EPC Contractor as a Project Delivery System Provider

 

 

 

 

 

 

 

EPC Contractor as a Project Delivery System Provider

 

 

 

 

 

In the field of international construction projects, the project delivery system is divided into the following four basic types:

  1. Design-Bid-Build (DBB)
  2. Management-Contracting-Approach (MCA)
  3. Engineering-Procurement-Construction (EPC)
  4. Build-Operate-Transfer (BOT)

 

1) Design-Bid-Build (DBB):

Design- Bid- Build is a Traditional Approach. This system has long been used in the West, and it has been developed well. So it was called Traditional Approach. Meanwhile the project is divided into small individual parts for construction, so it was called Fragmented Approach as well.

 

2) Management Contracting Approach (MCA):

The management contractors are not in charge of the construction, they just have to manage the organization. The owner chooses this system because:

  • The project is very large scale.
  • The organization is complex. There are many tasks between different contractors to coordinate.
  • The owner doesn’t have the ability to manage the project organization.

 

3) Engineering – Procurement – Construction (EPC):

EPC is the abbreviation for Engineering Procurement Construction done by an EPC contractor. EPC is one of the global construction contracting models, and it is also known as the turnkey project service by EPC contractor. It is a type of contract typical of industrial plant construction sector, comprising the provision of engineering services, procurement of materials and construction. The term “turnkey” indicates that the system is delivered to the client ready for operations. The outstanding feature of the EPC is that the ultimate price and time of the project by EPC contractor have a great degree of certainty. The project is largely managed by an EPC contractor and the cost risk and control are weighted towards the EPC contractor and away from the Owner.

 

EPC Contractor Delivery System

 

In this project delivery system, the EPC contractor holds all of the responsibility. It includes the provision of engineering services, procurement of materials and construction.

 

Advantages of EPC:

  • Responsibility is divided clearly between parties of Owner and EPC contractor.
  • The whole schedule can be cut down.
  • Less stress because there are various managers in the EPC contractor body.
  • The owner knows the whole prices of the project.

 

Disadvantages of EPC:

  • Because bidding happens before the engineering is complete, it is difficult for the owner to identify what the work done by the EPC contractor exactly is.
  • The owner’s ability to control the project and the EPC contractor is low.
  • The pre-tender stage cost can be very large.
  • The tasks across E, P, and C call for more EPC contractor management skills.
  • The EPC contractor holds greater responsibility so it is pivotal to have an EPC contractor who has the right qualifications for the job.

 

4) Build – Operate – Transfer (BOT):
If the government doesn’t have enough money for the construction of the project, they will try to attain investors from home and abroad to help with the project. The government, as a concession grantor, gives the concession to a private project company. During the concession period the company has to operate the project, then turn it back to the
government.

 

Source: swid.maj.ir