What is the difference between EPC and the general contract for engineering?

August 31, 2017

In short, EPC is one of the general contracting modes of engineering,it is a relation of inclusion.

PC is a contract which is, an enterprise engaged in the general contract of Engineering, commissioned by the owner to carry out the whole process or several stages of the feasibility study, reconnaissance, design, purchase, construction and trial operation of the project.

The general contracting model of the project can be divided into the following processes:

Engineering procurement and construction contract (EPC: combination of Engineering, Procurement, Construction) is the work of the general contracting enterprise according to the contract, undertaking the design, purchase, construction and pilot run service of the project, and it is fully responsible for the quality, safety, time limit and cost of the contracted project, which is the most principal one in our country to carry out the general contract mode at present.

Turnkey contract is an extension of the overall contracting business and responsibility of EPC construction, the ultimate is to submit a engineering project meeting functions and conditions to the owner.

Engineering procurement and construction general management contract (EPCM:combination of Engineering, Procurement and Construction Management) is one of the most popular project payment and management modes in the international construction market, and it is also a kind of general contracting mode implemented in China currently.EPCM contractor is determined by the owner's entrustment or tender. The contractor directly signs the contract with the owner, and is fully responsible for the design, material and equipment supply and construction management of the project.According to the investment intention and requirement proposed by the owners, the most suitable subcontractors are recommended to the owners by bidding, to complete the engineering, procurement and construction tasks.The subcontractor of engineering and procurement is responsible for the EPCM contractor, while the subcontractor of construction doesn't sign the contract with the EPCM contractor, but it accepts the EPCM contractor's management and has a contractual relationship with the owner directly. Therefore, EPCM contractor does not have to undertake the construction risk and the economic risk.When the EPCM general contract mode is paid in one time total quotation,the economic risk of EPCM contractor is controlled in a certain range and the economic risk is relatively small and the profit is more stable.

Design - Build general contracting means that the general contractor undertakes the design and construction of the project in accordance with the contract, and shall be fully responsible for the quality, safety, construction period and cost of the contracted project.

EPC (Engineering Procurement Construction) means that the company is entrusted by the owner to carry out the whole process or several stages of the contract for the engineering, procurement, construction and trial operation of the project under the contract. Generally, the company is responsible for the quality, safety, cost and schedule of the project under the condition of the lump-sum contract.

In EPC mode, Engineering includes not only the specific design work, but also the overall planning of the whole construction project and the planning and specific work of the whole construction project implementation organization management;Procurement is not a general purchase of building materials, but more of the purchase of professional equipment and materials;Construction should include construction, installation, testing, technical training and so on.

(Source：Zhihu)