What is EPC contract?

EPC contract

Engineering, Procurement and Construction (EPC) is a particular form of contracting arrangement used in some industries where the EPC contractor is made responsible for all the activities from design, procurement, construction, commissioning and handover of the project to the end-user or owner. This form of contract is covered by the FIDIC Silver Book containing the title words “EPC/Turnkey”. Other abbreviations used for this type of contract are “LSTK” for “Lump Sum Turn Key”, EPIC for Engineering, Procurement, Installation & Commissioning and sometimes also EPCC which is short for Engineering, Procurement, Construction and Commissioning. Use of EPC is common e.g. by FIDIC and most Persian Gulf countries.

Use of LSTK is common in Kingdom of Saudi Arabia. Use of EPCC is common in Qatar and some other countries e.g. by Qatar Petroleum. Therefore, an EPC, LSTK or EPCC are all same types of contracts a typical well-known example of which is the Silver Book of FIDIC.

Engineering, Procurement and Construction Management (EPCM) is a special form of contracting arrangement. In an EPCM arrangement, the client selects a contractor who provides management services for the whole project on behalf of the client. The EPCM contractor coordinates all design, procurement and construction work and ensures that the whole project is completed as required and in time. The EPCM contractor may or may not undertake actual site work.

The acronym EPCM is also encountered frequently on international projects, but this is very different from EPC. EPCM is a services-only contract, under which the contractor performs engineering, procurement and construction management service.