WHAT IS MEANT BY
BANK’S PANEL LENDERS INDEPENDENT ENGINEER
Guidance on Scope of Work for Lenders Independent Engineer –
Infrastructure/Manufacturing Projects
The Scope of Work of LIE may be divided into phases as mentioned below:
Phase I : Project Review and Assessment (on commencement of assignment till achievement of Financial Closure)
Phase II: Periodic Construction Monitoring and Certifications (from Financial Closure till completion of assignment)
Detailed Scope of Work
An indicative list, which shall change depending on the type of the project, is as under:
Scope of project shall change depending on the type of the project, however, an indicative list of coverage of LIE report is given as under.
(i) Phase I – Project Review and Assessment
a) Review of Concession Agreement: (For PPP infrastructure projects)
LIE shall review the technical aspects of the concession agreement and provide an opinion on the achievability of stipulations, including those related to technical specifications and time schedule, based on a review of the relevant Project contracts and construction schedule as proposed by the borrowers.
b) Review of Project Contracts / Agreement:
LIE shall review the Project contracts including the EPC contract, O&M contract, etc., and comment on the adherence to the technical and commercial aspects of the Project contracts, adequacy of project contractual arrangement including performance guarantees/ bonds, warranties, adequacy of liquidated damages, performance bonuses with respect to the general industry practice and adequacy of these to mitigate project risks.
c) Review of Project costs:
Review the Project costs including the adequacy of contingencies and comparison of the cost of project estimate with other similar projects. Review of technical inputs to Project Financial Model, review of drawdown schedule to be appended to Contract.
d) Review of Designs:
Review of the Project’s conceptual design, engineering and drawings, construction plans and operation plans including the projected construction program, expenditure schedule and adequacy of the arrangements made to achieve the projected construction schedule.
e) Review of approvals and clearances:
Review the approvals; clearances etc. which are required by the borrower firm to execute the Project as per schedule E of the Concession Agreement and comment on the status of the same.
f) Review of Environment protection plan:
Advise the Lender on the steps taken by the Company for protection of the environment and avoid damage to persons and property.
g) Review/ Check consistency of project documents
(ii) Phase II – Periodic Construction Monitoring and perusal of Certifications
a) Review the drawdown schedule and adequacy of the arrangements made at the site to achieve the projected construction schedule on a monthly basis.
b) Review, assist and advice about the progress of work on a monthly basis, vis-àvis program of construction and milestone dates specified in the concession agreement.
c) Review change in scope of work of the project during construction if any.
d) Certify the capital cost incurred and approve request for disbursements during construction.
e) Carry out spot verification of the quality of the construction work vis-à-vis stated specifications, if required.
f) Assessment of variation in orders, if any, which may have impact on the EPC cost.
g) Monitor progress related to removal of encroachments on the carriageway and other acquired land.
h) Monitor adherence to environmental regulations and report on any present / future risks that arise during Project implementation.
i) Review the status of necessary approvals, permits, licenses, toll notifications, project completion certificates, etc. as may be required by the Company for implementation of the project.
The scope of services provided above is not exhaustive but only indicative. It shall be the sole responsibility of the LIE to render all services required to fulfill the respective obligations broadly envisaged herein above.
Further, LIE may have to provide written opinions/ clarifications on any of the techno-commercial issues related to the project as requested by the Lenders.