EPC Contractor & EPCM Contractor Key Differences: No.2

 

EPC Contractor & EPCM Contractor Key Differences - No.2: Time

 

An EPC contractor will typically agree to deliver a fully operational facility within a fixed period or by a fixed date (being fixed at the time of entering into the EPC contract as an EPC contractor and subject to any extension of time and suspension rights set out in the contract). Time certainty of delivery may be important to an owner where, for example, it has future obligations to provide product from the facility by way of off-take arrangements. Also, where a project is debt financed, a financier may consider an EPC contract which is done by an EPC contractor more “bankable” if there are contractual mechanisms surrounding timing of delivery. One such mechanism typically found in an EPC contract is a liquidated damages regime for delay by the EPC contractor in handover of the completed facility.

 

An EPCM contractor, different from an EPC contractor, will not guarantee that the project will be completed within a fixed period; rather, it will generally only commit to using its best efforts to meet the owner's desired schedule. Consequently, an EPCM contractor may only be liable for delay where that delay is caused by the EPCM contractor's failure to perform (or poor performance of) the professional services under the contract. For this reason, it is unusual to see a liquidated damages regime in an EPCM contract.

 

Source: Ashurst