Engineering Procurement and Construction (EPC) – An Industry Trend

An Engineering Procurement and Construction contract is a form of contract used where a contractor designs the installation, procures the necessary materials, and builds the project, thus the acronym EPC; either directly or by subcontracting part of the work.

Some proponents prefer Engineering, Procurement, and Construction Management (EPCM) in order to mitigate the contractor incurring monetary liability for failure to comply with any requirements including delivering a project on time. Although the detailed contractual structure may vary most projects will entail the following agreements:

  1. A Joint Venture (JV) agreement between the JV participants which sets out the rights and obligations of the JV participants in relation to the management, control, and funding of the project.
  2. The EPC contract will vary for each project, however, all will include a single point of responsibility; a fixed contract price specifying risks for cost overruns; a fixed completion date that is either a fixed date or a fixed period after the commencement of the EPC contract; performance guarantees, liquidated damages, and variations including change orders on terms acceptable to the contractor.
  3. Some utility companies may require acceptance of their own construction contract specifying some of the terms and conditions in the EPC contract but more specific to their methods of operation.

As a key player in an EPC environment; ARUSI will be asked to provide engineering and design work, as well as, surveying, and locating services.

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