Key Benefits and Drawbacks of EPC Contractor in SPC Green Energy Project

Most EPC contracts stipulate a defined contract price, a fixed completion date, and a single point of accountability.

FREMONT, CA: Engineering, Procurement, and Construction (EPC) contractor are responsible for coordinating all design, procurement, and construction activities and ensuring that the entire project is finished on schedule, within budget, and to the required standard of quality.

For complicated infrastructure projects, EPC contracts (or turnkey construction contracts) are frequently used by numerous organizations in the renewable energy industry and power sector. This type of contract specifies the relationship between the owner and the contractor regarding providing professional or technical services. Under an EPC contract, the owner or principal agrees with the EPC contractor, who then enters into different subcontracts with subcontractors to complete specified work components. They will be responsible not only for the project's technical components but also for the equipment acquisition, design, and building of the facility, plant, or project.

Under standard EPC contracts, contractors have complete authority over the design, procurement, and construction of a project from inception to conclusion. EPC contracts enable project owners to control risk more effectively and permit contractors to allocate and specialize in the job they perform. This paradigm is utilized when the owner's concept design is primarily centered on functionality and requires an engineer to deliver that functionality.

Many people refer to EPC contracts as turnkey construction contracts since the owner may "turn the key" to activate the system when the project is complete. In addition to supplying an entire facility or plant, contractors must do so at a set price and by a specified deadline. This assurance ensures that the contractor, not the client, will be responsible for any excess expenses. The contractor may suffer financial liability if the plant is not finished to the stated level upon completion.

The engineering, procurement, and construction management (EPCM) contractor assumes administrative and management responsibilities for the engineering and design aspects of the project. As the owner's agent, they administer and supervise the project. It is essential to understand that EPC contracts and EPCM contracts differ.

The EPC contractor is responsible for the project's implementation. This could aid in the entire project's planning and joint operation. And numerous issues could be resolved. For instance, the connection issue between design and construction could be efficiently resolved by minimizing the link between purchasing and construction. In this manner, the conflict between practicability, technicality, and security could be resolved. And the obligation and risk could be passed to the general contractor throughout the construction period. The boundary between working range and responsibility is unambiguous. The entire contract price and term are fixed. This could aid in expense and progress management. Realizing the many objectives of project management, it is possible to demonstrate the benefits of project management. The owner could be relieved of individual concerns and focus on the critical variables affecting the project, thereby ensuring the overall direction of project management.

Rarely do the owners participate in the project, and their degree of control is likewise modest. The risk is transferred to the EPC companies by the owner. Therefore, selecting the proper EPC providers is essential because the project will jeopardize if the EPC companies have significant financial issues. EPC firms must assume the responsibilities and hazards. Consequently, the owner will incur higher costs for EPC firms. Traditional construction mode owners will find it more challenging to comprehend the functioning of EPC providers.