Among capital project delivery systems, EPC (engineering, procurement, and construction) contracts offer a variety of advantages when used for the right applications. One of the main benefits of using an EPC method is the reduction in project stakeholders and responsible parties. However, there is an additional type of EPC delivery system that can be used based on the key needs of the capital project owner and the capabilities of the contractor. This method is referred to as EPCM (engineering, procurement, and construction management).
Below, we delve deeper into two EPC project types and their benefits as well as the delivery system that’s still most commonly used in construction projects today.
Two Common EPC Project Types
A common design-build method is EPC, but another similar type of contract exists as well—EPCM. These two methods follow the same concept but differ slightly in execution responsibility.
Here are some of the key discrepancies between the two EPC project types.
EPC: Engineering, Procurement, and Construction
The standard EPC project delivery system eliminates the bidding process of the commonly used design-bid-build (DBB) system and enables the owner to externalize risk to a single party—the contractor who will design and build the project. The contracts can vary in terms but will generally be set as time and materials, fixed-price, cost-plus, or performance based on guidelines of quality and safety, among several others.
This project delivery type allows the owner to be hands-off in their approach and does not require a significant internal project management staff. The success is largely dependent on the ability of the contractor and the owner to develop a strong project scope so that few, if any, change orders are required.
Typically, there are five stages for a project:
- Front-End Planning
- Design-Build Company Selection (this is frequently the same company involved in front-end planning)
- Engineering and Design
- Fabrication, Procurement, and Construction
- Commissioning and Startup
With good communication and planning, these stages can often be overlapped. For example, the most critical parts of a project can be fabricated first so that construction can begin while less critical parts are still being designed. This allows for projects to be completed faster while maintaining a high level of quality.
Some EPC contractors also have in-house fabrication teams (sometimes called EPCF), which can be beneficial for staying on schedule and producing critical parts and materials with consistent quality. Perhaps the biggest advantage to using an EPC system, however, is the integration it allows. Because one entity is contracted to execute all the stages of the capital project life cycle, each department works together to ensure that quality standards are met. This also allows the construction team to work hand-in-hand with the design and engineering team, creating a high level of constructability.
EPCM: Engineering, Procurement, and Construction Management
EPCM is heavily based on the EPC method but allows for more control of the project by the project owner. In an EPC method, the contractor is responsible for completing every phase of the project, including fabrication and construction. This means the contractor also selects vendors and subcontractors to help complete the work.
Frequently, an EPCM company is hired to oversee engineering and procurement. The company then manages the construction performed by another company. It is also possible for the owner to decide the construction contractor who then tasks the EPCM company to manage them. There are several different models to EPCM based on project objectives.
Design-Bid-Build as an Alternative
Although it’s not an EPC method, another common project delivery system is the design-bid-build system. In a DBB project, the scope of the project is outlined by the project owner before detail design is bid out. The owner then selects a design company to produce an IFC (Issued for Construction) package, which contains project plans, drawings, and specifications, that is used to bid construction. At this point, the hired construction contractors, subcontractors, and material suppliers or vendors carry out the build per the design specifications.
This provides several advantages, especially for smaller projects, including accountability for each element of the project by providing performance requirements and contracts separately for the engineering and procurement, project management, and construction contractors. It is also a great fit for project owners who are looking to develop a strong relationship with the design team.
Find the Best Project Delivery System for Your Project
The best project delivery system is the one that fits your budget, schedule, and experience. H+M Industrial EPC has years of experience leveraging our expertise for capital projects of all sizes that utilize both EPC and DBB methods.