• construction
• EPCM
• Risk Management

Industrial EPCM (Engineering, Procurement, Construction Management) project has a large contractual material and multiple interfaces between project parties. Many of the implementation phase problems originate from the tender and contract phase which can create overload for the Construction Management team on site. At this stage, Owners often do not have a construction phase organization in project. The focus of the contract negotiations tends to be on engineering and supplier procurement, which are more developed and where the Owner’s expertise is strongest.

When Owner Decisions Become Site Risks

In the EPCM project model, the Owner has an active role. In the project model, all the responsibilities and risks are not transferred to the EPCM contractor. There is continues decision making needed for the owner regarding approvals, interfaces, engineering and contractual items. Delayed decisions may directly impact engineering, procurement, the construction schedule and ultimately the Construction Management workload on site. Therefore, decision making capability should be recognized as a project risk, and not only as the Owner’s internal issue.

The Owner may also have separate contracts with suppliers, contractors and other consultants related to the construction project. The content of those contracts may not be transparent to the EPCM contractor, especially regarding the interfaces. If the interfaces remain unclear during the implementation phase, it may lead the CM team to become only a problem solver on site. This will take the time away from the actual site management and supervision work.

Therefore, it would be very important to discuss with the Owner in detail the Construction Management and implementation phase items already during the contract negotiations. This would help to clarify the responsibilities and expectations between the parties. Helpful practical solutions would be to create a common site organization document with brief role descriptions.

Standard Appendices Could Reduce Contractual Uncertainty

EPCM projects are currently missing widely used standard contract models and appendices. Even though EPCM contract models vary between the Owners, appendices could be standardized, particularly the RASCI matrix (Responsible, Accountable, Supportive, Consulted and Informed), Scope of Work, and Project Execution Plan.

The standard appendices would not simplify the complex EPCM project model, yet they would support Owners and EPCM contractors to identify the key responsibilities, needed decisions and recognize risks before they become site organization problems to handle and manage. Good cooperation and fewer contract debates would help both parties to focus their effort on actual project execution instead of arguing about responsibilities.

Source:

Vähämaa, H. (2026). Contractual risk management in an EPCM project : during the tender and contract phase from a construction management perspective. Master’s Thesis. Turku University of Applied Sciences.