9
OPINION
Who should assume the risk?
E ngineering, procurement, and construction contracts, or EPC contracts, are a type of construction contract between parties where the contractor is responsible for the engineering, procurement, and construction activities to deliver a completed project to the owner within a predefined time and cost. It is in the interest of both the project owner and contractor to critically review risks and allocate them to the party most capable of controlling them.
Sol Sim
Here at SCS Engineers, we’ve seen an increase in demand for EPC delivery on our largest projects, most notably in the renewable natural gas sector. The RNG market is exploding due to the generous subsidies aimed at addressing emissions linked to climate change. This drive to take advantage of the lucrative incentives is steering developers and owners to the EPC model to “fast track” project execution and get to production in the shortest time possible. In our current environment, where supply chain issues and labor shortages are commonplace, the ability to procure major equipment and begin site development prior to final design completion can result in material time savings.
While speed to market in order to achieve return on investment is arguably one of the biggest drivers for the push toward the EPC delivery method in the RNG project space, there are other key advantages worth noting. EPC contracts are more common for larger “mega-projects” where the pool of qualified and financially capable contractors is limited. Negotiating with a qualified EPC contractor can provide early cost certainty and a single point of responsibility that allows for easier and more flexible project financing for the owner. As an owner, selecting EPC as the contract delivery method can be a straightforward decision. But negotiations with the contractor may be challenging,
See SOL SIM, page 10
THE ZWEIG LETTER JUNE 6, 2022, ISSUE 1444
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