What is an EPC subcontract?

The most common subcontracts are specialty trades or supply install equipment packages (vendor installed). An EPC can execute entirely as a General Contractor (GC), but the ability to self-perform is typically advantageous. Self-performed work is often completed by craft labor that maintains a history of working together which impacts performance.

Can an EPC perform as a general contractor?

An EPC can execute entirely as a General Contractor (GC), but the ability to self-perform is typically advantageous. Self-performed work is often completed by craft labor that maintains a history of working together which impacts performance. 6. Last, but certainly not least, you have commissioning and startup considerations.

What are the components of an EPC contract?

There are four influential components of the EPC contract. To understand cost risk, you must first understand how an EPC contract is priced (when done correctly): 1. A Front-End Engineering & Design (FEED) package is completed, often utilizing the Front-End Loading (FEL) process.

How does an EPC work?

EPCs maintain and retain access to a large amount of data. They know exactly how much time it takes a pipefitter to install (run) 2-inch small-bore carbon steel pipe by the linear foot. Thus, the only missing part of the equation is how much footage is there to install. Multiply the two and you get the number of man-hours required to do so.

What is an EPC pricing effort?

When done properly, an EPC pricing effort is an aggregate of producing material takeoffs (MTO’s), completing labor studies, adequately negotiating major equipment packages, and defining the balance of plant cost risk. In other words, data-driven analysis, and assumptions.

What is the difference between EPC and sponsor liability?

EPC liabilities are typically capped at a modest percent of the contract value (often 20%). The sponsor liability is the balance of the investment (the other 80%) plus any additional overruns or follow-on capital required. There are four influential components of the EPC contract.