What Is Engineering Procurement Construction (EPC)?

Have you ever heard about Engineering Procurement Construction (EPC)? EPC is a term used in the infrastructure development industry, including planning, procurement, and construction.

This article discusses EPC and its role in the industry and manufacturing. So, read this article until the end to learn more about EPC!

What Is Engineering Procurement Construction (EPC)?

Engineering Procurement Construction, or EPC, is a contract that gives a responsibility to the contractor or EPC company to finish a project from start to end.

The primary responsibility is engineering, procurement, and construction. Typically, EPC is implemented in large-scale infrastructure projects, such as refineries or power plants.

The advantage of using the EPC model is coordination, time, and cost efficiency, as a large project is typically carried out by a single contractor. This also makes the EPC project distinct from others, in which a traditional project is managed by several contractors separately.

The EPC Stages

As explained before, EPC contains three stages: engineering, procurement, and construction. Here is the complete explanation:

1. Engineering

Engineering is the stage at which the company or EPC contractor will conduct feasibility tests to ensure that the project can be carried out properly.

Contractors must create a comprehensive and detailed technical plan, as well as analyze logistics, financial, and technical aspects, to ensure that the project runs smoothly. At this stage, various teams of planning experts will be deployed to cover all aspects of engineering.

Also, the expert team must ensure that the project to be implemented complies with applicable regional or national regulations. The technology to be used must also be developed from the beginning to ensure that it is ready for use.

2. Procurement

When the engineering phase is complete, for example, when planning and design have been finalized, the EPC company will procure equipment and materials. It also selects vendors and negotiates with them.

To avoid interfering with the infrastructure development process, EPC companies evaluate different vendors based on factors like cost, delivery time, and product and service quality; choose subcontractors for particular tasks; and make sure the supply chain operates on time.

3. Construction

After the two phases are finished, the EPC project can proceed as planned. The EPC team is responsible for performing all construction work while monitoring the entire process. The EPC contractor is also in charge of enforcing OHS regulations to reduce the possibility of workplace accidents.

The Characteristics of an EPC Project

Different from other infrastructure projects, the EPC project has some particular characteristics, such as:

1. Provides Work Guarantee to the Project Owner

The EPC contractor is responsible for giving a guarantee that the infrastructure is built according to the plan and budget and completed following the timeline, as well as meeting the owner’s needs.

2. Large-scaled Project

A project done by an EPC company is a large-scale one, such as power plants, factories, and refineries. Due to its big scale, the company needs proper coordination and integration between many parties of various expertise.

3. Lump Sum Turnkey

Since the contractor is fully responsible for the infrastructure development, an EPC project is also called a Lump Sum Turnkey (LSTK). LSTK is a contract for a project where a contractor agrees that they will finish the project with the fixed prices.

4. Has a Single Responsibility

An EPC contractor is responsible for all stages and infrastructure processes. As a result, the process can be simpler and more properly coordinated.

Advantages of Engineering Procurement and Construction

EPC projects provide several advantages for companies that are about to build their facility, such as:

1. Projects Finished Faster

The advantage of an EPC project is that it can finish faster thanks to the three main stages above. It is also managed singlehandedly by one main contractor, making the coordination easier. Consequently, the project finished on time.

2. Manageable Cost

Because the project is handled by one primary contractor, the cost becomes more manageable. It is also caused by thorough planning in the engineering process, determining the needs and construction timeline.

3. Effective Risk Management

There are a number of risks that commonly occur in construction projects, such as cost overruns, delays, design changes during construction, or high rates of workplace accidents.

With the EPC model, the contractor is fully responsible for the entire construction process, thereby reducing the potential for conflict and the risks mentioned above.

4. Guaranteed Quality

Not only is it finished faster, but the project quality is also guaranteed. This is because every process is monitored tightly and must adhere to the determined standards.

Example of EPC Project Implementation

Regarding an EPC project, Chandra Asri Group, as a leading chemical, infrastructure, and energy company in Southeast Asia, as well as #YourGrowthPartner, signed EPC contracts with a number of companies several times.

For example, Chandra Asri Group signed an EPC contract with PT Inti Karya Persada Tehnik to increase the capacity of the B1 and MTBE plants by more than 25%.

Not only that, but our company also signed an EPC contract with Toyo Engineering Corporation to build a naphtha cracker facility that can increase capacity by 43%.

Chandra Asri Group's EPC contracts also continue for the development of a butadiene plant with a capacity increase of 37% (with Toyo Engineering Korea Limited and PT Inti Karya Persada Tehnik) through the entity PT Petrokimia Butadiene Indonesia and the construction of a polyethylene plant with a capacity of 400 KTA (with Toyo Engineering Group).

That concludes the information about Engineering Procurement Construction you can read. An EPC is one of the keys to large-scale infrastructure development, which later gives some advantages to the company owner, such as lower risk and more cost-efficient.

Thus, a company planning to develop a large-scale operational facility can consider Engineering Procurement Construction.