Epc philosophy with contract and appendices report. Epc and epcm minter ellison construction law made easy. Under an epcm contract, other parties construct the project. What is the difference between an epc contract and a. More recently, in response to market conditions and an. Engineering procurement and construction management. Epc appendix g forms release and certificate of final payment. Epcm contract owner negotiates warranties with each supplier and contractor directly, often supported by multiple performance bonds. Epcm stands for engineering, procurement and construction management. November 2016 performance incentives accurate and timely 5 measurement of performance 6 epc or epcm epc contract with a single contractor a uniform set of tools can be applied to record and measure performance. The epc contractor is responsible for engineering, procurement and construction.
Feb 08, 2016 epc is a contract comprising engineering, procurement and construction. The epcm job helps in tapping competencies and also gives an upper hand on the epc project being executed. For more information on epc and epcm contract advantages and disadvantages, contact. Here, an epcm contractor takes an administrative and management role in the engineering and design aspect of the project. Epc contracting tends to be more expensive, to the owner, due to the shift of project risk away from the owner and to the epc contractor. Epcm is a servicesonly contract, under which the contractor performs engineering, procurement and construction management services. Epc means the company is contracted to provide engineering, procurement and construction services. The contract you choose to utilise requires a clear understanding of the objectives, scope of work, the role of each party and the contract structure as a whole. Fidic conditions of contract for epcturnkey projects. Basic understanding of an epc contract caclubindia. See below for comparisons of both epc and epcm contracting options for owners along key project aspects, or download the white paper in pdf format. Clients in industrial projects in general use one of.
You then have misalignment between the epcm contractor and the construction contractor, and the project suffers as a result. Sign up to receive an update when we launch our online training courses. When deciding which one is right for you, there are several factors to take into account. Contracts proforma transportation and logistics specifications eng. However a turnkey contract which is the entire project from concept to commissioning and startup of the entire plantsystem up to stabilize the operation and end.
So it indicates the contractor scope includes all the activities and facilities required to start operation on a single point responsible ba. Our collection of articles about energy, infrastructure, technology, and work culture. Epc contract the cost risk for the project is borne by the epc contractor. Engineering, procurement, construction management epcm. The epcm approach tends to suit principals who have the expertise and experience to manage the progress of the project and the size of the balance sheets, and to retain the cost and time risk of the project rather than pay a hefty premium to put the risk on a head contractor under an epc contract. Jul 18, 2014 epc contracts are often associated with large scale projects such as mines, power stations and desalination plants.
Epc, epcm and pmc contract diffrences dedicated to. Therefore, this paper specifically addresses the epcm contract in light of construction project success in malaysia. Oct 23, 2017 7 diferencias clave entre contratos epc y epcm diferencia 1. Jan 26, 2016 both the epc and epcm contracts can be highly beneficial to a project. Although the engineering, procurement and construction epc contract and the engineering, procurement and construction management epcm contract have been present in the construction sector for many years, there remains confusion as to the fundamental differences between these contracts, the role each party is required to play, and when to use one contract over the other. This form of contract is covered by the fidic silver book containing the title words epcturnkey. Our services from studies to inhouse designbuild construction. Google search of epcm will bring up lists of epcm contracts and epcm contractors but virtually nothing explaining what an epcm contract is. Process mechanical geotechnical civilcivil civilstructural plant layout. Reporting tools can be integrated across the project. A comparison of epc and epcm contracting and the key risk. Epcm contract project financing can be any combination of down payments, accounts andor letters of credit from owner to different suppliers. This is basically a service which provides the link between research and design companies and those who want to establish a manufacturing unit fact. On average, a projects cost 10% 20% more using epc style of contracting than a project using the epcm style of contracting.
Fidics 1999 editions of contract for plant and design and epc contract. The engineering and construction contractor will carry out the detailed. An epcm contract is a professional services contract which has radically different risk allocation and legal consequences to an epc contract. In the epc model, the clients appoint the epc contractor for a certain portion of the scope. Epc contracts engineering procurement construction contracts. Engineering, procurement and construction epc projects. Few studies that compare epcm contracts have been performed. Moreover, the costs will probably be less, as there is no need for the supplier to add. In any case, the employer is likely to incur higher legal costs on an epcm project, simply because it has to negotiate multiple contracts, rather than a single epc contract.
Project delivery through engineering, procurement and construction management contracts the epcm contract may also be structured in such a way so as to permit the owner, in its absolute discretion, to instruct the epcm contractor to proceed to the next stage. They make the contractor responsible for all project activities from the design phase all the way through the construction phase. Contrasting epc and aec component is the principal target for both epc explicit emphasis on p component epc relatively minor a component aec relatively minor e component epc engineering disciplines. They manage the project as the owners agent and oversees the project. Due to the potential involved with epcm contract, it is more in value than an epc contract. Sep 30, 2009 in any case, the employer is likely to incur higher legal costs on an epcm project, simply because it has to negotiate multiple contracts, rather than a single epc contract. Epc contracts are often associated with large scale projects such as mines, power stations and desalination plants. An epc contract is a risk mitigation and management tool in the form of a project document. The concept of delivering projects by way of an epcm contract is not new. Abstract there are many numbers of projects taking place around the world and contracts are signed for each project comprising of major firms in action.
In this seminar, decherts shane debeer and navpreet atwal examine engineering, procurement and construction epc contracts in the oil and. Engineering procurement and construction management contract. Understanding the difference between epc and epcm contracts. Many clients believe that epcm delivery models are more cheap to execute because the epc contractor has to include risk in the pricing of the epc model. Which one can drive stronger outcomes for project owners. Articles on fidic contracts and agreements international.
Choosing the incorrect form of contract can have a major effect on the cost and risk associated with the project. Differences between epc and designbuild delivery lexology. Feb 07, 2011 an epcm contract is a progression of an epc contract. Epcvsepcm general contractor construction management. Registration and continental breakfast picasso 2 9.
Epcm contract sample construction owners association of alberta. Contrasting epc and aec component is the principal target for both. In fact, epc contracts were specifically conceived to transfer risk to the contractor. Epci stands for engineering, procurement, construction and installation. It is important to note that epc contracts differ to epcm contracts. Engineering, procurement and construction epc projects opportunities for improvements through automation presented by robert n. While this may be a minor inconvenience for a large and experienced employer, it is a significant drawback for a smaller and less experienced employer. This is arguably a better way to manage and avoid the well publicised cost blowouts that have beset some major mining developments in recent times. Epc contract only as good as the original project specifications presented.
The initialism epcm is also encountered frequently on international projects, but this is very different from epc. Common contractual and legal issues arising under epc. Risk mitigation in epcm selection of epcm contractor and supplierstrade contractors track record, experience etc. In short, an epc contract is a design and construct contract where a single contractor takes responsibility for all elements of design engineering, construction and procurement. Epc, epcm and pmc contract diffrences dedicated to project. Dependent on the level of risk the owner of a project is willing to accept, budget constraints, and the owners organization core competencies, will determine which method is best for their project. An epc contractor gives a turnkey product guarantee an epcm contractor does not he provides services an epc contractor is a principal an epcm contractor is mainly an agent epcm and epc general principles epc and epcm procurement issues for owners 3. Engage your students during remote learning with video readalouds. Epcm contract construction owners association of alberta. Definition epcm or epc engineering project management. Engineering procurement and construction management contracts epcm contracts, like engineering procurement and construction contracts epc contracts are similar to design and build contracts, in that there is a single point of responsibility for the design and construction of the project, but generally, the client has less say over the. Engineering, procurement and construction management epcm.
An epcm contract is a progression of an epc contract. What is the difference between an epc and a turnkey projects. May 07, 2015 epc contractors are often handed little more than performance requirements output levels, uptime levels, maintenance expense maximums, etc. Understanding the difference between epc and epcm contracts 2. This is due in large part to the projects risk being more evenly distributed between. Epcm contracting services there are two types of construction contracts that are common in todays highvoltage substation construction marketplace. Apr 11, 2014 epc and epcm contracting are both very prevalent types of contracts within the construction industry. Dependent on the level of risk the owner of a project is willing to accept, budget constraints, and the owners organization core competencies, will determine which method is. Fulltime team working for owner to monitor and manage the execution of the project and identify risks early incentivisation gainsharepainshare epcm contractor accepts risk and rewards on project outcomes. Engineering, procurement, and construction wikipedia. See, for example, nick henchie fidic conditions of contract for epc.
Jan 10, 2017 it is important to note that epc contracts differ to epcm contracts. Epc is a contract comprising engineering, procurement and construction. This type of contract is different to an epc contract in that the contractor is not directly involved in the construction but is responsible for administering the construction contracts. The client parties shall quote their title objective in the contract and expect the contractor to. What is deference between epc contract and turn key. Engineering, procurement, and construction epc is a particular form of contracting arrangement used in some industries where the epc contractor is made responsible for all the activities from design, procurement, construction, to commissioning and handover of the project to the enduser or owner. Oct 11, 2016 see below for comparisons of both epc and epcm contracting options for owners along key project aspects, or download the white paper in pdf format. Epc appendix g forms key personnel confidentiality appendix.
Epcm and epc general principles key risks and benefits of each structure risk mitigation in epc and epcm other factors affecting choice of contracting strategy other options key issues in epcm contracts overview epc and epcm procurement issues for owners 2. Epc v epcm contracting a comparison linkedin slideshare. Pdf evalaution of contract strategy for epcm alade o. Turnkey is a contract comprising engineering, procurement and construction. Epcm stands for engineering, procurement, construction management. Engineering, procurement and construction management the most flexible approach to project execution in terms of timing and budget. Click here to download a pdf copy of this white paper. Epcm small tools office equipment and supplies consumables list. Assessment of epcm as critical success factor of construction. Youve probably heard the terms epc engineering, procurement and construction and epcm engineering, procurement and construction management contracts since they are terms commonly used in the oil, gas, mining and power industries.
Designbuild epc contracts project management conference chateau nova hotel yellowknife, nt november 21, 2017 helmut johannsen, p. When comparing the epc and epcm project execution models, there is no right or wrong answer. You can just turn the key and start using the facility. In an epc contract, the epc contractor develops the project from commencement to final completion. Both the epc and epcm contracts can be highly beneficial to a project.
What is the difference between an epc contract and a turnkey. In the brave new mining world of 2015 and beyond, perhaps the market needs to reassess the epcm approach and look instead to hardedged epc contracts to successfully deliver projects. The other gentleman has already pointed out that it is engineering, procurement and construction. For related contract types see feed, epc, epci, epic, pmc. Contratos epc y epcm construction management insurance.