Hydraulic steel works: a case study in subcontracting for hydro projects

There is no consensus on the best way to contract for the design, construction and installation of hydraulic steel works for a hydropower project. This paper examines the rationale for, and advantages and disadvantages of, various procurement approaches for hydraulic steel works. The paper will also discuss legal and commercial issues relating to such procurement, including indexation, use of local as opposed to foreign contractors, design responsibility, the defects notification period, interface risk, price and payment mechanisms, testing and commissioning, size of packages, as well as requirements for project finance.