Share This Article
In the field of architecture and construction today, there are many different types of contracts used. ECP contracts are one of those types of arrangements. So do you know what the EPC contract and EPC general contractor are? Are there rules regarding using EPC contracts that contractors need to know? Please refer to San Francisco Contractors’s article below.
What is an EPC General Contractor?
Engineering, Procurement, and Construction mean design, procurement, and construction – a type of construction contract that, if signed, the contractor will perform all the work from engineering design, supply of materials, and design equipment to the construction of works, items, and testing and handing over to the investor.
So what is an EPC general contractor? EPC general contractors are companies providing EPC projects, responsible for designing and delivering technological equipment and construction works.
Applying the EPC contract allows the investor to take advantage of the contractor’s technical level and management experience when implementing the project. During the implementation process, because only one focal point is responsible for the primary responsibility, the investor needs less workforce and costs for project management.
The financial provision for EPC projects will also be more convenient because the advance and payment of capital will mainly be paid in stages of the specified time or based on the construction progress.
If risks arise during the design, supply, and construction of the work, the contractor shall share with the Investor; The contractor’s project implementation time may be shorter because the contractor side is more active in all stages of work during the implementation process.
On the contractor’s side, implementing the EPC Contract creates conditions for the contractor to increase flexibility in design and construction and better cooperate with the investor’s supervision consultant on the construction site. Can reduce the contractor’s project implementation costs due to some cost savings due to the combination of work stages in the implementation process.
Regulations on EPC general contractors that contractors need to know
- The EPC general contractor must manage the performance of the works according to the project’s objectives and the list of jobs in the signed contract; check the correctness, completeness, and suitability of the survey documents, design, and technical documents applied.
- Control the work progress by the general improvement of the project and the signed contract.
- Control all means and construction methods within the construction site of the entire project.
- Supplementing or replacing subcontractors to ensure the quality, price, and progress of the contract’s works after being approved by the investor;
- Managing the cost of performing works under the agreement; controlling, paying, and adjusting the contract price as agreed in the contract and relevant laws.
- The EPC General Contractor is responsible for organizing and managing all activities inside and outside the construction site. Ensure safe and efficient execution of existing EPC contractor contracts. Coordinate with subcontractors to rationally use sub-projects and construction works. Use, protect the construction site and maintain security and order on the construction site.
- Actively coordinate with the investor in organizing training for managers and workers to operate and use the works under the signed contract.
Some conditions to access the form of EPC Contract
To be able to apply for the EPC contract, projects need to meet the following conditions:
- Must specify the scope of work enough to establish the size of the EPC contract unambiguously. That is very important because it involves the division of labor and responsibilities between the Employer and the contractor.
When implementing projects, jobs are difficult to define clearly and delineate. For these types of work, it is necessary to have a thorough and consistent discussion between the Owner and the contractor to determine what kind of work should be included or taken out of the scope of the EPC Contract.
- There has been a thorough preparation of documents necessary to invite bids or appoint contractors, in which it is required to clarify the investor’s specific requirements for the project. These requirements need to be defined to be included in the Investor Requirements Document to serve as the basis for preparing the Bidding Documents or EPC appointment in the next step.
- The project requires technology transfer, experience in operation management, and exploitation from the contractor’s side.
In addition to the above conditions, the EPC Contract may not be suitable for signing in the following cases:
- The Investor Party does not have enough time for the contractor to study the investor’s requirements thoroughly. This research helps the contractor determine the full scope of the work and the necessary costs.
- Projects with a large volume of work but contractors do not have conditions to conduct direct field surveys.
- Projects where the Owner wants to gain precise control over the implementation process.
Above is the information we have summarized about the concept of EPC general contractor and the regulations on using EPC contract. Hopefully, you will have the practical knowledge to apply to your work, especially choosing a general contractor suitable for your project.