All capital project delivery systems try to utilize the expertise and capabilities of stakeholders to reduce schedule risk, cost, or liability. In both engineering, procurement, and construction (EPC) and engineering, procurement, and construction management (EPCM) project delivery methods, the goal is to leverage the integration and experience of the engineering and procurement team members to improve constructability, but the methods of implementation differ.
Let’s take a look at the slight differences between EPC vs. EPCM project delivery methods, potential benefits and risks to using either method, and how both delivery methods can be beneficial for ensuring capital project success.
Differences Between EPC vs EPCM
When deciding between an EPC vs. EPCM delivery method, the project owner will need to consider who will be responsible for executing the project stages. In a typical EPC delivery, the contracting company provides all of the front-end engineering (occasionally this is done before the EPC contract), detail design, procurement, and construction services. The EPC contractor also selects its own vendors and subcontractors for different project stages. This is also referred to as a turnkey contract.
In the case of an EPCM delivery method, the contractor is tasked with providing the engineering and procurement services, but there are various arrangements possible for the construction portion. The project owner has the ability to hire another contractor to perform construction and task their EPCM contractor to manage them. In some other cases, the EPCM contractor can hire an outside construction contractor who they will manage on their own.
Below, we detail some of the benefits and risks associated with both delivery methods.
Benefits and Risks of EPCM or EPC in Capital Projects
One of the biggest advantages of utilizing an EPCM delivery method is that the project owner retains more control of the project and decreases single point failure of hiring a single company. The owner is able to choose which contractors and subcontractors will work on different areas of the project. Conversely, utilizing the EPC delivery method in a capital project provides an integration of all project departments and a single source of accountability from engineering to construction.
Both delivery methods are not without risk, however. The EPCM advantage above can turn into a disadvantage if done improperly. Having multiple service providers adds a layer of complexity to any project and forces either the owner or contractor to work within separate contracts. This also forces the responsible party, whether that be the owner or the overall contractor, to ensure they act as a clearinghouse for information among everyone involved, including stakeholders, which can limit some of the benefits of the EPCM project delivery system in terms of integration and responsibilities. In an EPC project, just like all projects, the biggest risk comes from the scope development phase. When a project begins with an undefined scope, issues can arise throughout execution.
EPC vs. EPCM vs. Design-Bid-Build
Whether considering an EPC vs. EPCM project delivery, the most common point of comparison remains the Design-Bid-Build (DBB) contract. This gated system still often places the engineering and procurement responsibility on one party, similar to that of either EPC or EPCM. However, the gated nature of the stages means that there is the possibility of a weaker integration between the goals of the engineering and procurement contractor and the construction team, leading to a higher possibility of change orders and schedule inflation.
DBB remains popular due to the ability to get pricing at each stage. This accountability is often desired, particularly in small projects. There is also more transparency in contracts due to the more segmented nature of DBB.
Selecting an EPC/EPCM Contractor for Your Needs
A chief benefit of both EPC and EPCM project delivery methods is their ability to provide the required results on extremely tight deadlines. When considering this, note that EPC contractors that have in-house construction teams will be able to quickly create a realistic forecast of schedule and costs based on previous experience. This is also true even if that contractor is chosen for a construction management role—understanding how to manage process density helps minimize schedule overruns and outlines any potential safety risks for whichever contractor is eventually selected.
Even capital project owners who have already been through a myriad of DBB project deliveries can benefit from working with an EPC contractor. The increased capability is especially important in projects where long lead times for critical components are expected and schedule delays are not an option.
H+M Industrial EPC has decades of experience in capital project execution for a wide range of project sizes within the energy, chemical, and terminal and logistics industries. Our integrated approach allows us to complete your project on schedule and within budget.