Transcription
Hello dear students. We are talking about project business and I want to remind you about what is EPC and what is a PCM for a specific reason. When we are talking about project business, we must refer, and much of our materials and much of the firms that are talking about project and their business are referring to EPC and a PCM. So we must be comfortable with those concepts and understand what those concepts mean.
Now, this is what they mean. EPC: Engineering, Procurement, and Construction. It is a particular contracting arrangement or contract content where the EPC contractor is made responsible for all the activities from design, procurement, construction, and commissioning and handover to the project to the end-user or owner. So the EPC contractor has the sole responsibility and also financial responsibility of delivering the project to the customer and signing all contracts for itself and taking actually the ultimate juridical and financial risk for delivering the whole entity.
Whereas Engineering, Procurement, and Construction Management, EPC M, refers to contracting where the EPC M contractor provides engineering, procurement, and construction management services to the customer. But the customer, the owner, or the employer directly signs the procurement contracts and the contracts with other contractors to build the project. So the EPC M contractor is actually a kind of a consultant or professional consultant that becomes part of the owner's organization and works for the owner to manage the project. But the owner signs the contracts in its name and actually carries the actual juridic, political, and financial risks itself.
Now, the next picture illustrates this. I have used a similar kind of a picture here that you already are knowledgeable about. You have been seen, you have seen this same picture in some other courses, for example, Advanced Project Based Management. But now I have colored a few boxes of these two different organizational structures with yellow color. So O refers to owner, the for example, user operator for the project, and C refers to contractor. SC is subcontractor and so on.
And if we look at the picture to the right, then we can see that this project manager or single responsible contractor can be a kind of an EPC contract that takes the whole responsibility for the owner and signs the contracts with other contractors and in this way runs the whole project. When we look at the left picture, left side of a picture of this slide, then we can see that this management contractor is a kind of an EPC M contractor who only manages the project for the owner. So the owner is liable for signing all the contracts with other contractors. But the management contractor or EPC M contractor becomes a kind of an almost part of the owner's organization and helps the owner to manage the project as a specialized kind of a managing consultant and capable party of running the project further for the owner.
So this is what EPC and EPC M means, and I think that this is rather useful information for you to discuss the project business further. Okay, thanks, and see you in the next video lectures. Bye.