The Most Influencing Factors on the Causes of Construction Claims and Disputes in the EPC Contract Model of Infrastructure Projects in Indonesia

Abstract

EPC (Engineering, Procurement and Construction) is a project management concept that
delegates responsibility for design activities (Engineering), procurement of
materials/equipment (Procurement) and implementation of construction (Construction) to EPC
contractors. The EPC contract model in many infrastructure projects still does not run as it should
be. There are still many claims and disputes between users and service providers, the resolution
of which takes a considerable amount of time, money and energy. Because claims and
conflicts are frequent and recurring, it is necessary to have a good and mature understanding
to anticipate and minimize the occurrence of claims, disputes, and their impacts. The auditor's
finding that there is a state loss due to overpayments to service providers causes the auditor
element to be included in the study. The lumpsum payment method is one-factor driving claims
even though it follows the EPC contract. The research shows different perceptions of the parties
involved in a project with the EPC contract model that raises claims and disputes. It appears
that construction service companies still believe that other parties are the primary cause of
claims and disputes. They think they are in the correct position. Contract aspects, such as
contract administration, ambiguous definition of contract documents, understanding of the
EPC contract, and claims for extension of time, land handovers, and late completion of work
by contractors are the leading causes of claims and disputes on infrastructure projects using
the EPC contract model. It needs serious attention to minimize lawsuits and disputes in the
future.