§ EPC stands for Engineering, Procurement & Construction
§ Also known as Turnkey project (Turn of the Key)
§ A new and prominent form of Contract Agreement in Construction industry.
§ Key feature: To execute and deliver the Project (from Planning to Completion in all respects) within Agreed time and Budget.
§ In a nutshell, EPC Contractor will carry out:
A. Carry out the detailed Engineering Design of the Project.,
B. Procure all the Equipments and Material for construction of the said Project.,
C. then, Construct the Project and Deliver to their Client.
§ Usually in EPC Contracts, the Client employs PMC - Project Management Consultant to supervise the work. (Click here to access the article on PMC)
Need of EPC in Indian Railways
§ In Conventional Rate Contracts (present Works Contracts), the usual drawbacks are
A. Delay in Survey
B. Delay in preparation of Estimates
C. Delayed Measurements
D. Inadequate funds
E. Cost over runs
F. Time over runs
G. Disputes on various issues with Contractors
§ To address all the above issues, Railway Board have proposed a Model EPC Agreement, which is released recently.
Salient features of Model EPC Agreement of Indian Railways
ü Lump sum Contract Price (subject to Price Variation clause)
ü Within Time
ü Damages due to delay i.e., 0.05 % of Contract Price for one day delay.
ü Maximum damages are not to exceed 10 % of Contract Price. That means, maximum delay is 200 days ( 200 x 0.05 = 10)
ü Assigned responsibility for Investigations, Design & Construction to the EPC Contractor
ü Transferring the Construction Risk to the EPC Contractor.
ü Payments are linked to the Specific Stages of Construction. (unlike individual measurements like in existing rate contracts/Works contracts)
ü Defect Liability Period - 2 years
ü Bid Security (Replacing EMD )
ü Performance Security ( May be replacing Security Deposit and Performance Guarantee)
Examples of EPC in Indian Railways / Transport sector.
1. RE - Railway Electrification Project - 781 Kms in Konkan Railway given to L & T in the year 2017.
2. Delhi Metro Railway Construction
3. Construction of Railway Bridge in Jammu - Udhampur Railway Link