EPC vs EPCM
We offer a range of EPCM and EPC services, including full turnkey packages.
Engineering, Procurement and Construction Management (EPCM) and Engineering, Procurement and Construction (EPC) refer to different types of construction contract. They might sound similar – but there are fundamental differences between the two if considering EPC vs EPCM.
EPC vs EPCM: What is EPC?
In an EPC contract, the EPC contractor takes full responsibility for the delivery of a project, including detailed engineering design, procurement, construction and commissioning. The client or Principal Designer provides the contractor with the basic design, which the EPC contractor is responsible for delivering from detailed design to construction completion.
Under this type of contract, as your EPC contractor, we will engage ad negotiate contracts with suppliers and sub-contractors directly and are responsible for them completing their work within the designated timescales and budgets.
EPC stands for “Engineering, Procurement and Construction” and refers to the project stages included in this type of contract. The basic functions for each of these stages include:
- Detailed engineering
- Construction engineering
- Planning stages
- Logistics and transportation
- Invoicing arrangements
- Product delivery
- Electrical engineering
- Mechanical engineering
- Civil engineering
Benefits of EPC vs EPCM:
- Cradle-to-grave Service – also known as “turnkey” an EPC form of contract will allow a site owner the peace of mind that everything has been completed within the responsibility of the contractor.
- Alignment – an integrated team, that may already have experience working together, can bring better communication, synergy and innovation to the project.
- Removed from disputes – the EPC contractor has their own sub-contractors with those working on the project, the client is removed from responsibility and involvement in any disputes arising.
- Certainty – within the contract are agreed costs and timescales, with typically little room for manoeuvre. This is reassuring for the client as there is no risk of costs spiralling – it is the responsibility and risk to the contractor to ensure they come in on budget and a fixed completion date.
- Hands-off approach for client – the client no longer has the responsibility of dealing with multiple sub-contractors, a particularly attractive resource if this nature of resource is limited within the business.
What is EPCM?
In an EPCM (Engineering, Procurement and Construction Management) contract, the EPCM contractor is responsible for the design/engineering and the overall management of the construction phase of a project.
The EPCM contractor must confirm that the engineering design will meet the requirements of the client specification but then is not physically involved in the build/construction process, acting more on a consultancy basis to simply manage those who are.
They will typically be appointed to source and organise contracts with subcontractors (Procurement) on the construction phase, though this may be done directly by the client depending on the contract details.
Key to this contract approach is that overall responsibility for contractual relationships with those working on the construction phase still lies with the client or Principal Contractor of the project- they are employed by the client, not the contractor.
In the battle of EPC vs. EPCM this is certainly the more flexible option, giving greater control to the client, but the responsibility and time involved is proportionally greater.
- Budget Management – on projects where funding is perhaps not fully available before commencing, an EPCM project means the client can manage supplier payments within their own cashflow. With EPC contracts, it is a requirement that the budget is in place before start, with visibility and proof of funding supplied to the EPC contractor.
- Control – with EPCM projects, control for both time and people management lies with the client. This can be preferable for some businesses as they can change suppliers, specifications and timelines.
- Affordability – EPCM contracts tend to be lower in cost compared to EPC due to the project risk and responsibility for sub-contractor appointment staying with the client.
Difference between EPC and turnkey project management
EPC contracts are often incorrectly labelled “turnkey” projects, but there are differences between the two.
Turnkey projects (sometimes labelled EPCMv) allow the client to hand over the entire risk and responsibility of the project to the main contractor – this includes earlier stages of basic engineering design (FEED) and can even include feasibility and concept design. In turnkey project management the contractor may only receive basic technical specifications or user requirements documentation prior to project start.
The literal origin of turnkey project management was a client being able to hand over the whole project and simply receive and “turn the key” to their finished construction.
Crucially, turnkey projects also include final commissioning and start-up of the project following construction. This includes key HSE and legal compliance requirements, for which the responsibility would sit with the contractor.
In contrast, EPC contractors are usually responsible for a portion of the project; detailed engineering, procurement and construction.
An LSTK (Lump Sum Turn Key) project is essentially a combination of an EPC contract and a turnkey project. The lump sum constitutes the fixed sum payment given to the contractor in order to manage the project – as within an EPC contract. The turn key reference dictates that the scope of work should include start-up and commissioning of the site/operation.
In this project our client required full design and build of additional storage and production space to support growth in chilled and frozen lines.
What is a PMC Contract?
Typically utilised on very complex or large jobs, PMCs (Project Management Consultancy) will act as an interface between an EPC contractor and the client. They will oversee all elements of a project end-to-end for a client, including the responsibilities for the EPC contractor, including areas such as people resourcing, budgets, timescales and project risks. A PMC may involve a number of project managers, each an expert in their own field.
Still wondering about EPC vs EPCM? Learn more about the different types of CDM project management services we offer.
We provide a full range of cradle-to-grave engineering services, from concept to commissioning. Covering EPC, EPCM, turnkey and CDM responsibilities.