What are thekey differences between EPC and turnkey project companies and why they should use ERP for constructions?

 

EPC contractors and turnkey project contractors both operate in the construction industry. Are they different or are they the same? Also, is ERP for constructions useful for these contractors? Let’s find out.

 

What is an EPC project?

 

An EPC project covers the Engineering, Procurement and Construction part of a project. Here the EPC contractor designs, constructs and completes a project such as a manufacturing facility.

Example of an EPC project can be the civil work of a railway station or MEP work on EPC contract for an industrial plant.

 

How do turnkey projects work?

In turnkey projects, the client gives the entire risks and project responsibilities to the main contractor. The turnkey company gives a ready-to-use project to the client. Here, the client need not worry about the result and quality of the project as all those risks are covered by the turnkey contractor.

Large-scale projects such as construction of bridges, airports, industrial service facilities etc. are handled by turnkey project management companies.

 

Understanding the EPC and turnkey difference

Both EPC and turnkey projects cover planning and design to implementation and delivery. So, what’s the difference? The difference is in the details of the project scope. While EPC contractors handle a major part of the project, the turnkey project management companies begin the work from scratch and deliver the end project which can be put to use immediately.

For example, if there is a plot where a client wants to construct a building for selling residences in the building, the EPC contractor may take up the civil work or mechanical work or maybe the complete construction of a portion of the building. A turnkey project management company will begin their work with surveying the plot, planning, outsourcing, etc. and will complete the entire project. The turnkey projects firm will deliver the end product i.e. an entire building as per the approved plans with residences that are ready to be sold.

Here are some more differences between EPC and turnkey contractors:

  • EPC contractors and turnkey contractors deliver similar output but their work guidelines are different. EPC contractors may follow general guidelines to manage the projects. Turnkey contractors have to follow specific guidelines and may involve specific technical requirements.
  • The cost of projects of EPC and turnkey contractors may be more or less the same. The difference will be in the way costs are managed by EPC contractors compared to turnkey contracting companies.
  • EPC contractors may hire other sub-contractors and monitor their work. The turnkey project manager may hire main contractors who will be responsible for the delivery of the entire work assigned to them.
  • EPC contractors who operate large scale projects can become turnkey project management companies.
  • In a turnkey contract, the client providesonly the technical specifications and everything else has to be taken care of by the contractor. In an EPC contract, the contractors are not concerned about the output of other sub-contractors and are only responsible for the scope of work given to them. Here, the EPC contractor is taking less risk compared to the turnkey contract company.

 

Benefits of ERP for construction companies

Whether the project is handled by EPC contractors or turnkey project management companies, automation offered by the best construction management software can be beneficial to both.

Here are six benefits that contractors can experience with ERP solution for managing construction projects:

  1. Project planning can be optimised with automated functionalities such as estimation tools, contract templates etc.
  2. Contractors have to keep costs under control for the project to be feasible. Modules such as finance, supply chain management etc. help to track resources and costs efficiently.Contractors can save money and minimise expenses with cost and resource optimisation modules of an ERP.
  3. There are many stakeholders involved in EPC as well as turnkey projects. An intelligent software solution helps to maintain accountability by mapping all concerned stakeholders to a project.
  4. The decision-making process becomes easier with real-time data and analytics. Also, risks can be managed on time with project tracking features.
  5. Time is critical for projects in the construction industry. The time spent on co-ordination can be saved with automation capabilities offered by ERP software. Contractors can manage time effectively with task management functions and notifications for pending tasks.
  6. Projects can be streamlined with ERP software. Also, cloud-based ERP solutions can provide contractors with the ease of managing the projects securely on the move using handheld devices.

 

If you are a construction company handling EPC or turnkey projects then a cloud-based project management software such as OMNI ERP can be valuable for your business.

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