An important difference between the EPCM form and the EPC form is that in the EPCM model, the contractor provides professional services (including design) but acts as an intermediary in the construction contracts for the project.
The EPCM-contractor acts as a representative of the customer and, acting on his behalf, concludes direct contracts between the customer on the one hand and suppliers and specialized contractors on the other.
Each contract with contractors is a direct contract of the Customer with a company that provides specialized services or with a seller. With this type of project implementation, the customer should have a large and experienced team on staff to assist the EPCM contractor in managing these contracts.
Despite the fact that the most important function of the EPCM contractor is to monitor the fulfillment of the remaining contractors of their obligations, the customer must also monitor the fulfillment of the remaining contractors of their obligations through the method of distribution of responsibility between the parties, which is characteristic of EPCM.
Regarding all problems under contracts entered into between specialized contractors and the customer, responsibility will ultimately lie with the customer. For example, regarding problems of dependence of the work of one contractor on the work of another, demands for compensation for forced delays and damages, requests for additional funding and transfer of time frames.
Although the EPCM contractor must assist the customer in resolving any claims, the EPCM contractor itself is not a party to legal disputes between the customer and the specialty contractors.
Usually, the EPCM contractor does not assume full responsibility for the readiness of the object being implemented by a predetermined date (therefore, EPCM contracts rarely specify the terms of payment of penalties for disruption of project implementation deadlines).
EPCM-contractor also does not take responsibility for the quality of execution construction works or for the final cost of the project for the customer.
However, the contract often includes terms for incentives and material the EPCM contractor's interest in reducing costs, meeting deadlines, etc.