What is an EPC general contractor? Need to know: Pros and cons and regulations

The EPC general contractor is the unit responsible for technical design to construction, providing materials and technological equipment for the factory project, ensuring testing and handing over the completed project to the investor.

What is the definition of an EPC general contractor?

EPC general contractor (general construction contractor) stands for Engineering, Procurement and Construction, meaning the general contractor designs, constructs and provides construction technology equipment. This is the unit responsible for technical design to construction, providing technological equipment for the factory project and handing over the completed project to the investor.

It is easy to confuse the two types of contracts: EPC General Contractor (General Construction Contractor) and Design – Build General Contractor (General Design – Construction Contractor), because both general contractors require high professional and technical qualifications and responsibility for quality design and construction process. The biggest difference is that the EPC contract stipulates the general contractor participates not only in the design and construction of the factory but also in the supply and installation of machinery lines, ensuring production activities for the factory.

Requirements for EPC general contractor capacity

Circular 30/2016/TT-BXD of the Ministry of Construction stipulates details and specifics about the EPC general contractors. Accordingly, the EPC general contractor must have sufficient operational capacity for the entire scope of work of the EPC contract, including capacity in design, equipment supply, training services, operation, and transferring technology, construction works according to the provisions of law. In addition, the contractor is not allowed to subcontract more than 60% of the work volume within the scope of the EPC contract.

In addition to the requirements for quality design and construction expertise, the EPC general contractor must be the unit having the most knowledge about the factory’s technology and production lines. After installation, they must ensure technology transfer to the factory, warranty and maintenance services for the provided machines.

Regulations on EPC general contractors that investors need to know

To carry out an effective project, the EPC general contractor needs to clearly understand his rights and obligations as stipulated in Article 15 of Circular 30/2016/TT-BXD. The EPC general contractor needs to check the correctness of the applied survey, design and technical documents, and ensure the correct implementation of the work list in the contract.

The EPC general contractor is responsible for adding and selecting subcontractors to ensure the quality, price and progress of work after being approved by the investor. They coordinate subcontractors using rationalized auxiliary works, which avoids waste and maintains site security and order.

Besides, the EPC general contractor needs to proactively coordinate with the investor to organize training for managers and operational workers to use the project based on the signed contract. Keep confidential information related to the contract as per the agreement. Prepare construction design by the basic design or FEED design according to the provisions of law.

In addition, the EPC general contractor is responsible for organizing the procurement and supply of technological equipment to meet contract requirements, ensuring that the products do not violate intellectual property rights according to legal regulations. Carry out tasks such as testing, adjustment, commissioning and handing over the project according to the agreement.

What is an EPC general contractor contract? Cases of applying EPC general contractor contracts

What is an EPC general contractor contract?

According to Decree No. 37/2015/ND-CP, the EPC general contractor contract is a contract to design – supply technological equipment and construct all work items of a construction investment project. This is a contract between the investor and the contractor to carry out a complete package of work including the survey, design, procurement of materials, supply of technological and technical equipment, and construction to operate synchronously.

Cases of applying EPC general contractor contracts

For large manufacturing and assembly factory projects having hundreds of thousands of employees and many machinery lines, finding a reputable EPC company to construct will be the right choice for investors.

However, the value of an EPC contract is often very large, and many work items are difficult for the investor to control in detail. There will be some risks when the EPC general contractor is assigned both construction and technological equipment installation. Therefore, the EPC general contractor contract should only be applied when the investor has specific regulations on the scope of the contract. Circular 30/2016/TT-BXD regulating EPC general contractors also provides detailed instructions on the contents that need to be agreed, such as requirements on quality management of construction, testing, commissioning, warranty, and maintenance.

Pros and cons of EPC general contractors

Pros of EPC general contractor

Choosing an EPC general contractor helps investors only need to manage and work with one main responsible contact. This helps investors save optimal costs, time and human resources because they can take advantage of experience and qualifications about the technical level of EPC general contractors.
In addition, choosing an EPC general contractor also helps investors reduce legal pressure because the EPC general contractor often bears high legal responsibility for all problems arising from the design and construction process.

Cons of EPC general contractors

The value of EPC contracts is often very high and many work items are difficult for the investor to control in detail. In particular, the owner is at risk of losing control of costs and time because the EPC general contractor can propose low initial price proposals to be able to sign the contract and then increase the price during the implementation process.

In addition, the investor may have limited flexibility in selecting and working with subcontractors because the subcontractor may be selected based on the decisions of the EPC contractor. In particular, the EPC model also limits the ability to accept changes in requirements of a project once it has begun because changes can increase costs and affect project progress.

Although it is a Design – Build general contractor, DELCO constantly researches technologies, manufacturing lines of factory, operating procedures of factories belonging to many different manufacturing fields… to proactively support investors in optimizing the infrastructure construction process, calculating the mechanical electrical plumbing (MEP), ensuring the most effective line installation, safe production operations of the factory.

Dorco Living Vina Ha Nam Factory in 2022

DELCO is the general contractor in the design and construction of factories and mechanical electrical plumbing (MEP) for many large projects. DELCO has many complex production line systems such as Power Plus Technology Vietnam factory, NITTOKU factory in Vietnam, Curious Seiki Vietnam factory, DORCO LIVING VINA Ha Nam factory.

NITTOKU Vietnam factory has a paper manufacturing line more than 100 meters, with strict requirements on the machinery system to ensure the production standards of the Japanese Investor. The DELCO engineering team has coordinated closely with Japanese engineers to support the construction and installation of these complex machinery systems.

According to Circular 30/2016/TT-BXD and Decree No. 37/2015/ND-CP

See more: Types of general construction contractor contracts