Engineering, Procurement, and Construction (EPC) Contractors: A Guide to Integrated Infrastructure Projects in Australia and New Zealand

Engineering, Procurement, and Construction (EPC) contractors are an integral part of large-scale infrastructure projects across Australia and New Zealand.

EPC contractors manage every phase of the project lifecycle, from design and engineering to commissioning and project handover, offering project owners a turnkey solution.

In this article, we’ll detail the roles and responsibilities of EPC contractors, discuss how they compare with other types of contractors, and cover what to look for when selecting an EPC contractor for your project.

What is an EPC contractor?

An EPC (engineering, procurement, and construction) contractor is a firm that delivers an entire operational project under a single contract. 

Throughout the duration of the project, the contractor’s responsibilities are broadly divided into three categories:

1. Engineering: Designing the project and conducting feasibility studies.
2. Procurement: Sourcing materials, equipment, and services.
3. Construction: Managing on-site work, safety, and quality control.

This comprehensive solution means that the project owner works with a single point of accountability. The EPC contractor delivers a fully operational asset, reducing administrative overhead and project risk. The lump-sum nature of EPC contracts provides greater cost certainty, helping project owners overcome risk-related financial management challenges.

EPC contractors are often used for large-scale infrastructure work, industrial facilities, power plants, and other complex construction projects.

For instance, in Australia and New Zealand, EPC contracts are widely used in sectors like mining, energy, and public infrastructure, with AS 4902 (Design and Construct) and FIDIC Silver Book being common standards for contract creation and risk management.

What are engineering, procurement and construction (EPC) contracts?

An EPC contract, is a type of contract in which the contractor delivers a fully operational project. In this type of contract, the contractor assumes most project risks, including cost overruns and schedule delays, typically under a lump-sum contract, where the price is fixed and agreed upon before the project begins.

What does an EPC contractor do?

EPC contracts cover the entire project lifecycle, including design, sourcing, construction, and handover. 

The majority of what an EPC contractor does is covered under three main categories.

Other Key Responsibilities

Beyond their core engineering, procurement, and construction roles, EPC contracts are also responsible for:

• Risk management: Proactively identifying and mitigating risks like cost overruns, safety hazards, and supply chain delays
• Change management: Managing modifications to the project scope, cost, or timeline, ensuring clear documentation and communication
• Commissioning: Overseeing final inspections, testing, and system handovers, making sure the project is fully operational before it's handed over to the client

Pros and Cons of EPC Contracts

EPC contracts offer both advantages and disadvantages to project owners.

Difference Between an EPC Contract and a Design-Build Contract

EPC contracts differ from design-build contracts in that in EPC contracts, the contractor assumes more responsibility. In EPC contracts, the contractor assumes the full project risk, handling engineering, procurement, and construction under a single fixed-price contract. 

In contrast, design-build contracts combine design and construction but often exclude procurement, sharing risk between the owner and contractor. 

Design-build contracts are more common for commercial and residential projects, whereas EPC contracts are typically more suitable for large-scale industrial and infrastructure projects.

EPC Contractors vs. General Contractors

Depending on factors such as project complexity, risk tolerance, and the level of involvement you want from a contractor, you might choose to hire a general contractor over an EPC contractor.

These are the high-level differences between the two contract types:

What to look for in an EPC contractor

When choosing an EPC contractor, these are some of the essential qualities you’ll want to prioritise:

• Proven Experience

  A track record of successful large-scale projects with similar scope and engineering requirements to yours.

• In-house Capabilities

  The ability to handle engineering, procurement, and construction under one roof to improve efficiency and communication.

• Commitment to Safety & Quality

  Best in class work with unwavering adherence to WHS standards and ISO 9001 certifications.

• Risk and Change Management Processes

  Clear, documented processes for identifying and mitigating risks and for handling cost, timeline, and scope changes.

• Transparent Communication

  An emphasis on client-contractor communications, with regular progress reports and open collaboration with stakeholders.

When to Work with an EPC Contractor (and When Not To)

EPC contractors tend to be more suitable for complex builds and large-scale industrial projects like wind farms, LNG terminals, and transport infrastructure. 

Another important consideration is the project owner’s accountability needs. If the project owner prefers simplified communication and reduced administrative overhead, an EPC contractor may be a good fit, as they provide a single point of communication and accountability.

Similarly, if budgets and timelines are tight, an EPC contractor’s integrated approach may be suitable for accelerating delivery while managing cost risk through fixed-price projects.

EPC contractors aren’t a good fit for all projects, though. Some scenarios in which you might choose not to use an EPC contractor include:

• Small projects where a general contractor and separate design consultants may suffice
• Projects with a strong design focus, such as high-end residential or bespoke commercial spaces
• Situations where the scope is undefined or subject to change (such as experimental energy projects)

EPC contractors play a crucial role in the successful delivery of large-scale infrastructure projects.

By managing the entire project lifecycle from engineering to procurement and construction under a single contract, they provide a streamlined approach that minimises risk, offers cost certainty, and simplifies project management. While they may not be suitable for all types of projects, especially those with flexible scopes or heavy design emphasis, EPC contractors are an ideal fit for complex, industrial projects where efficiency, reliability, and clear accountability are paramount. When selecting an EPC contractor, it’s important to prioritise experience, in-house capabilities, safety, and risk management processes to ensure a successful partnership.

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