Engineering-Procurement-Construction
Engineering, Procurement and Construction , EPC for short , (in German: detailed planning and control, procurement, execution of construction and assembly work ) refers to a form of project management and the associated contract design that is common in international construction and especially in plant construction The contractor acts as a general contractor or general contractor .
He is committed to the client a facility or building turnkey (Engl. Turn-key ), usually at a fixed price and one with penalties to deliver occupied appointment. The EPC supplier (English contractor ) provides all the necessary services, in particular the entire engineering service , the procurement or manufacture of all necessary building materials and parts, the assembly on the construction site and the turnkey commissioning .
The contracts for such projects are contracts for work and services , which in an international environment are often structured according to the specifications of FIDIC (a set of rules similar to the German VOB / B ).
EPCM
Engineering, Procurement and Construction Management (EPCM) is an advanced form of project management. In addition to EPC, EPCM contains project management and construction management. Other companies / subcontractors are commissioned directly by the client to provide certain services. These are usually supervised by the EPCM contractor.
Comparison EPC - EPCM
| Task / contract content | EPC (Engineering, Procurement and Construction) | EPCM (Engineering, Procurement and Construction Management) |
|---|---|---|
| Purchase contracts (Equipment Supply Contracts) | negotiated and signed by the client and supplier alone | negotiated and signed by client and supplier with advice and support from the EPCM contractor |
| On- Site Construction Contract | negotiated and signed by EPC contractor and supplier | negotiated and signed by client and supplier with advice and support from the EPCM contractor |
| Supplier selection (Supplier Selection) | Suppliers are selected solely by the EPC contractor without the involvement of the client | Suppliers are selected by mutual agreement between the client and EPCM contractor |
| Procurement scope (scope of supply) | EPC contract as a product of the original project specification , submitted during the tendering process , changes and deviations from the specification or the scope of procurement can lead to additional costs. During the contract period, the client cannot obtain any further offers from independent contractors and suppliers | The client can easily change the project specification. With the support of the EPCM contractor, the client can negotiate independent contracts with suppliers or sellers as several contracting parties are involved |
| Procurement guarantees (Equipment Supply warranties) | The EPC contractor's guarantee to the client is negotiated separately | Guarantees between the supplier and the client are negotiated individually under the supervision of the EPCM contractor |
| Process guarantees (Process warranties) | The guarantee is negotiated between the client and the EPC contractor. It is issued by the EPC contractor to the client, usually in the form of a performance bond or performance bond | Guarantees between the supplier and the client are negotiated individually under the supervision of the EPCM contractor |
| Safety at the construction site : general liability, accident insurance, compensation payments, etc. (Construction Site Safety: General Liability Insurance, Workman's Compensation, Accident etc.) | Safety on the construction site is the sole responsibility of the EPC contractor and the subcontractors involved in accordance with the contractual agreements | Safety on the construction site is monitored by the EPMC contractor, but in a legal sense it is the responsibility of the client and the subcontractors involved in accordance with the contractual agreements |
| Permits such as building permit, environmental permit etc. Permitting (environmental, construction etc.) | Approvals are the responsibility of the EPC contractor with the exception of those legally required by the client | Permits are issued to the client. EPCM contractor assists in providing the necessary documents |
| Exceeding the planned project costs (Project Budget Cost Overruns) | Cost risks of the project are borne by the EPC contractor. Exceeding the cost of equipment and services is within the procurement scope of the EPC contractor. If costs are to be transferred to the client, this must be contractually agreed | Cost risks are borne by the client. Cost overruns for equipment and services, such as B. Subsequent tenders for equipment or higher on-site costs are at the expense of the client with the exception of the contractually agreed fixed costs |
| Project cost savings (Project Budget Cost Savings) | Cost risks of the project are borne by the EPC contractor. Cost savings for equipment and services go to the benefit of the EPC contractor and cannot be transferred to the client without prior changes to the contract | Cost risks are borne by the client. Cost savings for equipment and services go to the benefit of the client |
| Daily project expenses (Project Day-to-Day Expenses) | Daily project expenses that are within the scope of delivery are borne by the EPC contractor | Daily project expenses are borne by the client, but managed by the EPCM contractor |
| Project financing (Project Financing) | Project financing is usually guaranteed by a down payment between the client and the EPC contractor after certain services have been performed. The usual form of this transaction is an irrevocable documentary credit | Project financing can be handled with a combination of down payment, open account or letter of credit. The L / C is issued to the suppliers and contractors by the client. The EPCM contractor accompanies this process throughout the negotiations |
| Legal Costs (Legal Costs) | The court costs for the client are low. Client only negotiates a binding work contract with the EPC contractor. The EPC contractor has to negotiate further procurement contracts with the suppliers, so his legal costs are also higher. In the event of a legal dispute, the client must request the EPC contractor to take legal action against suppliers who do not provide their contractual performance. | Court costs are higher for the client, as he negotiates various contracts with the individual suppliers with the support of the EPCM contractor. If there is a legal dispute, the client must hold the defaulting supplier responsible |
| Administration (Administration) | Administrative costs are low for the client with an EPC contract. Only a relatively small number of staff (management, quality assurance, legal department, etc.) is required to carry out the project. | Administrative costs are higher for the client with an EPCM contract. When it comes to personnel planning, different levels must be installed in order to carry out the project successfully. |
Benefits of EPCM
- low overall costs
- Responsibility lies with the staff
- higher process control
- suitable for less defined projects with expected changes in the scope of procurement
- fewer legal problems, as problems can usually be identified in advance
- Flexibility for the client in project financing
Advantages of EPC
- Purchase contract is in one hand (with EPC contractor)
- low staffing requirements
- low legal risks
- Interface coordination of the individual trades is done by the EPC contractor (no cost risk)
- The EPC contractor bears the risk and defense of claims from sub-suppliers of individual trades
- suitable for projects with enormous time pressure to implement (time to market)
- Selection of EPC contractor is possible at a very early stage
- Installation costs are i. d. Usually less than with lengthy preliminary planning work and individual lot assignments
EPCI
So-called engineering, procurement, construction and installation contracts (EPCI) are used in the offshore sector in particular . In this case, the installation segment describes the construction at sea of the structures that are mostly manufactured on land or in port.
Notes and individual references
- ↑ construction service management ( http://www.cmguide.org/archives/1979)
- ↑ owner - owner or financer - financier
- ↑ Letter of Credit - documentary credit
- ↑ less legal ligitation?
