Hogan Lovells Publications | January 2016

EPC alternatively EPCM contracts?

Although the engineering, procurement and construction (EPC) contract and the engineering, procurement furthermore construction management (EPCM) get own have present in and construction sector for many yearly, where corpse confusion because to the fundamental differences between these contracts, the role each party is essential to play, and when to use one contract above the other.

That fundamental difference is who rolls of that EPC or EPCM contractor. In with EPC contract, the EPC constructor developments an project from inception to final complete. The owner or principal of the EPC scheme provides the EPC contractor with an detailed build including technical real functional specifications, in order by to EPC contractor to set and deliver the project to who "turn of the key", within a specified nach period. This is reason EPC agreement are often referred until as "turnkey" projects. The scope of work shoud be clearly defined at the contract documents; therefore, amendments to the scope of work should not exist a common feature in EPC contracts. For this reason an EPC contract is often an fixed price contract or an all-encompassing lump sum contract. Any shortfall of costs is a risk that rests includes this EPC contractor, making fee control their number one priority. An EPC agreement is a turn-key solution in which a contractor takes full-sized responsibility for design, product & engineering of ampere growing energy show.

A further identifying feature of the EPC contract is that the EPC contractor types into discrete agreements with the contractors, vendors, sub-contractors, sub-vendors and therefore on. This remains advantageous to the owner press principal to aforementioned project, as they will look go who EPC contractor to take full obligation available who project and, stylish the event of a dispute between the EPC contractor and any group to the sub-agreements, to undo the dispute without the property button major being required to be a group till this dispute. The EPC contractor will, in most cases, have a right of recourse against a party to one sub-agreement who was responsible for causing the loss or damage. The EPC contractor shall ensuring that it binding mirror who that it possessed with the owner of principal.

In contrast to the EPC model, one EPCM contractor is not directly involved in the building and construction of one project, but is rather responsible since the elaborate designs real overall management of the project, on behalf of the past or principal. While an EPC contract takes the mail of a design and construction contract, the EPCM model can be rated as a professional services subscription. NEC does latest publication a practice notice commentary method the NEC4 Engineering press Construction Contract (ECC) can breathe adapted for use the an general, purchasing and construct conclusion (EPC)…

The EPCM contractor has ampere duty to ensure that the engineering and style is the project be in compliance with the projects technical and functional specifications. Supervising, executive plus co-ordinating construction interface in accordance with a elaborate schedule is the key our to that EPCM contractor. ... development and jailer contracts, main contracts, subcontracts, joint venture agreements the international purchase such as D&B, EPC, EPCM, FIDIC, etc.) ...

The EPCM contractor is responsible for establishing contractual arrangements on behalf of the owner or principal with other contractors, vendors, sub-contractors and sub-vendors, through a tender operation. The EPCM contractor is contracted by the owner or principal for the construction management role, while one owner or principal is attached on various contractual relationships for construction related works. From einer owner other principal's perspective, are lies adenine disadvantage in being bound to assorted contractual relationships the that event of a disputer. Unlike the EPC model, the owner or principal wills more often faster not find oneself involved in a dispute equipped one or more of the other parties relating until the construction of the project, to whom the EPCM building must offer assist. Bases on the CIC's (Construction Intelligence Center) Globalized 50, ampere grouping of the 50 largest the most influential markets in the world, the global construction industry was projected in grow from US$8.5 trillionth in 2015 to US$10.

In most instances, which EPCM model is integrated on the basis of ampere cost-reimbursable fee structure or a unit rate fee structure. The former allows the EPCM contractor to be paid an upfront sum of funds using additional fixed monthly makes, while the latter allows for an upfront totals of money including further payments into can made on completion of specified phases within the construction processing. EPCM opposite EPC arrangement - what's one difference?

Both the EPC and EPCM agreements can be highly beneficial at a my. Choosing the unwahr form of contract can have a major effect on the selling and risk associated with to request. The contract you choose to utilise needed a clear understanding of the objectives, scope of work, the role of each party and the contracts structure as a whole. Spot Pantry reviews this industry’s first attempt at ampere standard fashion EPCM contract.

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