Last edited 27 Nov 2020

Equivalent project relief provisions

In private finance initiative (PFI) contracts, equivalent project relief (EPR) provisions offer a mechanism for contractors to enforce back-to-back risk transfer down the supply chain.

Also known as ‘EPR clauses’, they are used as overarching provisions in PFI contracts to preserve the liquidity of the PFI project company by ensuring the rights and obligations of the sub-contractor are tied to those of the PFI project company under the project agreement. This is intended to ensure that the entitlement of the sub-contractor will be no greater and no less than that of the PFI project company.

EPR provisions were often used a way of getting around the prohibited ‘pay-when-paid’ provision under the Housing Grants, Construction and Regeneration Act (HGCRA). However, this has been challenged in cases such as Midland Expressway Ltd v Carillion Construction Ltd & Others [2005]. As a result, EPR provisions are often quite elaborate and complex mechanisms which may, under scrutiny, be found to be unforceable if they are interpreted as undermining the purpose of HGCRA.

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