The difference between EPC and turnkey contract (2023)

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.

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.

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.

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.

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.

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.

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.

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 ( ...

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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).

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.

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

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 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.

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.

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.

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.

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.

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 ( ...

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.

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.

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.

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.

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.

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.