EPCM stands for “engineering, procurement and construction management” (or “engineer, procure and construction manage”) and is a form of construction procurement used in engineering and infrastructure projects.
On an EPCM project, we as EPCM contractors provide engineering, procurement and construction management services, but the employer directly employs construction contractors (sometimes called trade contractors) to build the project. As EPCM contractor we manage the construction contractors for the employer. On one analysis, our EPCM contractorship is more like a professional consultant than a contractor, providing design and construction advice (rather than building the project itself).
Our EPCM contracting contrasts with EPC (engineer, procure and construct) contracting because, in EPC contracting, the EPC contractor is responsible for construction and it, rather than the employer, enters into direct contracts with the construction contractors.
Equally, there are several reasons why an employer may prefer our EPCM contracting over EPC contracting:
- Lower cost. our EPCM contracting offers potential savings on project cost. EPC contractors usually charge more because of the extra risk they take on from the employer. In EPCM contracting prices are lower. In addition, the employer has the benefit of negotiating each construction and supply contract itself, rather than relying on an EPC contractor to get the best price.
- Flexibility. Compared with EPC contracting, the employer has greater freedom to change the project during the works. Under an EPC contract, variations to the agreed specification can easily lead to large increases in project cost. In our EPCM contracting this may be avoided because the employer can negotiate directly with contractors and suppliers.
- Speed. Compared with EPC contracting, the employer may be able to complete the project more quickly. our EPCM contracting allows the employer to engage the necessary contractors to begin work, without necessarily finalising the detail of the project right away or entering into contracts for works or equipment that will be needed later.
- Funding. EPC contracting usually requires the contractor to have all its funding arranged at the outset of the project, in order to secure a letter of credit in favour of the EPC contractor. In contrast, our EPCM contracting allows greater flexibility, so the employer does not necessarily need to have all funding in place before works begins.
- Quality. Our EPCM contracting may offer a higher quality result than EPC contracting. This is because EPC contracting (like design and build construction) leaves the EPC contractor to decide how it will meet the employer’s requirements for the agreed price. It is in the EPC contractor’s interest to meet the employer’s requirements at the minimum cost, thereby maximising its own profit. In contrast, our EPCM contracting allows the employer to take an active role throughout the project, advised by our EPCM contractor. In theory this allows the employer to control the quality of the project. With our EPCM contracting, the employer often feels a greater sense of satisfaction with the completed project because it has had “ownership” of the project throughout its course.
Overall, the employer’s role in negotiating contracts and funding burden it with greater responsibility in an EPCM project. However, this is tempered by the fact that our EPCM contractor is available to advise the employer throughout the project, together with the increased control the employer has over its project.A final word of caution
One party’s understanding of EPCM contracting may differ from another’s and, in any case, employers often tailor a procurement mechanism to suit the needs of a particular project. Terms such as EPCM and EPC are a useful shorthand, but parties should clarify their precise meaning for each particular project. EPCM stands for Engineering, Procurement, Construction Management. This type of contract is different to an EPC Contract in that the Contractor is not directly involved in the construction but is responsible for administering the Construction Contracts.
Our demosntrated approach and EPCm framework is a proven approach to your success including all the above advantages of managing and a successful completion of your EPC projects. Refer the Links below for a clear understanding of our teams and identify your needs to as we can support in each phase and process of your EPC projects.