If you’re planning a major infrastructure or energy project in 2025, understanding the EPC model isn’t optional—it’s essential. This delivery method has become the backbone of how complex projects get built around the world, from gas-fired power plants to utility-scale solar farms.
In this guide, you’ll learn exactly how engineering procurement and construction works, why project owners choose this model, and how to navigate its advantages and challenges. Whether you’re evaluating an epc contractor for your next development or simply need to understand how epc contracts work, this comprehensive breakdown covers everything from feasibility to final performance tests.
EPC stands for Engineering, Procurement, and Construction—a turnkey project delivery model that has become the standard for large scale projects in energy and infrastructure development. For project owners evaluating delivery options in 2025, understanding this contracting arrangement is critical for managing project costs and timelines.
The EPC model is a lump-sum turnkey (LSTK) project delivery approach where a single contractor assumes responsibility for design, procurement and construction, and commissioning of the entire project.
In epc contracts, the contractor typically guarantees a fixed completion date and a lump-sum price, taking on most performance and schedule risks. This risk allocation makes the epc approach particularly attractive for owners who want cost and schedule certainty.
Typical sectors using EPC include:
An EPC company is a single entity that manages design, procurement, construction, testing, and handover of large industrial or infrastructure assets. These epc companies serve as the project owner’s primary point of contact throughout the entire project lifecycle, coordinating dozens of disciplines and hundreds of suppliers under one master contract.
EPC contracts are the standard delivery model for utility-scale solar farms, gas-fired power stations, offshore platforms, and complex infrastructure projects. They bundle all project execution responsibilities into one agreement, giving the project owner a predictable path from contract signing to commercial operation.
The typical lifecycle of an EPC project follows these stages:
The epc contractor commits to key milestone dates—mechanical completion, substantial completion, and commercial operation date—with financial penalties (liquidated damages) for delays that can reach 10-20% of contract value.
Payment milestones typically include an advance payment (10-15%), progress payments tied to completed work, a substantial completion payment, and final retention release after the defects liability period.
Concrete example: A 200 MW solar PV project under EPC would bundle site preparation, piling and mounting structure design, module procurement (typically 400,000+ panels), inverter station engineering, MV collection system, and grid interconnection—all under one contract with a 12-18 month construction schedule and 25-year performance guarantees.
The engineering phase in epc projects is divided into conceptual, basic (or FEED), and detailed engineering stages that define the entire project before a single foundation is poured. This progression ensures that project costs, technical specifications, and construction methods are locked down before major commitments are made.
The engineering phase establishes the foundation for the entire process—errors here cascade through procurement and construction, making thorough risk assessment and design review essential.
The procurement phase can account for 60-80% of total EPC project cost, making the procurement process the most financially significant activity in energy and industrial complex projects. Efficient resource allocation during procurement directly impacts project timelines and overall project execution success.
Key procurement steps include:
Long-lead items requiring early procurement attention include:
Global supply chains—with modules manufactured in Southeast Asia, transformers built in Europe, and construction sites in the Middle East—require detailed plans for logistics, customs clearance, and on-site storage. Supply chain disruptions during 2021-2023 highlighted the importance of contingency plans and alternative supplier strategies.
Quality control activities include Factory Acceptance Tests (FAT), third-party inspections at manufacturer workshops, documentation review against ISO, IEC, and API standards, and certification verification for all essential materials.
The construction phase is the most visible stage of epc projects, transforming engineering drawings and procured equipment into an operational facility. This is where the construction team brings months of planning to physical reality, often under challenging site conditions and tight construction schedules.
Key construction activities follow a logical sequence:
Solar EPC construction example: A utility-scale solar project follows a specific sequence—surveying and piling (driving thousands of steel posts), mounting structure assembly, module installation, DC cabling, inverter station placement, MV substation construction, and grid interconnection. A 100 MW project typically requires 18-24 months from groundbreaking to commercial operation.
The commissioning sequence progresses through defined stages:
HSE (Health, Safety, Environment) performance is tracked through metrics like Lost Time Injury Frequency Rate (LTIFR), with top epc companies targeting rates below 0.5. Compliance with ISO 45001 safety management standards and local safety regulations is mandatory on international projects.
In modern renewable energy projects and infrastructure projects, the roles of designer, developer, and contractor are sometimes combined but often remain separate entities with distinct responsibilities. Understanding these differences is crucial for project owners structuring their project delivery approach.
Example: A 300 MW solar PV project in the Middle East might involve an international developer (arranging financing and offtake agreements), a regional epc contractor (managing construction and local subcontractors), and a European engineering consultant (providing specialized inverter station design). The developer takes development risk, the EPC contractor takes execution risk, and the designer takes professional liability for their deliverables.
Effective cost control in EPC starts with a detailed Bill of Quantities (BoQ) that serves as the foundation for bidding, budgeting, and managing project costs throughout the entire project lifecycle. The BoQ translates engineering designs into measurable quantities that can be priced and tracked.
Typical BoQ content includes concrete item groups:
Digital BoQ tools and project management software—including Primavera P6 for scheduling, Microsoft Project for coordination, and specialized cost control systems—link quantities with schedule activities and cash flow forecasts. This integration enables real-time tracking of earned value and cost variances.
Modern EPC projects, especially in renewables, update BoQs continuously based on design evolution. Changes in module efficiency or inverter sizing on a solar project directly affect quantities, construction schedules, and ultimately the Levelized Cost of Energy (LCOE) that determines project economics.
Accurate BoQ documentation reduces disputes between project owner and epc contractor by making scope and pricing transparent. When variation orders arise, a well-structured BoQ provides the basis for fair pricing of changes, ultimately contributing to project completion without prolonged claims negotiations.
EPC contracts bundle design, procurement, and construction responsibility under a single contractor, dramatically reducing the project owner’s coordination burden—particularly valuable on multi-billion-dollar power plants and complex infrastructure projects. This single point of accountability is why clients benefit from the EPC model for technically demanding projects.
Key advantages include:
Example: A 1 GW solar portfolio developed by a major utility used standardized EPC lots across five sites, enabling repeatable designs, volume procurement discounts on modules, and accelerated project execution. The approach reduced combined project timelines by eight months compared to site-by-site contracting.
EPC models accelerate time to market for power and industrial projects, allowing earlier revenue generation and improving project finance terms through reduced construction period interest. Global owners—utilities, oil majors, and infrastructure funds—often prefer EPC for projects in new geographies where they lack local execution capabilities.
While the EPC model offers predictability and cost savings, it also concentrates substantial risk on the epc contractor and can lead to disputes if scope, schedule, and commercial terms aren’t carefully managed. A thorough risk assessment during contract development is essential for successful delivery.
Typical risks with specific examples:
Fixed-price epc contracts signed before 2020 faced severe stress during the 2021-2023 global supply chain crisis and energy price volatility, with some construction contractors experiencing margin erosion of 5-10 percentage points.
Contractual issues commonly arising include:
Mitigation measures include robust FEED development, realistic project timelines with adequate float, risk-sharing mechanisms for defined commodities, appropriate contingencies (typically 5-15% of contract value), and strong project controls with monthly reporting. Managing multiple contractors under traditional approaches involves identifying potential risks at each interface—exactly what EPC aims to eliminate.
EPC companies are rapidly adopting digital tools to manage complexity, enhance efficiency, and reduce project costs across the entire project lifecycle. The construction industry transformation accelerated dramatically after 2020, with distributed teams and remote collaboration becoming standard practice.
Key digital technologies in current epc projects:
Cloud-based collaboration platforms became essential after 2020, enabling engineering teams in different countries to work on the same 3D model simultaneously. A significant trend is the integration of these tools into unified project execution platforms that connect engineering, procurement, and construction sites in real time.
ESG (Environmental, Social, and Governance) criteria now strongly influence how epc projects are designed, executed, and financed. Lenders, investors, and project owners increasingly require demonstrable sustainability performance as a condition of project approval.
Specific sustainability practices in modern EPC include:
Environmental compliance requirements:
Social aspects receiving increased attention:
Many epc companies now report CO₂ emissions, waste generation, and water consumption data for each major project to meet investor and lender ESG reporting requirements. These metrics directly influence access to capital for future projects, making sustainability performance a key trend in contractor selection.
The global EPC market is driven by energy transition investments, grid modernisation requirements, digital infrastructure expansion, and water security projects across every region. Understanding emerging trends helps project owners and the private sector position for successful project delivery in coming years.
Regional trends shaping the market:
The share of EPC work in renewable energy projects continues growing, with solar, wind, battery storage, and green hydrogen representing the majority of announced energy projects through 2030. Renewable energy projects now account for over 60% of new power generation EPC awards globally.
Consolidation trends show large global EPCs increasingly partnering with local firms to meet localisation requirements and in-country content mandates. This joint venture approach combines international technical expertise with local market knowledge and workforce.
Looking ahead, the EPC model will continue evolving with digital tools that compress project timelines, new contract models that better allocate emerging risks like supply chain disruptions, and decarbonisation targets that reshape what gets built. For infrastructure development in an era of energy transition, EPC remains the preferred delivery model for complex projects requiring integrated design, procurement, and construction expertise.
Whether you’re evaluating construction projects for renewable energy, industrial facilities, or critical infrastructure, understanding the epc framework positions you to make informed decisions about contractor selection, risk allocation, and project management approach. The successful completion of your next major project may well depend on how effectively you leverage this proven delivery model.
