The Role of Engineering, Procurement, and Construction (EPC) Contractors
By Taylor Riso
and Jacob Kunken
The Role of Engineering, Procurement, and Construction (EPC) Contractors
By Taylor Riso
and Jacob Kunken
Photo of a contractor in a bright yellow reflective vest on a jobsite
Last Updated Nov 17, 2023
Engineering, Procurement and Construction, also known as EPC, refers to a specific type of contracting arrangement or project delivery method that is often used for large-scale infrastructure work, industrial facilities, power plants, and other complex construction projects.
Engineering, Procurement and Construction contractors (EPC contractors) are responsible for the entire project lifecycle, from engineering and design to procurement of materials and construction, as well as commissioning and project handover. The EPC contractor provides a comprehensive, turnkey solution, overseeing and managing all aspects needed to deliver a successful project to the client.
In this article, we’ll dive into the roles and responsibilities of EPC contractors as well as the benefits of their involvement in specific types of construction projects.
Table of contents
Roles and Responsibilities of EPC Contractors
Engineering
Procurement
Construction
Other Key Responsibilities
Benefits of using an EPC Contractor
Importance of EPC Contractors
Roles and Responsibilities of EPC Contractors
At a big-picture level, the role of the EPC contractor is to provide an integrated and comprehensive approach to project delivery, managing all aspects of engineering, procurement, and construction to successfully deliver a functioning project to the client.
Throughout a project's duration, the responsibilities of an EPC contractor can be categorized into three major categories that we’ll dive into below:
Engineering
Procurement
Construction
Engineering
Project owners will frequently engage EPC contractors to undertake feasibility studies aimed at evaluating the project's viability. In these assessments, the EPC contractor thoroughly examines the technical, financial, and logistical aspects of the project. These studies play a pivotal role in ascertaining whether the project's engineering prerequisites can be accomplished while adhering to certain constraints such as location, budget, and schedule.
Once the project's scope of work is defined, the EPC contractor assumes the responsibility of crafting comprehensive engineering plans, specifications, and designs for the project. An EPC contractor typically employs a team of skilled engineers and designers who possess expertise in various disciplines such as civil, mechanical, electrical, and other specialties. They collaborate to ensure that all technical aspects of the project are meticulously addressed and that the plans outline all of the project's structural, architectural, and functional aspects.
The EPC contractor also ensures that the engineering designs adhere to all local and national regulations, codes, and standards as well as adhere to required safety, environmental, and building codes.
In addition, EPC contractors actively participate in value engineering, proposing alternative, budget-friendly solutions that simultaneously enhance the design and fulfill the intended functions. Their objective is to strike a harmonious balance between performance, quality, and cost, all while aligning with the owner’s overarching objectives of the project.
Throughout the project's duration, the EPC contractor employs creative approaches to address any engineering challenges that emerge. Their efforts aim to refine designs, enhance efficiency, and overcome any technical obstacles that may impede the successful delivery of the work.
For example, project executives on a New York City subway project opted for aluminum pipes over steel in order to run a glycerin solution through the pipes to freeze the ground in preparation for a tunnel boring machine (TBM) to cut its path.
This ingenuity saved the contractor millions of dollars because the TBM’s cutting head was strong enough to cut through the aluminum, whereas the steel pipes would have to be extracted before the tunnel’s excavation.
Procurement
Procurement is a fundamental pillar within an EPC contractor's role in a construction project. The EPC contractor's involvement in procurement spans the entire spectrum, from selecting and negotiating with suppliers to meticulously managing supply chains and orchestrating logistics.
These contractors bear the responsibility of not only identifying and acquiring all essential materials, equipment, and components from suppliers, manufacturers, and distributors but also evaluating and choosing these suppliers based on critical factors like quality, reliability, cost, and delivery timelines. Beyond the task of identifying and sourcing, EPC contractors are also responsible for managing the purchasing and logistical aspects associated with these components.
During the procurement phase, the EPC contractor also selects their subcontractor partners who will be responsible for specialty scopes. This often involves issuing a request for proposal (RFP) or an invitation to bid (ITB) to attract potential subcontractors. Much like the process of procuring suppliers, the EPC contractor engages in a bidding process when selecting and finalizing contracts with specialty contractors.
As part of their comprehensive approach, EPC contractors often formulate a procurement management plan, essentially functioning as a strategic schedule that ensures the timely receipt of materials, thereby upholding key construction milestones. This plan serves as a blueprint, offering a framework for the entire procurement process, thus ensuring punctual deliveries to uphold the overall construction schedule.
The procurement management plan outlines the schedule for acquiring each item and pinpoints essential procurement benchmarks, which will be continuously adjusted throughout execution to assess potential project effects. EPC contractors will communicate this strategy to the project owner to ensure complete transparency concerning crucial procurement-related pieces. One key component of the procurement management plan is supply chain management. The EPC contractor monitors inventory levels, lead times, and potential supply disruptions to maintain smooth operations.
Once suppliers are identified, the EPC contractor engages in negotiations to secure advantageous terms and conditions, aiming to attain competitive pricing and ensure the timely delivery of materials. Additionally, they formulate contracts that meticulously detail expectations, quality benchmarks, delivery timetables, and terms of payment. The EPC contractor then arranges for the transportation and delivery of materials to the construction site, and accounts for factors such as transportation costs, distance, and other logistics pieces.
After the materials are delivered, the EPC contractor conducts inspections, testing and verification to ensure that they meet the specified quality and safety standards.
An EPC contractor’s proficiency in procurement ensures that the necessary resources are available on time, within budget, and in compliance with quality standards and is key to the successful delivery of the project.
Construction
In the construction phase, the plans and designs developed during the engineering phase are executed. The EPC contractor is responsible for managing construction crews, contractors, and subcontractors to ensure that the project is built according to specifications, safety standards, and timelines. Put simply, the EPC contractor spearheads the construction project management process.
The EPC contractor is responsible for overseeing and managing all of the construction activities of the project. This entails maintaining project schedules, milestones, and timelines to meet project objectives. In addition to ensuring the project stays on schedule, the EPC contractor is responsible for cost control and monitoring construction expenses so that they remain within the predetermined budget.
The EPC contractor additionally enforces quality control procedures to guarantee adherence to predetermined quality assurance criteria and specifications. This encompasses performing thorough inspections and tests to validate the quality and operational integrity of finalized scopes as well as promptly addressing any shortcomings or challenges that arise.
During construction, the EPC contractor implements and enforces on-site safety protocols. With the welfare of all crews, contractors, and subcontractors in mind, the EPC contractor abides by regulatory guidelines and industry best practices to mitigate potential risks.
Throughout the entire construction phase, the EPC contractor oversees both their work crews and subcontractors, while also providing the project owner with regular updates on construction progress, challenges, and any deviations from the devised plan.
Project Management
Build Predictability and Productivity
Deliver projects on time and on budget with greater visibility.
Illustration of graphs layered into a building.
Other Key Responsibilities
In addition to overseeing all aspects of engineering, procurement and construction, an EPC contractor is also responsible for the following:
Risk management: Under an EPC contract, the contractor assumes a higher level of risk, as they are accountable for the successful completion of the project within the agreed-upon parameters. Any delays, cost overruns, or quality and safety issues can have financial and reputational implications for the contractor. A key piece of project execution for EPC contractors entails proactively identifying, assessing and mitigating risks.
Change management: If changes in project scope, design modifications, or unforeseen circumstances arise, the EPC contractor evaluates the impact of these changes on the project's overall schedule, budget and final result and adjusts their course of action accordingly.
Commissioning: After construction is complete, the EPC contractor is responsible for commissioning. All systems and elements are tested and validated to ensure they operate according to their intended function before the project is fully handed over to the client.
Benefits of using an EPC Contractor
EPC contracts offer advantages to both project owners and contractors.
Benefits of an EPC Contractor
Owners Contractors
Turnkey solution
An EPC contract offers the project a turnkey solution, meaning the project owner receives a fully operational building or project at the end of the process. This eliminates the need for separate contracts for design, procurement, and construction, simplifying an owner's responsibilities. The EPC contractor handles all aspects of the project, from inception to completion. Competitive advantage
Contractors with EPC capabilities are less common compared to general contractors and distinguish themselves by offering comprehensive solutions. This competitive edge allows them to stand out, specifically on complex industrial projects or those requiring integrated services.
Single point of responsibility
In an EPC contract, a single contractor (the EPC contractor) takes on the responsibility for the entire project, from engineering and design to procurement of materials and construction. The EPC contractor is responsible for delivering a fully functional project to the client. This streamlines communication and coordination, reducing the owner's administrative burden and the risk of miscommunication between multiple parties. Steady workload
As EPC contractors cover the entire project lifecycle, the workload is more consistent, particularly due to the longer duration of such projects. This extended visibility also allows EPC contractors to forecast farther ahead, leading to more efficient resource allocation and workforce management.
Minimizes risk
Under an EPC contract, the EPC contractor shoulders the majority of the project risk and is responsible for managing and mitigating various risks, such as delays, cost overruns, design issues, and construction challenges. Profitability
An EPC contract typically entails lump-sum or fixed-price arrangements. This empowers EPC contractors to manage costs more effectively and potentially attain higher profit margins as long as they successfully control project costs.
Importance of EPC Contractors
EPC contractors play a pivotal role in delivering complex, infrastructure-heavy projects. Their unique ability to seamlessly integrate engineering, procurement, and construction phases provides a holistic approach that streamlines project execution and minimizes risks for project owners. Whether navigating complex engineering challenges, delivering turnkey solutions, or effectively managing risks, EPC contractors bring a comprehensive approach to deliver efficient project execution.
By carefully evaluating the project's unique requirements, owners can make informed decisions on whether the expertise of an EPC contractor is needed. This decision isn't just about project execution; it's about finding a partner that not only ensures timely and high-quality delivery but also offers an avenue for innovation, optimal resource allocation, and long-term project performance.
As projects become increasingly complex and timelines tighter, the role of EPC contractors and the utilization of EPC contracts continues to be paramount. In an era where projects span multifaceted industries and require intricate engineering feats, the need for a comprehensive approach to project execution is essential in the world of construction.
