EPC and EPCM

Running Head EPC and EPCM 0
EPC and EPCM

EPC and EPCM 1
Contents
EPC and EPCM contractual arrangements......................................................................................2
Difference........................................................................................................................................4
Advantages and disadvantages of EPC and EPCM.........................................................................5
Recommendation.............................................................................................................................8
References........................................................................................................................................9

EPC and EPCM 2
EPC and EPCM contractual arrangements
EPC is the engineering, procurement, and construction contract where EPCM is engineering,
procurement, and construction management contract which are applied in the construction sector
from last many years.
When we talk about EPC contractual arrangement, it is a development of projects by a contractor
from beginning to final completion of projects. It is a design and contract of construction which
is to be done by only one contractor and the contractor will take the responsibility of all the
elements of the projects like design or engineering, construction, and procurement of the project.
EPC is associated with performing the operating activities given to them by an owner. To
complete the contract it requires the performance standards. The engineering of the project
contains the detailed engineering and designing of the project to commence the project. It
requires the programming and scheduling of works to be done and then the estimation costs are
analyzed in all the areas of the projects. The procurement of projects includes the tenders or
quoting for all the work activities is described(Deng, et al, 2014). To start the construction the
purchasing, receipting and invoicing of goods and services is done during the procurement
process. All the potential coordination required by the contractor are decided and mentioned in
the contract. In the project contract, the schedule of construction is given to begin the work. The
performance of all the sub-contractors is measured by all the activities which are performed. The
commissioning and finalization of the project are included in the contract.
EPCM is a professional services contract and the contractor is responsible for engineering,
procurement, management of the construction which is to be done on behalf of the owner. An
EPCM contractor only works as an owner's representatives. The responsibility of the
construction or quality of the project is not on the contractors. EPCM contractors are popular in
the sector of mining, power plants, etc. the services which are performed under EPCM are
Engineering/Design where the contractors perform the basic works which are Front end
engineering and design (Kesari, et al, 2003). Specialist designing is performed by suppliers on
agreement done between the specialist supplier and the owner of the project. In EPCM, the risk

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and responsibilities of the design are linked with the specialist supplier, not on the EPCM
contractors. Procurement in EPCM is done by the EPCM contractor by giving advice to the
owner for developing and adopting the procurement strategies in the project. An EPCM
contractor guides the owner or they can act as the owner's agent for implementing the strategies
in the project. The management of construction is done by the EPCM contractors by performing
the coordination, supervision, and management of all the works in construction projects which
are performed by the various construction contractors. EPCM contractors are not responsible for
the performance of the sub-contractors or vendors and will not involve in preparation of the
budget and estimation of the cost of the project (Moselhi and Hui Xiao, 2011). Duration for the
completion of the project will not be decided by the EPCM contractor and will not manage trade
contracts of the procurement which is to be done by the owner itself.
EPC contracts are also called as the turnkey project because they are completed within a
specified time period. The document will include all the scope of work as it will not amend
during the process of the project and this is the special feature of the EPC contractual
arrangement. EPC contracts are also the fixed cost contracts as mentioned in the documents. If
there is any shortfall in the cost it will be a risk for the EPC contractor so cost control is the
utmost priority for the EPC contractor to understand the project and then decide the cost of the
whole project (Khan, 2006). In EPC contractual arrangement, the EPC contractor will enter into
the separate agreement with all the sub-contractors, vendors, sub-vendors. Any dispute between
the EPC contractor and sub-contractor of sub-agreements will be resolved by them without the
owner interference. The owner will not deal with the sub-contractors as the EPC contractors will
be responsible for causing loss or damage occur during the process.