Engineering procurement construction (EPC) and engineering procurement construction management (EPCM) services are prominent forms of contracting used in the construction industry. While EPC is a turnkey service comprising of designing, planning, execution and final delivery of projects to owners, EPCM is a professional service dealing with engineering procurement and management of construction. EPCM contractors act as representatives of owners.
As both EPC and EPCM services enable higher quality of work, compliance to regulatory frameworks, and are cost-effective, they are being widely used in the global construction industry. In 2015, the global EPC & EPCM services market stood at $1.30 trillion; according to analysts at Technavio, the market will grow at a CAGR of around 5% by 2020.
What is driving the global EPC and EPCM market?
To begin with, there has been a great deal of construction work occurring in almost every part of the world. While many developed countries are working to improve their existing infrastructure, most developing countries have heavily invested in the construction sector. Additionally, in a bid to reduce the risks and uncertainties in projects, there has been a trend towards the use of advanced technology-based solutions, which facilitate visualization, centralized management of project information, and modern economic estimations.
Knowledge of local markets is another major driver of the EPC and EPCM services market. Buyers always prefer suppliers who have an understanding of both the global and local spheres; not only does this allow them to comply with regional labor laws, tax policies and regulatory framework –they can also reduce the risks that can arise as a result of a lack of experience in the regional market, as well as other socio-political factors.
One major way in which the construction industry is changing is in the use of eco-friendly techniques and equipment. EPCM and EPM services usually see to it that all the techniques used in the construction process are eco-friendly and comply with the standards set for ‘green construction’.
Additionally, with the emergence of newer finance options such as crowd funding, public-private participation (PPP), and green bonds, several construction companies are investing in EPC and EPCM services.
What are the challenges facing the market?
Every industry has its own set of challenges that it works to overcome. In the case of the EPCM and EPC market, the biggest challenge comes in the form of stringent government regulations, as well as cost over-runs and heavy dependence on local labor. However, as many local suppliers are involved in the entire process, it becomes easier to comply with the local government regulations as well as coordinate with the local labor force.
