Work starts on delivering new FIDIC EPCM contract

New FIDIC task group starts work on new Engineering, Procurement and Construction Management (EPCM) contract.

The FIDIC board has agreed to the setting up of a new task group by the FIDIC contracts committee, which will lead over time to the development of a new FIDIC Engineering, Procurement and Construction Management (EPCM) contract.

EPCM contracts can vary in their scope and type, but the proposed FIDIC version is for a contract between an owner or project sponsor and a single EPCM contractor where the contractor provides the following services for the owner or sponsor’s project: -

• Overall engineering and design for the project (but also providing for management, as agent of owner/ sponsor, for some specialty engineering and design/ EPC contractors for sub-elements of the project).

• Procurement, as agent of the owner/sponsor, of the goods, materials, equipment, and construction and related services for the project.

• Management of the construction trade contractors and construction related services providers as agent for the owner/sponsor through completion and commissioning of the project.

EPCM contracts represent a better alternative to other forms of contracting for the design and construction of capital projects. They offer the ability to begin the project with reduced risk before the full scope is developed and can deliver significant schedule savings where ‘time to market’ is critical. They can also offer an ongoing ability of the owner or project sponsor to control the project cost and schedule and also control the design and specification/performance of the project well into its development and delivery phase.

EPCM contracts can also avoid the dilution of accountability and reduction in the number of interfaces and coordination efforts and bring centralised risk identification, management and allocation which can continue to be modified as risks are better understood and defined. They also offer continuity through concept, design, equipment selection and delivery, construction and handover.

The new contract, aimed at the global market, is a significant development for FIDIC in an important area of the international engineering, construction and infrastructure industry. EPCM services represent an additional market offering for the engineering firms represented by FIDIC provided they have the necessary expertise and in some ways these firms may well be better positioned to provide EPCM services versus other providers.

Commenting on the setting up of the task group and the prospect of a new EPCM contract, FIDIC contracts committee chair Vincent Leloup said: “I am delighted that FIDIC has started work on this exciting project. We have assembled a highly knowledgeable task group, under the guidance of our contracts committee liaison Deryl Earsom and given his experience in the global contracts arena, Deryl is very well placed to lead and understand the challenges of delivering a contract like this.”

FIDIC contract committee liaison Deryl Earsom commented: “We have assembled a knowledgeable group of global professionals representing many parts of the industry, jurisdictions and perspectives to sit on this task group to develop this important FIDIC contract, which we hope will be seen as a crucial project for the international engineering, construction and infrastructure industry.

” The new contract is expected to be launched to market towards the end of 2023.