When Speed Counts: EPCM Delivery for Industrial and Manufacturing Projects

Owners building complex industrial projects face a wide range of risks in delivering their projects as quickly and as cost-effectively as possible. This is especially true when the project is still evolving in terms of scope or identifying long lead items, but, regardless, the planned start of production is the project’s primary driver. For owners facing this scenario, integrated services like the Engineering, Procurement, and Construction Management (EPCM) delivery method may be the best option for your project.

EPCM encompasses the coordinated management of the project’s design, procurement, construction, and administration, with construction and design happening in tandem to crash the project schedule while simultaneously realizing significant potential cost reductions. EPCM achieves this by commencing project construction while design is still in its early stages, enabling the team to tender and award project elements prior to completed full package of design documentation.

EPCM Risks: Is Faster Always Better?

For EPCM to succeed, however, owners need to understand the risks involved. These include:

• Communications:  Even if the of project stakeholders is limited, at the core of EPCM delivery is constant and open coordination between the client and the EPCM team. Without the free flow of knowledge, ideas, concerns and maintenance/operational experience, efficiency can decrease significantly.
• Costs: As the scope is likely to evolve and change across the design and construction phases, EPCM projects can expect additional engineering costs as work progresses. Nevertheless, these additional costs are still significantly less than making changes during execution. The key to addressing this risk is to define capital expenditure (CAPEX) and operational expenditure (OPEX) at project commencement, and to understand that both CAPEX and OPEX will fluctuate in EPCM delivery., Summary of both stays at the defined level, and the contingencies are under Client control, not contractors. This is a major departure from traditional design-bid-build delivery where the team only sees lump sum costs with various contingencies and, of course, large margins. Frequently on these projects, the consequence of changes occurring late in the project lifecycle is the establishment of a mechanism to recover CAPEX with OPEX increases, and then wrongly calling it savings.
• Quality: The speed of EPCM delivery means quality assurance is a key challenge. A rigorous quality control approach executed as planned is necessary to mitigate this risk. However, EPCM offers its solution to this risk: outside of early works, such as enabling works foundations, or structure, EPCM allows more time for engineering core internal systems, like building MEP systems. Emphasizing quality during planning and commencement, then, can help mitigate this risk.
• Capacity and Expertise: Identifying the right contracting partners to realize the benefits of EPCM is paramount to ultimate success. Pre-qualifying subcontractors who understand EPCM and have the resources available to achieve the fast-tracked delivery process can help owners avoid this risk. Finding the right management partner who can oversee and administer multiple construction contracts concurrently is a challenge, undoubtedly, but once that partner is aboard, then the diversification advantages of EPCM can drive progress forward much more quickly than other delivery methods.

Finding the Right Partner

Choosing a qualified and experienced consultant to help realize the benefits of EPCM while mitigating the inherent risks can help industrial owners get their facilities up and running as quickly as possible at the lowest cost. Find the partner firm that best fits with your needs depends on many factors, but at a minimum, we recommend seeking out a project management company that brings:

• Recent, relevant engineering experience in the type of project you need to deliver.
• Experience in procurement on relevant markets
• Strong experience and capabilities in managing similar projects.
• The latest management methodologies to ensure a smooth and open collaboration among all involved stakeholders.
• A technology suite that facilitates communication through the dissemination of timely, accurate data and reporting.

No matter the size or scale of your project, a PM partner with these characteristics can add value to the process and guide you through the nuances and opportunities of EPCM.

Case Study: A New Greenfield Manufacturing Facility and EPCM

When executed correctly with the right team, EPCM can deliver impressive results. For example, in Poland, Hill International is providing EPCM support for multiple facilities for a leading materials technology client in Poland. The team’s EPCM work includes supporting the delivery of tree buildings, while CM support will encompass six additional facilities. All of the new facilities will include new systems, tie-ins, and related infrastructure. The project will build-out a large greenfield site and will ultimately employ approximately 400 people involved in materials technology manufacturing processes for a variety of products related to green energy.

Hill’s specific services include consultancy and permitting services, cost management, risk management, impact analyses, schedule management, construction quality inspection, budget and schedule monitoring, reporting, site management, commissioning, handover, and close-out, among others.

To date, EPCM has delivered several quantifiable benefits to this project, including:

• Flexibility to adapt to project needs as they occur.
• Updating and prioritizing tasks on critical path by changed production needs.
• Cost efficiency through the procurement of long lead items as well as choosing local contractors to execute works.
• On-time delivery.

The Path Forward: Is EPCM Right for You?

Choosing the EPCM delivery method is not an easy decision. Simply determining if your organization has the appetite for risk and the sophistication to realize the trade-offs of EPCM can be an involved process. We recommend working with a qualified project manager alongside your internal team to weigh the costs and benefits of EPCM long before any specific project is on the table. This can help educate your team on the options available and see what works best for your company and your project.

For those organizations with the need for an accelerated schedule and who are ready to embrace the challenges and opportunities of EPCM, the process can be rewarding both in the short- and long-term, as the lessons learned and best practices garnered from your first EPCM success can be applied and evolved over your entire portfolio.

If your organization is planning a schedule-driven, cost-sensitive project, we encourage you to reach out to learn more about EPCM from our experts. Hill International, Inc. Operations Director Tomasz Karczewski has more than 20 years of professional management and engineering experience, primarily focused on the industrial sector. With a strategic mindset and a keen focus on achieving results he consistently leads teams to success while ensuring the highest standards of quality and client satisfaction. As Operations Director for the Industrial Sector in Europe at Hill, Tomasz is responsible for overseeing and managing complex projects in the industrial sector. He leads strategic initiatives, ensures efficient project delivery, and leads cross-functional teams to achieve project milestones and objectives.