Understanding EPCM
Under an EPCM contract, the client maintains ownership and control of the project, while the EPCM contractor takes on the responsibility for detailed design and project management. In the mining sector, the EPCM contractor’s responsibilities traditionally extend up to procurement. Following this stage, the owner typically employs resources for continuous engineering and mining and contractor management. In the EPCM mining contract model, the EPCM team work in close collaboration with the owner and assumes responsibility for:
Why the need exist for EPCM in mining?
Efficiency and cost-effectiveness: EPCM models, with their focus on lean principles, equipment optimization, and advanced IoT infrastructure, provide a comprehensive and efficient solution for open-pit mining projects. They offer cost and time efficiency, market access, flexibility, and transparency.
- Streamlined operations: The EPCM process integrates engineering design, procurement of necessary equipment, contractors, materials, and overall mining and construction management. This comprehensive approach not only streamlines operations but also redefines them by enhancing efficiency and reducing costs.
- Control and flexibility: Customers retain more control over the project and can choose from a variety of mining methods, contractors, and subcontractors best suited for each task. They can also adapt to changing project needs and priorities as they occur.
- Risk management: The customer transfers the risk of design, delays, and cost overruns to the EPCM contractor, who manages the project on behalf of the customer.
- Improved communication and collaboration: The customer has a single point of contact with the EPCM contractor, who coordinates and communicates with all the stakeholders involved in the project.
- Increased efficiency and performance: The customer benefits from the extensive experience and expertise of the EPCM contractor, who provides engineering design, mining studies, and project management for the project.
The Advantages of EPCM in Mining
The EPCM model in mining, with its design and execution capabilities, offers a significant advantage to shareholders. It allows mining companies to concentrate on their core responsibilities, while the EPCM contractor manages complex tasks such as detailed engineering and design. This approach not only streamlines supplier input for efficiency but also manages project risks, a major concern for mining companies. The EPCM model thus enhances shareholder value by ensuring that projects are executed efficiently, within budget, and with managed risks. This is leading project proponents to reconsider their risk retention strategies, regardless of risk sharing or transfer approaches. This shift towards the EPCM model is a testament to its potential to maximize shareholder value in the mining sector.
EPCM and Geology Risk
In the EPCM model, the client maintains ownership and control of the project, while the EPCM contractor takes on the responsibility for detailed design and project management. This means that the client, rather than the EPCM contractor, typically retains the geology risk. This shared responsibility fosters close collaboration between the EPCM contractor and the owner’s teams. It also means that mining companies must have the necessary expertise and resources to manage this risk effectively.
Shaping the Future of Mining with EPCM
As a valued stakeholder in the mining industry, you are at the forefront of a promising future with the Engineering, Procurement, and Construction Management (EPCM) model. Amid a period of introspection in project development, design, and engineering, it’s an opportune time for both EPCM contractors and mining companies like yours to reassess the traditional execution models upon which mines are built.
EPCM emerges as a practical and efficient solution tailored to your needs in the mining sector. However, to unlock its full potential and align with the evolving landscape of mine development, a paradigm shift is needed in project execution philosophies. This calls for contractors to adapt their offerings to meet the unique demands of today’s mining projects.
In essence, the future of mining with EPCM is not just about adopting a new model, but about embracing a change that could redefine efficiency and success in your mining operations. For more information on TacminMadini's EPCM Mining model click here.
(also read our blog - How EPCM gives junior mining companies the edge in mining)
