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Engineering, procurement, and construction (EPC) contracts (a type of
turnkey A turnkey, a turnkey project, or a turnkey operation (also spelled turn-key) is a type of project that is constructed so that it can be sold to any buyer as a completed product. This is contrasted with build to order, where the constructor builds ...
contract) are a form of contract used to undertake construction works by the private sector on large-scale and complex infrastructure projects.


Overview

Under an EPC contract, a contractor is obliged to deliver a complete facility to a developer who needs only "turn a key" to start operating the facility; hence EPC contracts are sometimes called turnkey construction contracts. In addition to delivering a complete facility, the contractor must deliver that facility for a guaranteed price by a fixed date and it must perform to the specified level. Failure to comply with any requirement will usually result in the contractor incurring monetary liabilities. The EPC contractor coordinates all design, procurement and construction work and ensures that the whole project is completed as required and in time. They may or may not undertake actual site work. Various abbreviations used for this type of contract are ''LSTK'' for ''lump sum turn key'', ''EPIC'' for ''engineering, procurement, installation & commissioning'' and ''EPCC'' for ''engineering, procurement, construction and commissioning''. Use of EPIC is common, e.g., by FIDIC and most Persian Gulf countries. Use of LSTK is common in the
Kingdom of Saudi Arabia Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the List of Asian countries by area, fifth-largest country in Asia ...
. Use of EPCC is common in
Qatar Qatar (, ; ar, قطر, Qaṭar ; local vernacular pronunciation: ), officially the State of Qatar,) is a country in Western Asia. It occupies the Qatar Peninsula on the northeastern coast of the Arabian Peninsula in the Middle East; it s ...
and some other countries.


EPC functions

EPC contracts cover the following issues. ;Engineering functions * Basic engineering * Detailed engineering * Planning * Construction engineering ;Procurement functions * Logistics and transport * Receiving * Procurement * Invoicing * Purchasing ;Construction functions * Electrical installation * Mechanical erection * Civil engineering ;Commissioning functions * After-sales-service * Testing and commissioning * Modernization of plants An EPC, LSTK, or EPCC all are the same types of contracts. This form of contract is covered by the FIDIC ( International Federation of Consulting Engineers) Silver Book containing the title words ''EPC/turnkey''. The initials EPCM are 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 services. In an EPCM arrangement, the client selects a contractor who provides management services for the whole project on behalf of the client.


See also

* EPCI *
Construction management Construction management (CM) is a professional service that uses specialized, project management techniques and software to oversee the planning, design, construction and closeout of a project. The purpose of Construction management is to control ...


References


Bibliography

*{{cite book, last=Hartman, first=Francis T., title=The Ten Commandments of Better Contracting: A Practical Guide to Adding Value to an Enterprise Through More Effective Smart Contracting , year=2003, publisher=ASCE Publications, isbn=978-0784470985, pages=69–71 Civil engineering Engineering economics Facilities engineering Costs Project management techniques Construction documents