EPCM: What does EPCM stand for and how is it different to EPC?

What does EPCM mean? Well, EPCM is known extremely well by those in the engineering world. This article is instead for those who are less familiar with this well-used acronym, intended to provide an understanding of the basics and an initial introduction to the world of EPCM and EPC. However, since there are far more complexities involved than we are covering here initially, we will be following up with a series of articles on this topic. Those articles will cover more of the detail around EPCM. Watch this space and check back on our latest news section for more.

What is EPCM?

EPCM stands for Engineering, Procurement and Construction Management and is a professional engineering services contract growing in popularity for the construction of manufacturing plants or heavy engineering facilities across many industries. These include Energy, Agriculture, Chemical, Pharmaceutical and Food & Beverage industries, to name a few.

Simply put, EPCM is a way of working on an engineering project which lets the project owner (our clients) stay in complete control of their project while engineering consultants (like ourselves) manage the process from start to finish. This means the engineering consultants take care of all the stages of engineering: including planning, complex engineering requirements, co-ordinating all contractors and vendors etc. on the client’s behalf and providing a single point of contact.

Engineering:

As you would expect, where EPCM contracts are employed there is a significant amount of specialist engineering processes which need to be scoped, strategized, organised, planned, coordinated and executed. This is the case right from the outset upon receiving the project brief from the client, all the way through to project completion.

This is where the EPCM approach really shines. It allows the client full transparency and involvement in engineering options and decisions that need to be made, and their cost implications, giving the client more control over the process. This is especially important in technical speciality projects where clients benefit from the unique expertise, qualifications and experience of the engineering consultants to guide them on how best to achieve their desired outcome.

Procurement:

The engaged engineering consultants also manage the procurement process. This involves everything from technical quotation requests, organisation of the tender process, pre-qualification of vendors, technical evaluation and recommendation of contractors, negotiations and much, much more. Again, with EPCM all of this is done transparently to help the client, meaning that recommendations are then put forth for the client to ultimately make their procurement decisions with complete knowledge and control.

Construction:

On to the physical construction phase, and yes, it’s exactly as it sounds. The client’s engineering consultants provide full construction management for the project from beginning to end. Comprehensive planning of the construction elements, costs, logistics and construction team; on-site management of contractors, individual operatives, equipment, services and office facilities (again, to name only a few of the multi-faceted elements involved in construction management) all encompassed to effectively supervise the construction of the client’s project through to completion. All the while co-ordinating the supply of information provided by the contractors and by the project team through to the client at all times as per the EPCM model of working.

Management:

As we’ve explained, “Management” is at the very core of what EPCM is. It is essentially a full-circle, all-encompassing project management service which allows the benefits of specialist expertise to achieve engineering excellence whilst at the same time allowing the client complete control over the entire process through transparently involving the client at all stages.

What is EPC and how is it different to EPCM?

EPC stands for Engineering, Procurement and Construction… so the crucially missing element is the “M” for “Management”. Simply put, this is because EPC is not a service in the same way that EPCM is. Think of EPC as more completely “contracting-out” the project, rather than having engineering consultants manage it for you.

So this means with an EPC contract, yes your engineers will completely handle the client’s project from start to finish, however, the client effectively relinquishes control of the project from the moment the contract is signed. So the engineers then have complete ownership of the project from then on, and they make all the decisions, with no involvement of the client needed, nor transparency on those decisions.

Crucially the difference is in how the project is organised – with EPCM all the contracts and purchase orders with third parties such as construction contractors, suppliers and vendors remain with the client. The engineering consultants will find, vet and make recommendations of these third parties, and they will then manage them and may even draw up the contract between the client and the third parties, but fundamentally the contracts sit with the client, so the client has overall responsibility and control. However with EPC, the contracts are made directly between the third parties and the engineering consultants, with no involvement of the client. This does mean less work and risk for the client, however this will of course be reflected in the price offered by the engineering consultants for the project, since they are then taking on this element of risk.

Advantages and Disadvantages of the EPC approach:

• Advantage: The EPC approach gives more control to the engineers, so whilst the client does not have involvement in the process, it is completely handled by the engineering consultants, so there is less effort required on the part of the client and therefore minimal staffing requirements.
• Advantage: It also means that the overall responsibility for the project therefore lies with the engineering consultants too, so for example (and again, this is a very simplistic explanation); if costs are higher than quoted for whatever reason, if a contractor hasn’t delivered on time or if schedules are otherwise delayed, the engineering consultants bear the risk and any cost implications rather than the client.
• Disadvantage: However, since the engineering consultants take on this increased level of risk on behalf of the clients, this will be reflected in an overall significantly higher cost to the client for the project as a whole.
• Disadvantage: EPC requires an extremely well-defined project brief from the outset with detailed engineering plans and project deliverables laid out from the very beginning. Since nothing can be changed or adjusted by the client once the project has begun, these initial specifications must be exact and impeccable. As such the project must have minimal variable factors involved for it to be worthwhile, meaning it is often not the best choice for new, specialist technical or innovative projects.
• Disadvantage: There is no requirement for transparency with an EPC project and so the client will not be able to have any influence over financial decisions when it comes to parts, equipment or contractors, nor know how the engineering consultants have come to make these decisions.

Advantages and Disadvantages of the EPCM approach:

• Advantage: The main advantage EPCM has for clients over EPC is the sense of ownership. EPCM allows for greater flexibility for the client, which can ultimately lead to a better overall outcome for the project.
• Advantage: Since it doesn’t reply on an iron-clad defined brief and scope from the beginning, it is well-suited to projects which are perhaps less defined or where there might be anticipated changes or variables to take into consideration.
• Advantage: It also means the client can benefit from the engineering consultants’ expert advice and recommendations not just in the planning stages but also as the project progresses.
• Advantage: EPCM effectively reserves the client’s right to alter the scope as the project is underway if necessary, and ultimately gives the client complete financial control over project cost decisions within the process. This obviously has untold value to clients and can often mean a significant cost-saving overall.
• Disadvantage: There is increased involvement on the client’s part which with all the advantages this brings also means more effort and time involved with day-to-day functions and procedures for the duration of the project. Often the client will set up their own project team to work in conjunction with the engineering consultants.
• Disadvantage: Since EPCM relies on regular communication between the client and the engineering consultant company, there is the possibility for misunderstanding or for a gap to emerge with roles & responsibilities. It is therefore really important for client responsibilities and engineering consultant responsibilities to be outlined and made clear from the outset to avoid this potential issue.

IntES’ EPCM Approach

As you might have gathered, here at IntES we are huge advocates of EPCM. We take a completely client-centric attitude to all our operations, putting them in the driving seat. Our clients tell us what they need, we listen with great interest and we use our knowledge and expertise to transform those discussions into a fully-tailored, flexible and practical integrated approach which yields fantastic results; fully involving our clients every step of the way. We find our clients across all markets & industries have both exacting requirements as well as a need for innovation in their respective highly-specialist fields, which is where our EPCM full-circle approach shines.

In addition, at IntES we have a distinct advantage over other firms in that we have several experienced senior consultants who have spent most of their highly successful careers on the client-side of EPCM, and so our process becomes more seamless than most. They help to ensure our client communications are exactly as needed which means we completely avoid that potential gap in roles and responsibilities, guiding the client through the process from their side as well as from the engineering perspective.

Find out more about us, about our approach, explore the detail of our EPCM project process, or please do get in touch with us and we will be delighted to answer any questions.