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In April 2023, the Institution of Chemical Engineers (IChemE) published the 1st edition of The Blue Book, Engineering, Procurement and Construction Management (EPCM) Contract which is the first standardised EPCM contract. The Form of Contract contains a model form of agreement, general conditions, supplemented with detailed guidance notes and optional clauses dealing with payment jurisdiction, payment mechanism or other project specifics.

Prior to its release, EPCM contracts were typically bespoke contracts because of the lack of an appropriate standard form contract.

The Blue Book has been warmly welcomed in the industry by employers, contractors and advisers and FIDIC are expected to follow suit and release its own EPCM contract the end of 2023.

What is EPCM and how is it different to Engineering Procurement Construction (EPC)?

Under an EPC Contract, for example the FIDIC Silver Book 2017, the contractor delivers a complete facility to the developer from commencement through to final completion/hand-over. In contrast, the EPCM contractor does not carry our any construction work but takes on a role of design and project management and co-ordination, more akin to a professional services contract.

The key differences between the two forms of procurement are summarised below.

The publication of The Blue Book fills a gap in the availability of standard forms for EPCM contracting. Primarily directed at process engineering and other performance related projects, The Blue Book contains a number of helpful guidance notes and schedules to aid the user. In addition, The Blue Book's optional conditions and payment conditions (reimbursable, fixed price or target cost) for use in addition to the general conditions means that the clauses can be aligned to the project objectives and locality. For example, Part A would be selected for projects in the UK and includes payment provisions to take account of the Construction Act; Part B contains provisions dealing with target cost pricing, and Part C allows parties to include project specific mechanisms, such as the use of dispute review boards and expert determination.

While similar in same, the EPC and EPCM contracting models are vastly different and care should be taken when considering the form of contract to be used on a project having regard to contracting and financing structure, project requirements, roles and sophistication of parties, time and costs etc.

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First of its kind: 'The Blue Book' Engineering, Procurement and ... - Lexology