Engin Ertuş
Çalık Enerji, Istanbul

An engineering, procurement and construction (EPC) contractor can win a tender, yet weaken the project before mobilisation by treating every clarification as a concession and every concession as interchangeable. Using the FIDIC Silver Book as one contractual setting, this article argues that disciplined perspective-taking, bounded transparency and risk-adjusted give-and-take improve both contractual certainty and dispute avoidance. Although the principles are transferable, the discussion is anchored in power projects, including the multi-contract structures increasingly used for solar, wind and hydropower. It proposes two practical tools: the Trust-Enabled Negotiation (TEN) framework and the Risk-Adjusted Comparable Exchange (RACE) principle.

Negotiation starts delivery

Engineering, procurement and construction (EPC) negotiations are usually described as exercises in risk allocation. That is correct, but incomplete. They also establish the working assumptions, behavioural expectations and documentary record that will govern the project long after the negotiating team leaves the room. Before engineering is mobilised, each party is already learning how the other responds to uncertainty, inconvenient facts and competing interests.

This matters because an EPC contract can be legally robust and operationally fragile. A contractor may secure favourable wording, yet create distrust by withholding a material inconsistency, overstating confidence or trading unrelated concessions as though they were equivalent. Conversely, a contractor may accept no additional risk and still improve the project by explaining its assumptions clearly, identifying contradictions and proposing a workable allocation before signature.

The better view is that negotiation is the first phase of delivery. Its objective is not to remove disagreement; sophisticated parties will disagree. It is to make disagreement intelligible, priceable and administrable. That requires legal discipline, commercial judgement, and an understanding of how people assess trust and risk.

What the Silver Book demands

The FIDIC Silver Book provides one demanding setting for this argument. Its EPC/turnkey model is intended to give the employer a high degree of price, time and performance certainty through broad contractor responsibility for design, procurement, integration and execution. FIDIC also identifies an important boundary: the form is not suitable where tenderers lack sufficient time or information to scrutinise the employer’s requirements, develop the design, assess risk and estimate the works.¹

That warning should shape the negotiation process. The contractor cannot rationally price a risk that remains unintelligible, and the employer cannot obtain genuine certainty by transferring an undefined problem. The FIDIC Golden Principles similarly emphasise clear particular conditions and preservation of the form’s risk/reward balance.² The question is therefore not only who bears a risk, but whether the trigger, consequence, control measures, price effect and contractual route are understood by both parties.

This is particularly important where the employer’s requirements interact with the priority-of-documents provision, Clause 5 design obligations, Clause 8 delay regime, Clause 13 variation mechanism, and Clauses 20 and 21 on claims and disputes. A qualification hidden in a price schedule may not cure a broader performance obligation elsewhere. Negotiators should test the contract as an integrated system, not as a collection of isolated clauses.

Power-project contract matrices

The Silver Book provides the principal contractual lens for this article, but contemporary power projects are not always delivered under a single EPC/turnkey contract. A large thermal project may follow that model, whereas solar, wind and hydropower developments are often divided among equipment supply, balance-of-plant or civil works, grid connection, storage, commissioning, operation and long-term service packages. Depending on design responsibility, the project may combine the FIDIC Silver, Yellow or Red Book with bespoke supply, installation and service agreements.³ Renewable projects may also, in the author’s experience, involve more mid-sized contractors and specialist suppliers than a large thermal EPC. That does not justify lower standards, but it may require proportionate security, liability caps, notice procedures and reporting systems that the counterparty can realistically administer. In a multi-contract project, clear interface ownership, coordinated testing and aligned delay remedies become especially important.⁴ The more fragmented the contract matrix, the more advisable it becomes to adapt the approaches discussed in this article in order to achieve greater clarity, stronger trust and a more coherent overall project outcome because certainty within individual packages does not, by itself, create certainty across the project.

Trust is commercial infrastructure

Trust is sometimes treated as a soft value to be considered after the hard drafting is complete. Organisational research suggests a more useful model. Mayer, Davis and Schoorman identify ability, benevolence and integrity as central dimensions of perceived trustworthiness.⁵ In an EPC negotiation, ability is demonstrated by technical and commercial command of the risk; integrity by consistency between statements, qualifications and drafting; and benevolence by a credible concern for a workable project outcome, rather than by altruism or surrender. The Trust-Enabled Negotiation (TEN) framework brings these ideas together by showing that trust is not a separate courtesy but a practical negotiating tool that helps the parties to reach clearer, more workable and more resilient contractual outcomes.

Trust does not replace securities, notice provisions, liability limits or a dispute board. Formal contract and relational governance can reinforce one another.⁶ Clear rights make cooperation safer; trustworthy conduct makes those rights less expensive to administer. The practical effects include earlier disclosure of bad news, more credible forecasts, faster decisions and greater willingness to examine a solution before positions harden.

Transparency must nevertheless be bounded. A contractor is not required to disclose its reservation price, privileged advice, negotiation mandate or confidential supply-chain strategy. The relevant duty is narrower: disclose material contradictions, assumptions and consequences that the other party must understand for the proposed bargain to work. Organisational transparency research conceptualises transparency through disclosure, clarity and accuracy, and links those qualities to assessments of trustworthiness.⁷

Empathy without surrender

The most useful form of empathy in contract negotiation is disciplined perspective-taking. It asks what the employer is trying to protect, what internal approvals it requires and how it will experience the proposed risk. Experimental work distinguishes perspective-taking from emotional identification and shows that entering the other party’s cognitive frame can improve the discovery of hidden interests and mutually beneficial trades.⁸

Consider an employer insisting on a high delay liquidated damages rate. The stated position is a percentage. The underlying interests may be debt-service obligations, a power-purchase agreement, regulatory milestones, lost production or board accountability. Simply arguing that the rate is ‘too high’ addresses none of them. A better response may combine a realistic baseline programme, relief for employer-caused delay, objective access assumptions, milestone logic, an exclusive-remedy structure, a cap and, where appropriate, an incentive for early or reliable completion.

Perspective-taking is not agreement. It improves the contractor’s ability to choose where to resist, where to explain and where to create options. It also helps to avoid a common credibility error: presenting every requested amendment as equally essential. Employers usually recognise when a negotiating team has not separated genuine project-threatening exposure from ordinary commercial preference.

Clarify the grey

Contractors sometimes discover an ambiguity that could later support a claim: conflicting output figures, inconsistent test conditions, a spare-parts obligation that does not match the price schedule or an interface described differently in two documents. Silence can appear tactically attractive. Under an EPC/turnkey structure, however, ambiguity is rarely a free option. It can affect the design margin, procurement, programme, performance testing and financing at the same time. Empirical construction research identifies ambiguous contractual language and inconsistent documents as recurring sources of conflict.⁹

A contractor should therefore consider proposing clarification, even when the immediate correction favours the employer. This is not necessarily a concession. It may prevent a mispriced obligation, remove an execution trap and demonstrate integrity. The commercial return is credibility: later, when the contractor identifies a genuine employer risk or seeks a balanced qualification, its position is less likely to be dismissed as opportunistic.

The effect can extend beyond the corrected clause. Negotiators evaluate process, fairness and the future relationship, as well as the immediate economic outcome, and research on reciprocity explains why a voluntary, credible concession can encourage cooperation.¹⁰ The point should not be overstated: a clarification offered theatrically or made conditional on an unrelated demand will look manipulative rather than trustworthy.

The decision in MT Højgaard v E.ON provides a power-sector warning. The dispute concerned the design and installation of the foundation structures for two offshore wind farms at Robin Rigg in the Solway Firth, United Kingdom. Although the contractor followed the J101 industry standard, a flaw in that standard meant that the foundations did not achieve the contract’s broader 20-year design-life requirement. Compliance with the standard therefore did not displace the more demanding performance obligation.¹¹ The lesson is not that every inconsistency is resolved against the contractor; it is that technical compliance cannot safely be assumed to neutralise a broader contractual promise. A contradiction visible at tender stage should be reconciled across the employer’s requirements, schedules, guarantees, testing provisions and pricing documents.

An analogous issue arises under the FIDIC document-review machinery. The 2017 Red, Yellow and Silver Books all use a review mechanism in which the employer or the engineer is to respond within the review period with a notice of no objection or a reasoned notice of non-compliance, and revised documents may then need to be resubmitted before the relevant work can proceed. Unless the particular conditions require a single consolidated response, that process does not guarantee all employer’s or engineer’s comments to be provided in one single batch. In practice, fragmented commenting can extend approval times, push procurement, and fabrication further into the critical path and affect the contractual completion date. When necessary, the commercially sound response is to negotiate the review timetable transparently, explain the programme impact in clear terms and, where relevant, state earlier experience of delayed or piecemeal commenting so that the employer understands why a disciplined approval process and a proportionate concession strategy are necessary.

There are limits. Clarification should be accurate, proportionate and documented. It should not become a performance of virtue or a device for extracting reciprocal concessions from every correction. Trust is damaged when an apparently helpful point is later revealed as a tactical ambush.

Compare risk with risk

Give-and-take is unavoidable, but the items exchanged should be commercially comparable. This article calls that discipline the Risk-Adjusted Comparable Exchange (RACE) principle. It does not prohibit cross-category trades. It requires the parties first to compare expected value, tail exposure, timing, controllability, insurability, financing effect and internal approval constraints.

The distinction between a spare-parts package and delay liquidated damages illustrates the point. Spare parts are normally a visible procurement cost that can be quantified through quantities and supplier quotations. Delay damages are contingent exposure connected to critical-path performance, revenue loss and termination scenarios.

Delay damages also interact with completion, termination, general damages and liability caps. Triple Point confirms that familiar drafting can produce significant questions about how liquidated damages operate before and after termination and whether they fall within a contractual cap.¹² They should not be negotiated as a simple price line.

A similar mismatch arises where an earlier payment milestone is offered in exchange for the relaxation of an output or availability guarantee: the former is principally a financing and cashflow issue, whereas the latter transfers contingent technical and revenue risk. Behavioural economics shows that decision-makers are often loss averse and classify certain costs and contingent risks within different mental accounts.¹³ Treating the two as naturally equivalent may therefore appear less like creative trading and more like an attempt to exchange a known cost for relief from a materially different risk.

The practical rule is to build concession packages within coherent baskets before moving across baskets. The direct scope cost can be traded against payment timing, scope deletion, quantities or another priced obligation. Delay risk can be traded against extension-of-time entitlement, employer dependencies, caps, milestone structure, document-review cycles, acceleration rules or incentives. Performance risk can be traded against test conditions, retest rights, cure periods and a remedy ladder (see Table 1).

Table 1: risk-adjusted concession baskets

Negotiating item	Character and valuation	More coherent counterpart items
Mandatory spare parts	Direct scope cost: quantities, supplier quotations and obsolescence	Other priced scope, payment terms or warranty spares
Delay liquidated damages	Contingent schedule risk: probability, critical path, cap and tail exposure	Time relief, employer dependencies, milestone logic, document-review cycles or incentive
Output, efficiency or availability guarantee	Technical and remedy risk: design margin, test conditions and remedy sequence	Retest rights, cure periods and performance-damages cap
Payment timing	Cashflow and credit risk: financing cost, security and collection risk	Advance payment, retention, security or milestone structure

Culture and team selection

International power-project contractors must also recognise that a strategy effective in one country may fail in another. Research on cross-cultural negotiation shows differences in communication, hierarchy, information sharing and the interpretation of direct disagreement.¹⁴ A highly explicit challenge may signal competence in one setting and disrespect in another; relationship building may be essential before substance in one market and regarded as delay in another.

Cultural preparation should go beyond etiquette. The team should understand who can commit the employer; whether silence indicates reflection or disagreement; how bad news is expected to be delivered; and whether decisions are made in the room or after internal consultation. The contract remains the contract, but the route to a reliable agreement varies.

Companies should select negotiators as carefully as they select external counsel. Technical knowledge is indispensable, but so are listening, emotional regulation, calibrated language and the confidence to raise inconvenient points. Research links emotional intelligence with value creation and claiming in negotiation, while psychological safety supports speaking up and learning within teams.¹⁵ In a competitive tender, a single defensive sentence can reinforce an employer’s concern that the contractor may be difficult to work with during execution.

A practical framework

The Trust-Enabled Negotiation (TEN) framework translates these ideas into six practices.

• First, translate positions into interests. Identify the financial, operational, regulatory and governance purpose behind each material demand.
• Second, expose material ambiguity. Reconcile the employer’s requirements, schedules, guarantees, testing regime, price documents and particular conditions before signature.
• Third, explain risk rather than merely rejecting it. Show the trigger, probability, consequence, control measures and price or programme effect.
• Fourth, exchange comparable value. Use the RACE criteria and record the reason each concession package is balanced.
• Fifth, adapt communication to culture and authority. Confirm who decides, how escalation works and what language will be understood as constructive rather than evasive.
• Finally, carry the bargain into delivery. Prepare a negotiation-to-execution memorandum recording assumptions, rejected positions, agreed risk owners, notice requirements, employer dependencies and unresolved watch items.

These practices are not an empirical scoring system and should not be used to label one party as trustworthy. They are a governance checklist. Their purpose is to make the commercial logic of the deal visible to the people who must administer it.

From signature to delivery

The value of a well-negotiated contract can still be lost at handover. Project teams often receive the executed agreement without the history that explains why a sentence matters. The result is avoidable inconsistency: a project manager gives away a protection, a notice is missed, or an employer’s dependency is treated as informal cooperation rather than a contractual condition.

A disciplined handover should identify the project’s risk architecture, not merely circulate the contract. It should also establish an early-warning and escalation rhythm. Standing dispute boards and structured contract-management guidance reflect the same principle: issues should be surfaced and addressed while facts, records and relationships remain manageable.¹⁶

The central proposition is therefore modest but consequential. The strongest contractor in a power project is not the one that appears to win every point. It is the one that distinguishes cost from risk, protects its legitimate interests, removes dangerous ambiguity and convinces the employer that difficult issues will be handled accurately and professionally. Although framed around power projects, the same discipline can be adapted to other complex contractual negotiations. Trust is not the reward for a successful project. It is part of the infrastructure that makes success more likely.

---

¹ FIDIC, Conditions of Contract for EPC/Turnkey Projects (Silver Book) (2nd edn, 2017, reprinted 2022 with amendments), Introductory Note.

² FIDIC, The FIDIC Golden Principles (1st edn, 2019), especially Golden Principles 2 and 3.

³ FIDIC, Conditions of Contract for Plant and Design-Build (Yellow Book) (2nd edn, 2017, reprinted 2022 with amendments); and FIDIC, Conditions of Contract for Construction (Red Book) (2nd edn, 2017, reprinted 2022 with amendments).

⁴ European Bank for Reconstruction and Development, Sector Supply-Chain Guidance – Wind Energy, Environmental and Social Risk Management Toolkit for Financial Intermediaries.

⁵ Roger C Mayer, James H Davis and F David Schoorman, ‘An Integrative Model of Organizational Trust’ (1995) 20(3) Academy of Management Review 709.

⁶ Laura Poppo and Todd Zenger, ‘Do Formal Contracts and Relational Governance Function as Substitutes or Complements?’ (2002) 23(8) Strategic Management Journal 707; Anna Kadefors, ‘Trust in Project Relationships – Inside the Black Box’ (2004) 22(3) International Journal of Project Management 175.

⁷ Andrew K Schnackenberg and Edward C Tomlinson, ‘Organizational Transparency: A New Perspective on Managing Trust in Organization-Stakeholder Relationships’ (2016) 42(7) Journal of Management 1784.

⁸ Adam D Galinsky, William W Maddux, Debra Gilin and Judith B White, ‘Why It Pays to Get Inside the Head of Your Opponent: The Differential Effects of Perspective Taking and Empathy in Negotiations’ (2008) 19(4) Psychological Science 378.

⁹ Kerim Koc and Asli Pelin Gurgun, ‘Ambiguity Factors in Construction Contracts Entailing Conflicts’ (2022) 29(5) Engineering, Construction and Architectural Management 1946.

¹⁰ Jared R Curhan, Hillary Anger Elfenbein and Heng Xu, ‘What Do People Value When They Negotiate? Mapping the Domain of Subjective Value in Negotiation’ (2006) 91(3) Journal of Personality and Social Psychology 493; and Robert B Cialdini and others, ‘Reciprocal Concessions Procedure for Inducing Compliance: The Door-in-the-Face Technique’ (1975) 31(2) Journal of Personality and Social Psychology 206.

¹¹ MT Højgaard A/S v E.ON Climate & Renewables UK Robin Rigg East Ltd [2017] UKSC 59.

¹² Triple Point Technology Inc v PTT Public Co Ltd [2021] UKSC 29.

¹³ Daniel Kahneman and Amos Tversky, ‘Prospect Theory: An Analysis of Decision under Risk’ (1979) 47(2) Econometrica 263; Richard H Thaler, ‘Mental Accounting and Consumer Choice’ (1985) 4(3) Marketing Science 199.

¹⁴ Jeanne M Brett, ‘Culture and Negotiation’ (2000) 35(2) International Journal of Psychology 97; and Wendi L Adair, Tetsushi Okumura and Jeanne M Brett, ‘Negotiation Behavior When Cultures Collide: The United States and Japan’ (2001) 86(3) Journal of Applied Psychology 371.

¹⁵ Maw Der Foo, Hillary Anger Elfenbein, Hwee Hoon Tan and Voon Chuan Aik, ‘Emotional Intelligence and Negotiation: The Tension Between Creating and Claiming Value’ (2004) 15(4) International Journal of Conflict Management 411; and Amy Edmondson, ‘Psychological Safety and Learning Behavior in Work Teams’ (1999) 44(2) Administrative Science Quarterly 350.

¹⁶ International Chamber of Commerce, Dispute Board Rules (in force 1 October 2015, appendices updated 1 October 2018); and World Bank, Procurement Guidance: Contract Management Practice (2nd edn, May 2024).

Engin Ertuş leads contracts and claims at Çalık Enerji in Istanbul, Türkiye, and can be contacted at engin.ertus@calikenerji.com.