPC contract disputes, arbitration or court?

Both are permitted by law; Decree 210/2026/ND-CP respects the parties' agreement on dispute resolution methods. For high-value EPC contracts with foreign elements or technical confidentiality requirements, commercial arbitration is often preferred for its confidentiality, flexibility in appointing technical experts, and cross-border enforceability under the New York Convention. Whichever form is chosen, the contract should specify the institution, governing law, language and venue, avoiding generic clauses that lead to jurisdictional disputes.

References

Construction Law No. 135/2025/QH15 dated 10/12/2025, effective 01/07/2026.
Decree No. 210/2026/ND-CP dated 15/6/2026 of the Government on construction contracts, effective 01/07/2026.
Decision No. 1040/QD-BXD dated 26/6/2026 of the Minister of Construction publishing model construction contracts, effective 01/07/2026.
Civil Code No. 91/2015/QH13 dated 24/11/2015, effective 01/01/2017.
Bidding Law No. 22/2023/QH15 dated 23/6/2023, effective 01/01/2024.