EPC contracts involve the contractor providing engineering, procurement, and construction services for a project. The contractor manages the project and bears most of the cost and schedule risks. EPCM contracts involve the contractor providing engineering, procurement, and construction management services on behalf of the owner, who manages the project and bears most of the risks. The key differences are that EPC contracts are more contractor-managed with risk on the contractor, while EPCM contracts are owner-managed with risk on the owner. Both can be beneficial for large projects but the right type of contract must be chosen to avoid cost and schedule issues.

1. Understanding the Difference
Between EPC and EPCM Contracts

2. You’ve probably heard the terms EPC
(Engineering, Procurement and Construction)
and EPCM (Engineering, Procurement and
Construction Management) contracts since they
are terms commonly used in the oil, gas, mining
and power industries. However, there remains
some confusion as to the fundamental difference
between these contracts and the role of the
contractor.

3. EPC Contract
Engineering, Procurement and
Construction
• Provides framework for projects where significant
engineering is required
• Under an EPC contract, the company is contracted to
provide engineering, procurement and construction
services by the owner.
• The project is heavily Contractor managed; cost risk
and control are weighted towards the Contractor and
not the owner.
• Think “Design and Construct” contracts
• Commonly used for large scale resource
developments, like oil and gas projects

4. EPCM Contract
Engineering, Procurement and
Construction Management
• Under an EPCM contract, the company is
contracted to provide engineering, procurement
and construction management services.
• The project is largely Owner managed; cost risk
and control is weighted towards the Owner.
• Think “Professional Services” contracts
• Commonly used for the construction or
expansion of large-scale heavy engineering
facilities or manufacturing plants in the oil and
gas, mining and power sectors.

5. Responsibilities of the EPC Contractor
• The EPC contractor develops the project from
commencement to final completion
• The Contractor has direct contracts with the
contractors.

6. Responsibilities of the EPCM Contractor
• In EPCM contracts, Companies are contracted
by the Owner directly to provide services.
• The contractor is not directly involved in the
creation and construction of the project. Rather,
contractors are responsible for the design and
management of the project, on behalf of the
owner.

7. Both EPC and EPCM contracts can be highly
beneficial to a project. However, it’s crucial to
choose the correct form of contract to avoid
negative impacts on the cost and risk associated
with the project.
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