Page 68 - Industrial plants

construction management services. Other - Less Legal Litigation (Identify issues early and
companies are contracted by the Owner directly to remedy situation before larger problems arise)
provide construction services and they are usually - Owner’s Financing Flexibility
managed by the EPCM contractor on the Owner’s These are just a few of the advantages of EPCM
behalf. Think Professional Services contracts, where style of construction contracting.
the project is largely Owner managed and the cost
risk and control is weighted towards the Owner. EPC contracting has it place in the construction
Below is a simplified Chart showing the differences industry as well. Under certain situations, it makes
in the type of contracts and how each would differ better sense to use this type of construction
under the same situations: The list below is not a contracting than other methods.
complete list of differences between EPC and EPCM
contracts but it does address many of the major
contractual differences. The way each of these EPC Advantages
issues is handled can be modified during contract - One Stop Shopping “One point of Contact”
negotiations to suit the situation and overall goals of - “Hands off” approach to project
the project. - Minimal Staffing Requirements
EPC and EPCM contracting are both very prevalent - Minimal Legal Risk
types of contracts within the construction industry. - Best for well-defined projects with Detailed
Dependent on the level of risk the Owner of a project Engineering Complete before EPC Contractor
is willing to accept, budget constraints, and the selected (Minimal Unknowns).
Owner’s organization core competencies, will
determine which method is best for their project. “These contract methods can be
EPC contracting tends to be more expensive, to the tailored to the individual projects /
Owner, due to the shift of project risk away from the owner’s needs.
Owner and to the EPC Contractor. On average, a Each company must decide for
project’s cost 10% - 20% more using EPC style of themselves as to which method of
contracting than a project using the EPCM style of construction contracting is best for
contracting. This is due in large part to the project’s their particular project and situation
risk being more evenly distributed between the
Owner and contracts / suppliers. As stated before, these construction contract
Construction contracting trends have been leaning methods can be tailored to the individual projects /
towards the EPCM style of contracting and away owner’s needs. Some companies can go as far as
from EPC contracting for several reasons but both breaking up each portion of the EPC / EPCM
methods have their place in business today. (Engineering, Procurement, Construction /
Construction Management) to separate companies.
One company can do the engineering; another can
EPCM Advantages do the procurement, while still another can do the
- Lower Overall Cost construction / project management).
- Staff’s Sense of Ownership Each company must decide for themselves, with the
- More Control over Process advice of legal and financial counsels, as to which
- Better for less defined projects with anticipated method of construction contracting is best for their
changes to scope of supply particular project and situation.

Massimo Rebecchi

Massimo Rebecchi is graduated in Civil Geotechnical President and Managing Director he satisfied the
Engineering. He he has achieved PhD in Minerals and Opertions, Project and Quality requirements of
Petroleum Engineering in the United States. For several Main Contractors.
years he was freelance professional as Mud Logger Today Xylem is a Lead Business Consultant Company
and Drilling Project Manager. He attended important in Industrial Construction (Oil, Gas, Process, Mills,
construction projects under CCC-Sicon Oil group. Rail) for Operations, Project Management and
As a GE consultant in Nuovo Pignone since 2010, he Sourcing Quality Management located in Italy,
attended several strategic Projects. During this Emirates, France and Algeria.
experience he established Xylem srl in Milan. As

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