EPC Contractor & EPCM Contractor Key Differences: No.1

EPC Contractor & EPCM Contractor Key Differences - No.1: Points of Responsibility

 

An EPC contract provides for a single point of responsibility. An EPC contractor is generally responsible to the owner for all design, engineering, procurement, construction and commissioning of the facility. That is, an EPC contractor generally assumes time, cost and quality risk for the project.

 

An EPCM contract, on the other hand, requires the owner to have multiple points of responsibility for delivery of the facility. While an EPCM contractor is responsible for the design component, it is not usually responsible for the construction and procurement components. Rather, the owner must separately contract with contractors and suppliers, and responsibility for those goods and services lies with the relevant contractor or supplier. An EPCM contractor’s responsibility is generally limited to the managing of those contractors and suppliers on behalf of the owner. That is, an EPCM contractor generally does not assume time, cost and quality risk for the project.

 

The single point of responsibility makes the EPC contracting model an attractive option for owners. As the allocation of risk is primarily with the EPC contractor, the owner only need look to the EPC contractor to address any defect or dispute that arises. This is compared with an EPCM contract, under which the owner may need to seek recourse from a number of contractors and suppliers, depending on the nature of the defect or dispute.

 

Source: Ashurst