How to Leverage EPC for Capital Projects
9/10/2021
Insights
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EPC—engineering, procurement, and construction—project delivery methods are commonly used for large industrial capital projects, though they offer significant benefits to capital projects of any size. Leveraging EPC for capital projects presents unique advantages over traditional delivery methods regarding time to market, price certainty, and project risk management. The use of an integrated team under the control of an EPC contractor allows for a seamless and collaborative approach with project stage overlaps, opening up the possibility of compressing project schedules. 

EPC models benefit project owners by eliminating the various bidding processes for the engineering and construction of a project. With this method, project owners do not have to manage communication and coordination between multiple contractors, as there is a single point of accountability. This not only reduces administrative needs but also can greatly project risk if the right EPC contractor is selected.

Utilizing EPC for Capital Projects

One of the most important benefits the EPC methodology offers is delivery certainty and predictability. Since all project aspects are integrated under the control of a single entity, project owners have a greater sense of cost and schedule certainty. This added level of predictability allows project owners to ensure they meet any commercial obligations and more accurately calculate ROI.   

EPC for capital projects typically consist of five service stages:

  1. Front-End Planning 
  2. Design-Build Company Selection
  3. Engineering and Design
  4. Fabrication, Procurement, and Construction
  5. Commissioning and Startup

With proper planning and communication between project owners and EPC contractors, these service stages can be packaged and overlapped for various aspects of the project based on the development of each package. 

Below we examine in detail some of the advantages of leveraging EPC for capital projects and how project owners can benefit from using this delivery method. 

Planning for Project Success

Typically, front-end planning (FEP), similar to front-end loading (FEL), is divided into three stages—FEP 1, FEP 2, and FEP 3. Throughout these stages, it is critical to establish a strong scope definition and develop work packages to set up capital projects for success. The development of an early and detailed execution plan is essential for preventing capital project overruns. A strong scope and execution plan definition can also result in the ability to strategically overlap engineering, procurement, and construction stages.

Leveraging EPC for Capital Projects to Remain on Schedule

Choosing an EPC approach over traditional methods, such as the design-bid-build approach, provides inherent time savings. With the design-bid-build method, the project is broken up into engineering/design and construction stages. Project owners must contract with an engineering and design group to produce a set of detailed drawings for construction purposes. Before construction can begin, project owners must then bid out the work to various contractors and subcontractors, which can often take months. 

The EPC approach eliminates this bidding process while also removing potential conflict, miscommunication, and risk that may be present when many contractors are involved. 

The Benefit of Project Stage Overlap

When using EPC for capital projects, the focus is placed on the critical path of the project versus specific phases. As various work packages or areas of the project are designed, fabrication and construction can begin while other aspects are still in the design phase. EPC contractors often will work to fabricate the most critical areas first to begin installation at the project site while other equipment is still being fabricated. In other words, EPC contractors can fabricate and construct in an order that makes the most sense and optimize the sequence from engineering to procurement to construction.

This strategy is highly efficient compared to traditional methods which follow a linear process where one task follows the completion of another with no overlap.

Finding the Right EPC Contractor

The EPC approach offers many noteworthy advantages over traditional delivery methods and can be used for capital projects of all sizes in industries such as chemicals, terminal and logistics, and energy. Leveraging this methodology for capital projects can provide project owners with a highly predictable budget and timeline while eliminating many burdens associated with traditional delivery approaches.

As there is only a single point of accountability, you must ensure your project is placed in the right hands. This means it’s important to find a contractor who is highly experienced in your project’s industry and can achieve high-quality engineering and construction services that meet the project vision, budget, and timeline. Finding a true EPC contractor who has in-house capabilities for all project phases, including full construction capabilities, can also prove beneficial. 

At H+M Industrial EPC, we plan ahead to keep you ahead. We have ample experience providing capital project services to the energy, terminal and logistics, and chemicals industries and provide complete oversight of your project, internally executing the project from front-end planning through construction. We leverage our strategic EPC approach to meet your vision while remaining on time and budget. 


About the Author

To find out more about how H+M Industrial EPC can help you leverage EPC for capital projects, contact us through our website today.

To find out more about the advantages and disadvantages of turnkey projects and how H+M Industrial EPC can meet your capital project needs, contact us through our website today.

Contact Us
The H+M Industrial Team

For over three decades, we have provided best-in-class capital project management services to Energy and Chemical industries through our proven EPC approach. We are dedicated to providing trust, experience, and efficiency through all stages of engineering, procurement, and construction--on budget and on time.

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