EPC stands for Engineering, Procurement, Construction and is a prominent form of contracting agreement in the construction industry. The engineering and construction contractor will carry out the detailed engineering design of the project, procure all the equipment and materials necessary, and then construct to deliver a functioning facility or asset to their clients. Companies that deliver EPC Projects are commonly referred to as EPC Contractors.
In some instances which can be related to the time a project owner would like the project delivered, an engineering and construction company can be given work on a direct reimbursable basis to start with followed by conversion to Lump Sum Turn Key once sufficient time and resources can be allocated to quantifying and pricing the scope of works.
One method to convert from a reimbursable to Lump Sum Turn Key Contract is called an Open Book Estimate or OBE in which the Contractor will open all their working documentation or books for representatives of the client to assess what the total scope of works for delivering the project will be. An agreed Lump Sum Turn Key scope of works and price will be negotiated and agreed between EPC Contractor and Project Owner during the execution of EPC activities.