The construction of engineering projects is a complicated process, which requires professional skills and experience. The construction industry relies heavily on contracting jobs out to the relevant experts. EPC and Turnkey projects are two such methods of contracts.
Let’s understand the difference between the two -
EPC stands for Engineering, Procurement, and Construction. Companies that undertake such projects are known as EPC Contractors. It is a type of contract that holds the EPC Contractor responsible for the whole project including designing, procurement, construction, and commissioning, along with the final handover to the Owner or End User. EPC Contractors not only design and engineer the project, but they source the materials and equipment required, along with building the asset according to the specifications mentioned by their clients.
On the other hand, the term ‘turnkey projects’ is used to describe projects that the provider or supplier is supposed to hand over to the client in a ready-to-use condition. They must be able to “turn a key” for the project or delivery to be fully operational. Examples of big turnkey projects include airports, buildings, or even some IT products. Since the supplier is responsible for the costs, delivery dates, and the scope of the project, the customer is immune from any risks inside the construction of the project. Construction businesses, manufacturing companies, and consulting firms mostly take part in turnkey projects, with construction companies taking the lead.
The significant point of difference between EPC and turnkey projects is the amount of responsibility the contractor has to take. While the contractor can hire a third party for different aspects of the construction and execution, with turnkey projects the supplier is solely responsible for all aspects of the project. Secondly, EPC projects have the contractor working with basic engineering procedures, however, with turnkey projects there are more specific rules for technical procedures, to make things easier for the End User.
Shapoorji Pallonji is a global, diversified company established in 1865 delivering end-to-end solutions in segments including Engineering & Construction, Infrastructure, and Real Estate. With a focus on sustainable development, they have been the brains behind numerous megastructures and landmarks such as the Jammu Udhampur Highway, Lilavati Hospital (Mumbai, India), Jawaharlal Nehru Stadium (New Delhi, India) for the Commonwealth Games 2010, among many others.
Originally published at http://realestateandepc.wordpress.com on February 4, 2022.
