The difference between EPC and turnkey contract (2023)

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Mohammad Tanjir Rahman, CAAM The difference between EPC and turnkey contract (2)

Mohammad Tanjir Rahman, CAAM

Published Feb 8, 2016

EPC is a contract comprising Engineering, Procurement and Construction.

Turnkey is a contract comprising Engineering, Procurement and Construction.

If you look at the definition , you may find no difference between two concepts, but there are some differences between two concept as follows;


1- In EPC, an employer will provide basic engineering to a contractor and the latter shall perform detailed design based of received basic design.
2- In Turnkey , Employer will only provide certain technical specifications of the project and it is the responsibility of the contractor to prepare basic and detail design of the project.
3- In turnkey, contractor is responsible to perform construction and commissioning, start-up and take over of the plant to employer, but in EPC, it may be the responsibility of other third person to do commissioning and start-up.

(Source: www.answer.com)

The difference between EPC and turnkey contract (12)

Little difference but huge impact!

The difference between EPC and turnkey contract (13)

try to explain with example

The difference between EPC and turnkey contract (14)

Turnkey Project have some Advantages & Disadvantages, same for EPC Projects tooo

The difference between EPC and turnkey contract (15)

Turnkey Project have some Advantages & Disadvantages, same for EPC Projects tooo

The difference between EPC and turnkey contract (16)

In Turnkey project employer gives only idea while it is contractor responsibility to convert idea in reality BOT build operate transfer is classical example of turnkey project while in EPC project employer gives basic design and its contractor responsibility to do the detail engineering & carried risk in design is allocated to contractor scope

The difference between EPC and turnkey contract (17)

Can you explain what is a client coordinated approach to major project? and what it comprise of..

The difference between EPC and turnkey contract (18)

Quality content is the key to attract readers. And you provide just that. Good work. https://www.enggpro.com/blogs/all-about-turnkey-contractors-for-epc-projects/

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FAQs

What is the difference between EPC and turnkey contract? ›

EPC is a contract comprising Engineering, Procurement and Construction. Turnkey is a contract comprising Engineering, Procurement and Construction.

What is the difference between turnkey contract and lump sum contract? ›

Lump sum is a noun which means a complete payment consisting of a single sum of money while turnkey is an adjective of a product or service which means product or service will be ready to use upon delivery.

What is the difference between EPC and design-build contract? ›

An EPC project results in a turnkey facility. The EPC contractor heads the working of the project facility. A design-build contract finishes off comparatively to configuration offer form contracts, with the proprietor and its development director or fashioner playing a functioning job in punching out the office.

What is the difference between EPC and EPCM contracts? ›

In contrast to the EPC model, the EPCM contractor is not directly involved in the building and construction of the project, but is rather responsible for the detailed design and overall management of the project, on behalf of the owner or principal.

What is the meaning of turnkey contract? ›

Meaning of turnkey contract in English

a contract in which a company is given full responsibility to plan and build something that the client must be able to use as soon as it is finished without needing to do any further work on it themselves: The stadium is being built under a turnkey contract.

What is the meaning of EPC contract? ›

A form of building contract used for a large or otherwise complex project under which the builder (the EPC contractor) will deliver a completed project on a turnkey basis. EPC contract is an abbreviation for engineering, procurement and construction contract.

What is an example of a turnkey contract? ›

In information technology, a contract under which, when a computer system is delivered to the user, the user only has to "turn a key" to have a fully operable computer system.

What are the 4 types of contracts? ›

Types of Contracts: Learn About the 13 Main Options
  • Fixed-Price Contract.
  • Cost-Reimbursement Contract.
  • Cost-Plus Contract.
  • Time and Materials Contract.
  • Unit Price Contract.
  • Bilateral Contract.
  • Unilateral Contract.
  • Implied Contract.
Jan 26, 2022

What are the 3 types of contracts? ›

The three most common contract types include:
  • Fixed-price contracts.
  • Cost-plus contracts.
  • Time and materials contracts.
Jan 29, 2021

What are the advantages and disadvantages of EPC contracts? ›

Advantages and Disadvantages of EPC Contracts

This contract arrangement also benefits contractors who will have more control over the design and selection of subcontractors. While contractors accept more risk with the coordination of the design, they can act more efficiently to lower construction costs.

What does EPC mean in projects? ›

An “Engineering, Procurement and Construction” or short EPC-Project is a particular form of contracting arrangement used in some industries where the EPC-Contractor is made responsible for all activities from design, procurement, construction, to commissioning and handover of the deliverables to the Owner or Operator ( ...

Is EPC contract a works contract? ›

Engineering, procurement, and construction (EPC) contracts (a type of turnkey contract) are a form of contract used to undertake construction works by the private sector on large-scale and complex infrastructure projects.

What type of contract is EPC? ›

EPC (Engineering, Procurement, Construction)

An EPC contract is a turnkey solution, which means that the construction company provides the complete package of services. Under an EPC contract, the owner hires the EPC contractor, who then supplies its own engineers, consultants, suppliers and other contractors.

What are the different types of EPC? ›

EPC: Engineering, Procurement, and Construction
  • Front-End Planning.
  • Design-Build Company Selection (this is frequently the same company involved in front-end planning)
  • Engineering and Design.
  • Fabrication, Procurement, and Construction.
  • Commissioning and Startup.

What are the advantages of EPC contract? ›

Advantages of an EPC contract
  • A Single Point of Responsibility.
  • Fixed Contract Price.
  • Fixed Completion Date.
  • Can Set a Performance Specification.
  • Performance Guarantee.
  • Security.
  • Caps on Liability.
  • Has Rights to Suspend the Project.
Nov 25, 2022

What is another name for turnkey contract? ›

This type of contracts is also known as EPC Contracts (Engineering, Procurement and Construction). Turnkey contracts include at least three components: The design of the facility by the contractor.

What is turnkey project in simple words? ›

A turnkey project is a delivery method in which a single entity—a contractor—works with a project owner under a single contract to complete all stages of a project from detail engineering through construction.

Why is it called turnkey? ›

A turnkey business is a business that is ready to use, existing in a condition that allows for immediate operation. The term "turnkey" is based on the concept of only needing to turn the key to unlock the doors to begin operations.

What is the objective of EPC? ›

In pursuit of its mandate, the EPC primary objective is to address bottlenecks facing exporters and producers of export goods and services in order to increase the performance level of the export sector.

What are the examples of EPC projects? ›

Power plants, factories, gas development project, infrastructure projects, and industrial plant construction sectors are the typical examples of EPC projects.

Is an EPC contract fixed price? ›

In addition to their turnkey nature, EPC contracts also include a fixed price and an agreed upon date of completion so there are minimal surprises throughout and at the end of the project.

What are the major clause of a turnkey contract? ›

The main clauses of a turnkey contract are: design of the project, the construction site, time for completion, price and payments, performance guarantees and the law governing the contract.

What is an advantage of turnkey contracts? ›

Saving time by having a single contractor handle all steps of the process saves money. In many cases, a turnkey contractor will be more likely to offer a better deal than you would find hiring separate contractors. A turnkey contractor provides you with the benefit of knowing the cost at the onset of a project.

What is the advantage of turnkey? ›

Advantages of Turnkey Installation

It essentially means being able to turn over a product or project that's completely ready to go — all you need to do is turn the key — but in reality, a turnkey product is often nothing more than a pre-packaged, one-size-fits-all solution.

What are the two main types of contracts? ›

Contract type is a term used to signify differences in contract structure or form, including compensation arrangements and amount of risk (either to the government or to the contractor). Federal government contracts are commonly divided into two main types, fixed-price and cost-reimbursement.

What are the two basic contract types? ›

There are two fundamental types of contracts: Fixed-price and cost-reimbursement. Performance risk is higher for the U.S. Government under a firm fixed-price contract, while cost-reimbursable contracts place a higher cost risk on the U.S. Government.

What are the 2 types of contracts and what is the difference? ›

Two different kinds of groups of contracts are fixed price contracts and cost-reimbursement contracts. Different types of contracts, which are contained within each of these two types of groups, may be used separately or in combination with one another. Consider hiring a lawyer to review your contract.

What are the 5 types of contracts? ›

Types of contracts
  • Written contracts.
  • Verbal contracts.
  • Part verbal, part written contracts.
  • Standard form contracts.
  • Period contracts.
  • Getting contract advice.
May 24, 2021

What are the four 4 types of contracts in construction industry? ›

The five main types of construction contracts are lump sum, time and materials, cost-plus, unit price, and guaranteed maximum price (GMP).

What are the 7 different types of contracts in project management? ›

Some of the most useful types of contracts in project management are fixed priced contracts, cost reimbursement contracts and time and materials contracts. Other types of contracts are implied contracts, unit price contracts, unilateral contracts, express contracts and bilateral contracts.

What is the weakness of EPC? ›

Disadvantages of EPC Contractor

Higher contract price as all risk is allocated to the contractor (construction risk premium), which results in an overall higher project capital cost (DLA PIPER, 2011) (Langhe & Minde, 2018).

What are the risks in EPC projects? ›

When dealing with risks for construction companies, there are two levels of risks to manage: corporate risks and project implementation risks. The principal disaster scenarios for an EPC contractor are: time disaster, commercial disaster, quality disaster, and health, safety, and/or environmental issues.

What are the roles and responsibilities of EPC? ›

The Role of an EPC Contractor
  • Concept Development. ...
  • Feasibility Studies. ...
  • Front-End Engineering and Design (FEED) ...
  • Engineering, Procurement & Construction. ...
  • Commissioning & Operations. ...
  • A Higher Standard for Your Project.

What is the opposite of turnkey project? ›

In a nutshell, a turnkey project is the opposite of a made-to-order project or the custom software.

What are the stages of EPC? ›

The EPC phase generally includes: (1) FEED (which is sometimes prepared by a different engineering firm than the rest of the EPC effort); (2) detailed engineering; (3) procurement; and (4) construction.

What does EPC mean in procurement? ›

What does “EPC” mean? In the construction industry, EPC is an acronym that stands for Engineering Procurement Construction. EPC is a type of project delivery model (or contract agreement) where contractors are responsible for the project from start to finish.

How do you negotiate an EPC contract? ›

Ten Best Practices for Negotiating EPC Contracts
  1. Control the document. ...
  2. Select the most appropriate contracting model. ...
  3. Establish a realistic budget. ...
  4. Establish an achievable schedule. ...
  5. Vet project teams. ...
  6. Define the scope and division of responsibilities. ...
  7. Identify technology risks/mitigation.

How many main contracts Does the owner have in EPC? ›

Depending on the project type and contracting paradigm, a developer (owner) must align key EPC terms with some or all of the following: (1) power purchase agreement (PPA), (2) interconnection agreement, (3) major supply agreements, and (4) operations and maintenance (O&M) agreement.

What is fixed price turnkey EPC? ›

The fixed price model

In this type of contract, the EPC contractor agrees to perform the entire project for a fixed price. The benefits of this model are obvious for an owner who gets the entire project for a determined price and costs set at the signing of the contract.

Who provides an EPC? ›

The Energy Performance Certificate is produced by Domestic Energy Assessors. To get an EPC carried out you can contact and get a quote from an accredited and DBS checked Domestic Energy Assessor. Be sure to compare assessors to find the best deal for you.

What is the opposite of an EPC contract? ›

In contrast to the EPC model, the EPCM contractor is not directly involved in the building and construction of the project, but is rather responsible for the detailed design and overall management of the project, on behalf of the owner or principal.

Can you exchange contracts without an EPC? ›

When is an EPC not required? If the property is sold before the EPC is received, then this is no longer required but the Vendor is still legally obliged to provide an EPC to the Buyer at exchange of contracts or as soon as available.

What type of projects are EPC? ›

An “Engineering, Procurement and Construction” or short EPC-Project is a particular form of contracting arrangement used in some industries where the EPC-Contractor is made responsible for all activities from design, procurement, construction, to commissioning and handover of the deliverables to the Owner or Operator ( ...

What is the other name of EPC? ›

Engineering, Procurement and Construction ('EPC') is a particular form of contracting arrangement used popularly in many countries where the EPC contractor is made responsible for all the activities from design, procurement, construction, commissioning, and handover of the project to the end-user or owner.

What happens if you buy a property without an EPC? ›

You can be fined if you do not get an EPC when you need one. The person selling the house, the landlord or the letting agent must show you the EPC if you're buying or renting.

What property does not need EPC? ›

Other exempt buildings include:

Industrial sites, workshops and non-residential agricultural buildings that don't use a lot of energy. Holiday accommodation rented out for less than four months per year. Residential buildings intended to be used less than four months a year.

Can a house be sold without an EPC? ›

By law, an EPC is required when you sell a property. It is the vendor's responsibility to make sure the property is in possession of a valid EPC when it is marketed for sale. You will need to make sure that if the EPC has expired, you commission a new one before the property goes on the sales market.

Who is responsible for EPC? ›

It is the responsibility of the seller or landlord offering the accommodation for sale or let to make an EPC available for their building. A lease assignment would be considered to be a sale and the assignor should provide an EPC.

What are the elements of an EPC? ›

The certificate will be split into four sections: Information about the property, the date of the assessment, a reference number and the average energy costs for a property of that house type.

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