How is the implementation of EPC projects?
The term EPC is used for contract, project or contractor and companies. direction Implementation of EPC projects You have to enter into a contract. EPC contracts are contracts according to which the employer entrusts a contractor to carry out all activities of a project, including engineering and design, purchase and supply of all items and equipment, and finally construction, implementation and installation.
In general, the term EPC stands for Engineering/Procurement/Construction meaning engineering and design/supply and procurement/construction and implementation.
What are the prerequisites for EPC contracts?
The ability of the executive body to accurately and completely define the project and mutual understanding between the executive body and the contractor regarding the scope and purpose of the project
The ability of the executive body in terms of project management
Providing the required credit and access to it in the predetermined dates
The presence of a capable contractor who has the characteristics of a general contractor and a consultant together.
The existence of specifications and standard technical requirements and its stabilization at the beginning of work.
What are the characteristics of EPC contracts?
The speed of EPC projects is more and by doing the work quickly, the expected payments should be made on time.
The employer and the consultants need to know the skills and experiences of the contractor Implementation of EPC projects have trust, and as a result, except for the cases where the contractor deviates from his duties in a fundamental and general way, it is not necessary to interfere in the contractor’s work or examine the proposals with a long delay.
The activity of the employer and her consultants will be more in the bidding process and high supervision during the project. As a general rule, any defects that occur within the scope of the work will be the contractor’s responsibility and risk
And executive responsibility is transferred from the employer to the contractor.
Integration in the purchase of equipment and goods, especially foreign purchases, will make its management much easier and more economical.
An EPC contractor is a company that has sufficient experience and capability in three different fields of engineering, procurement and execution, while having the appropriate financial capacity.
Phases of a project with this contract
Engineering or design phase:
At this stage of the project, documents, documents and plans needed for future designs, purchase of equipment and materials, and installation and implementation of materials and equipment are done. In this stage, the progress of the project is usually planned and controlled based on the design stages and the number of man-hours required to complete the design.
Purchasing or procurement phase:
At this stage, items, equipment and materials needed for EPC projects is prepared At this stage, the progress of the project is usually planned and controlled based on the stages of purchase and cost (in some cases, time or a combination of cost and time) necessary to complete the purchase.
Installation or implementation phase:
At this stage, the equipment and materials of the project are installed or executed. در این مرحله معمولا پیشرفت پروژه بر اساس احجام و مقادیر کاری لازم جهت تکمیل خرید تجهیزات صورت میگیرد.
Advantages of using EPC contracts
The most important advantage of using an EPC contract Lack of multiple contractors to build and execute EPC projects is. The EPC contract is concluded with a contractor for the implementation of the project, and this contractor will take responsibility for the design and construction of the project and is required to complete the project within a certain period of time and in accordance with the specifications requested by the employer.
As mentioned, the EPC contract is concluded in the form of a fixed price, and this makes the employer’s financial obligations clear from the beginning and is not affected by changes in the circumstances governing the project.
The EPC contract is much faster than the traditional contracts regarding the implementation of the project. Because in traditional contracts, design and construction were considered two separate parts, and until the design was done, the construction operation was not completed. While in the EPC contract, all these works are provided to the contractor in the form of a single set, and naturally the work speed increases.
Disadvantages of using EPC contracts
EPC contracts According to what was said, a large amount of risk and responsibility for the design and construction of EPC projects puts the burden on the contractor and this causes the contractor to increase the contract amount as much as possible in front of the responsibilities and obligations she has accepted. This makes these contracts more expensive for the employer.
One of the important features of EPC contracts compared to traditional project implementation contracts is that it has greatly reduced the controlling and monitoring role of the employer. This reduction in the supervisory role opens the way for the contractor to reduce the quality of the execution for more profit.
Considering that the EPC contract imposes a large amount of obligations on the contractor, it requires a professional and expert contractor, both in the field of design and in the field of construction. Finding such a contractor for the employer is one of the difficulties and disadvantages of using this contract model.
