The Difference Between an EPC Contractor and an EPCM Contractor
When it comes to major industrial infrastructure projects, the majority of companies will look to outsource the work to a business more specialized within the niche. While some may employ their own engineers and skilled laborers to begin the project, they will usually require the skill set of an outsourced team to complete it. As a result, companies will collaborate with a specialist contractor who can cover every need of the project from start to finish. Even if a project may sound similar to another, it can often have very different needs. This allows many companies to choose from two main approaches EPC or EPCM. Here are the differences between the two.
EPC: Engineering, Procurement, and Construction
An Engineering, Procurement, and Construction (or EPC contractor) contract is usually the most common type of contract in the industry. This is when the job is completed to the point where a company can begin operations as soon as the contractor has finished its job. It is the ideal option for a company that does not have the resources, labor, or expertise to complete any of the jobs themselves. The structure of this project allows the owner or director to have a single point of responsibility should any changes occur.
With fewer interfaces involved, EPC projects have significantly better communication. Contractors are able to efficiently communicate internally within their own organization, which improves progress and reduces any margin for error. The EPC contract helps to shift all risk from the owner to the contractor and allows for greater budgetary controls as the final price is agreed before the construction process actually begins.
EPCM: Engineering, Procurement, Construction Management
The other type of contract is an EPCM (Engineering, Procurement, Construction Management). In this type of contract, the contractor works as a construction manager and consultant for the project. The owner makes use of internal resources or employee contracts for the duration and aspects of the project. This allows them to hire many or a few contractors depending on the size of the project. An example of this would be an owner using an EPCM contractors group of engineers to create a design, then using a subcontractor team to complete certain parts of this construction and finish with an additional subcontractor to complete the final project.
The benefit of this is that it provides flexibility for the owner. The owner can create relationships in ways that suit their own interests. However strong internal resources are required to complete more complex works and projects due to the number of subcontractors involved. If done efficiently, an owner may be able to save costs and negotiate cost-effective contracts with individual vendors.
Which Is The Best Contract
Like most things in life, there is no easy response to this question. Both EPC contractors and EPCM contractors bring their own advantages to each owner. EPCM can offer lower costs for the project however the owner themselves will be required to dedicate significant resources to the project. As a result, they will need to consider if their resources are best for this part of the business or elsewhere.
Many companies will offer both types of services to their clients. Construction-led engineering, procurement, fabrication, and construction management will often be a part of their business whilst a subdivision will cover engineering-led project management. No matter what your preferences are, there are many companies such as Alstern Technologies that can provide you with comprehensive solutions to your project.
