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What is an EPC Construction Contract?

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05/05/2009

Engineering, Procurement and Construction contract Engineering Procurement Construction ("EPC") contracts typically pass all design development and construction risks to the contractor. The developer acquires a "bankable" turnkey project and, at least theoretically, pays a premium for the assumption of risk by the contractor. In other words, in an EPC contract, the EPC contractor (EPCC) agrees to deliver the keys of a commissioned project to the owner for an agreed amount, just as a builder hands over the keys of a flat to the purchaser. An owner decides for an EPC contract for several vital reasons. Some are: · The owner puts in minimum efforts for his project and, so, has less stress · EPC gives the owner one point contact. It is easy to monitor and coordinate · It is easy for the owner to get post-commissioning services · EPC way ensures quality and reduces practical issues faced in other ways · Owner is not affected by the market rise · Investment figure is known at the start of the project