The main contractual forms of implementation of construction investment projects. EPC and EPCM. ':.
In the world of construction practice, there are different types of contractual regulation of relations in the field of construction management. Among the major types of contracts, covering all stages of the construction process (design, procurement, construction) include:.
contract EPC - English abbreviation (engineering, procurement, construction - engineering, procurement, construction);.
contract EPCM - English abbreviation (engineering, procurement, construction management - management of engineering, procurement, construction );.
contract EPCS (engineering, procurement, construction supervision - engineering, procurement and supervision of construction );.
agreement PCM (project construction management - construction management ).
It should be noted the lack of uniformity in the classification of construction contracts. Thus, if the EPC for all agree that this contract with a firm price and terms under which the contractor assumes all responsibilities and all the risks associated with the creation of the object, the remaining contract types are often confused, both among themselves and with . The above contract types, as well as, in fact, the terms developed commercial traffic and have no regulatory fix, whether international or national level. Sufficiently serious work on the standardization of forms of contracts used in construction was carried out by the International Federation of Consulting Engineers ( FIDIC ), which is commissioned by the World Bank has developed a set of templates of various building contracts. However, due to a number of factors ( the multicast and the complexity of the work, unadjusted to the specific national legal system, etc. ) Proforma FIDIC are not used in all major construction projects. In addition, a set of FIDIC contracts from among the above includes only the form of EPC contract.
However, in cases where the customer wants to hire a contractor to perform the complete cycle of works, most commonly used model EPC contract or EPCM.
For EPC contract characterized by the following characteristics:.
fixed price, which in most cases can be a lump. It should be noted that the definition of price as a hard lump and does not exclude the fact that in the design process can also occur and the estimated. Any excess of cost, equipment or materials as compared to the contract price refers to the EPC- contractor. The exception is the change in volume or composition of the work initiated by the customer, the events of force majeure, failure by the customer of its obligations under the contract of EPC;.
higher limit of liability of the contractor: the limit of liability is often limited by the size of the contract price, although there are cases when this limit is limited to only part of the EPC contract price;.
the contractor has more autonomy in carrying out the construction process, and the customer has the least authority to manage the EPC contractor or subcontractors;.
most of the risks under the contract, including the risk of unforeseen costs and delays related to the EPC- contractor.
EPC Contract is often used in cases where the customer does not have its own service, able to manage the construction project, does not want to interfere with such management and to assume the risks. EPC is also one of the main contractual forms in projects that are financed through banks or other financial institutions ( especially with respect to project finance ), as banks, providing credit, seeking to ensure that the borrower has assumed the least possible amount of risk.
It should be noted that the contractors are often reluctant to EPC contracts. This is usually caused by one or more of the numbers listed below circumstances:.
atypical project or the complexity and unpredictability of the environment in which the project will be implemented, the uncertainty in the volume and / or composition of the work;.
implementation of the foreign contractor for the project in the state with a high degree of economic and political risks, with undeveloped market related activities and services, labor (usually developing countries);.
underdevelopment of the local market of construction organizations and, consequently, to attract a significant number of subcontractors, in particular, local subcontractors.
Contract EPCM (Engineering, Procurement, Construction Management).
There are several types of EPCM contract:.
a. EPCM contractor shall act only as a person providing customer management services to the construction project. Most of the contracts concluded with contractors contracting on its behalf and shall bear the risk of default by contractors of their obligations. Most of the risks of this type of contract EPCM, including the risks of exceeding the planned project costs and delays in its realization, lie on the customer.
2. EPCM Contract, the general contractor on the model, based on the principle of ... In this construction contractor is reimbursed for costs of everything associated with the construction of the object, and shall be paid compensation in the form of an agreed rate of return. Also in a separate flat fee can be allocated for project management fees. EPCM contractor acts as the general contractor, t. e. enter into contracts with subcontractors on its behalf and shall be liable to the customer for failure to sub-contractors of their obligations. However, the total liability EPCM- contractor is limited to the sum of his own remuneration or part of such compensation, except where failure to fulfill obligations EPCM contractor due to his guilt in the form of intent or gross negligence. The structure of the contract price is the only firm value of the contractor's fee, the amount of the costs associated with the construction of the object is not restricted. The contract usually contains less stringent for the EPCM contractor (in comparison with the contract EPC ) provisions regarding compliance with performance time. The customer has a significant amount of authority to participate in project management: it can approve or reject the subcontractors, monitor their actions to present to them the direct requirements. Subcontractors are usually selected on a tender basis.
3. EPCM Contract for a model with a general contractor indicative price ( EPCM target price) - a contract based on the same principle of ... The contract price consists of two parts: ( a) the actual award EPCM contractor, which he receives for managing the project, (b) the direct costs - total cost of the work, materials and equipment in connection with the construction of an object. In this case only a fixed amount of the solid rewards of the EPCM- contractor. Indicative direct costs - their value can be specified in the contract above and below this value. If you exceed a pre-agreed amount of direct costs of the contractor's fee deductions are made. However, the contractor shall at his own expense the entire amount is exceeded. Thus, the customer and the contractor share the risk of exceeding the agreed amount of direct costs. In the case of the contractor to achieve savings without sacrificing quality, EPCM contractor receives a bonus part of such savings. The contract may provide for ... The customer has about the same powers to participate in project management as a model EPCM on a ... In addition, in order to achieve maximum savings assumes that the entire scope of work or a substantial part of them will not be passed to one subcontractor. The total amount of liability EPCM contractor is limited to the sum of his own remuneration, unless the default EPCM contractor due to his guilt in the form of intent or gross negligence. This model represents a negotiated compromise between the EPCM contract, based on the principle of ... In some cases, such a model is called «EPC Target price».
EPC Contract, as well as EPCM contract are contractual models in which the contractor performs the complete cycle of works, ranging from design to delivery of equipment and materials, as well as the implementation of construction works. However, quite often there are cases when the customer takes delivery of the equipment design or. Foreign contractors are often willing to do the design work and to supply, but do not agree to be responsible for the construction of the. For such purposes, there are the so-called ...
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