EPC contractors coordinate every aspect of a construction project’s commissioning, design, procurement, and construction process to ensure timely completion. EPC contracts are a form of contract utilized by private sector businesses to conduct construction work on complex, large-scale infrastructure projects.
EPC contractors are vital to industrial plants, mining, oil and gas, power generation, and other large infrastructure operations. Here we’ll explain more about what EPC contracts are and what contractors do as part of their key functions.
EPC Contracts
An engineering, procurement, and construction (EPC) contract—also known as a turnkey contract—is a construction contract where the EPC contractor is fully responsible for the project’s procurement, design, construction, commissioning, and delivery. The EPC contractor is provided with a detailed scope of work that encompasses the functional and technical specifications of the facility or machinery under construction. Consequently, the EPC contractor runs the project from start to finish. Upon completion, the EPC contractor hands over the project to the owner or client.
EPC contracts play a major role in streamlining the modern energy and power industries. EPC agreements delegate responsibility to one party to ensure the complete design and construction of a facility or other project. At the project’s conclusion, the other party can begin operating the facility or machinery right away.
EPC Contractor Functions
An EPC contractor is fully responsible for:
- The project’s detailed planning
- Procuring all the required pieces of equipment and materials needed to construct the project
- Constructing the project or facility according to the original design
- Preparing the final building for the client’s use
- Handing the project over to the client
EPC contractors must complete and deliver the project within the agreed timeline and budget. Here’s a closer look at the individual aspects of a contractor’s job.
Engineering
Engineering in EPC contracts requires specialized expertise to ensure customer satisfaction. Engineering tasks include 3D modeling, structural design and analysis, feasibility studies, front-end engineering design (FEED), and more. Engineering also includes:
- Basic and detailed engineering
- Construction engineering
- Planning
Procurement
A successful procurement strategy means getting a partner who delivers orders on time, within budget, and to exact specifications. An expert EPC contractor manages:
- Logistics
- Transport
- Receiving
- Invoicing
- Purchasing
Construction
Construction is the process of bringing the initial design to life. A quality EPC contractor can provide various construction solutions of any size while remaining dedicated to safety and quality. Construction tasks involve:
- Electrical installations
- Mechanical installations
- Civil engineering
Benefits of EPC and EPCM Contracts
EPC contracts are turnkey solutions, which allow contractors to execute and deliver the full project with minimal input from the client or owner. This takes the project completely off the client’s hands so that they can focus on their core business until the construction project is complete.
On the other hand, an engineering, procurement, and construction management (EPCM) contract gives more control to the client throughout the project. The client can choose which construction workers, suppliers, and other contractors to hire, and the EPCM contractor manages the project under closer client supervision. This approach decreases the risk of single-point failure from partnering with a single company. EPCM contracts are popular in the power plant, petrochemical, and mining industries.
Here are the benefits of hiring an EPC vs. EPCM contractor:
- At the start of an EPC contract, both parties establish a fixed price. Doing so eliminates any hidden fees that may arise during the project.
- The EPC contractor is liable for any mistakes that come up during the construction process. In EPCM contracts, the client must fix any errors.
- The EPC contractor is fully responsible for the construction project’s quality. With an EPCM contract, the client must ensure the final project’s quality.
- An EPC contract typically has a fixed completion date, while an EPCM contract is flexible according to the client’s timeline.
- An EPC contractor handles the procurement on behalf of the owner, whereas an EPCM contractor works with the suppliers and other sources chosen by the client.
Hire an Expert EPC Contractor for Your Construction Project
Since 1998, Base Construction has been an industry leader in turnkey engineering, procurement, and construction contract services. We have performed a diverse portfolio of construction projects from start to finish, meeting our clients’ expectations and specifications. We ensure our operations comply with OSHA, CAL-OSHA, and client-specific safety standards. Contact us to schedule a consultation or find out more about our EPC contract services.