Project Procurement – Engineering Procurement and Construction (EPC)

Engineering, Procurement and Construction Contracts are getting to be the more and more accepted form of contract within the construction industry. This contract typically covers the design of the project along with the procurement from the bidding to handing over stage within the given period of time.

Under the EPC contract, EPC contractor will be the single point responsibility for all the contract work to the client. Commonly the EPC contractor will subcontract the part works to other contractors, however the EPC contractor only will be the single point responsibility to the client for the work of sub-contractors. The EPC contractor shall be deemed to have obtained all necessary information as to risks, contingencies and other circumstances which may influence or affect the Works. By signing the Contract, the Contractor accepts total responsibility for having foreseen all difficulties and costs of successfully completing the Works.

One direct benefit of EPC contracts is that It minimizes the risk to the employer and proponents of the project, leaving the complete risk at the Contractor side. As the system is new to the industry, there remain some apprehensions in its adoption, in particular, pertaining to the architectural and engineering design.

These are the same as in most Design & Build projects where the contractor is responsible for the design too and thus in position to influence the parameters of the project i.e. the design and specifications. Since the mode has come to stay and we will see more and more in coming times in respect of public projects, there are certain safe-guards which need to be built in. Prime of these safeguard is assuring the integrity of the designers. One way is for the employer to have a say in selection and engagement of Architects & Engineers team on the terms which are already prescribed in the bidding document as a condition. The terms could provide for an Architectural Design Competition for this purpose. As is usually done for all the architectural design competition, there would need to be developed a Design Brief in advance of bidding.

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