An EPC construction contract or an Engineering, Procurement, and Construction contract is between the project owner and the contractor. In the EPC contract, the contractor must design, procure, construct, and commission all the project facilities. This can be a good option for project owners who wish to minimize their overhead and liabilities regarding the project.
What does an EPC Contractor Do?
EPC contractors typically provide a wide range of services, including:
Engineering
The EPC contractor will prepare the project’s engineering design in the form of drawings, specifications, and calculations.
Procurement
The EPC contractor will be responsible for purchasing all materials and equipment required for the project. This entails obtaining quotations from suppliers, bargaining for the prices, and delivering the supplies to the construction site.
Construction
The EPC contractor will build the project based on engineering design. This involves selecting and supervising subcontractors, planning and controlling construction activities, and ensuring that the construction is completed within the stipulated time and cost.
Commissioning
The EPC contractor will commission the project, which entails testing and starting up all the systems and equipment.
Benefits of Using an EPC Contractor
The following are the advantages of engaging an EPC contractor in a construction project. These include:
Reduced administrative burden
Since the EPC contractor is involved in all aspects of the project, the project owner has limited paperwork to handle. This can help the project owner save time and effort for other business activities.
Reduced risk
EPC contractors usually have extensive experience in the construction of large projects. This experience can help minimize the probability of project delays, high costs, and poor quality.
Single point of contact
The EPC contract also means that the project owner has one contact point for all project-related issues. This can help reduce confusion and coordinate the work of the different departments.
Improved project certainty
EPC contracts also contain provisions on the project’s price, which is usually fixed. This can give the project owner more assurance about the project’s cost.
Critical Differences Between EPC and General Contractor
One has to differentiate between EPC contracts and general contractor contracts. General contractors are usually involved with the construction phase of a project and not the design phase. They might delegate the project’s engineering and procurement responsibilities to the owner or other contractors.
However, EPC contractors are more involved than simple contractors in the construction process. They are fully accountable for the project and are involved in all the processes from the beginning to the end. This can make EPC contracts a good option for large and/or complicated projects or where the project owner wishes to have high confidence in the cost and time required to complete the project.
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