and Construction Management

and Construction Management

Engineering, Procurement, and Construction Management is widely used in the mining industry. From detailed feasibility studies to coordinating equipment and materials to get to a site, a company that offers a full suite of EPCM services is often an integral part in getting a project from exploration to operation.

While some companies only offer Engineering, Procurement and Construction, other companies do all of the above as well as construction management. The difference between EPC and EPCM is best explained on the Prodigy Engineering Group site:

‘EPC means the company is contracted to provide engineering, procurement and construction services. Think Design Construct style contracts, where the project is largely Contractor managed and the cost risk and control are weighted towards the Contractor and away from the Owner.

EPCM means the company is contracted to provide engineering, procurement and construction management services. Other companies are contracted by the Owner to provide construction services and they are usually managed by the EPCM contractor on the Owner’s behalf. Think professional services contracts, where the project is largely Owner managed and the cost risk and control is weighted towards the Owner.’

Here are some advantages of each from Prodigy:

Lower Overall Cost

Staff’s Sense of Ownership

More Control over Process

Better for less defined projects with anticipated changes to scope of supply

Less Legal Litigation (Identify issues early and remedy situation before larger problems arise)

Minimal Legal Risk

Best for well defined projects with Detailed Engineering Complete before EPC Contractor selected (Minimal Unknowns).

The online article, “Worlds Apart: EPC and EPC Contracts: Risk Issues and Allocations” by Phil Loots and Nick Henchie, is also an excellent description of the differences between EPC and EPCM contracts and goes into great detail about how these contracts work.

EPCM contracts vary from project to project and the range of services that is tendered in each project is never the same. Below is a closer look at the individual aspects of EPCM and how each can impact a mining operation.

Every mining project requires hours of engineering to move from exploration to production to a successful reclamation. A company offering EPCM services for a proposed mine will start with a conceptual mining plan and conceptual design of the facilities. For many projects, a preliminary economic assessment and a pre feasibility study will be required before the project can receive financial backing from a bank to proceed with a bankable feasibility study. Hours of engineering go into these studies, as they cover everything from the proposed plant layout to a detailed analysis of the mine design. The next step, a bankable feasibility study requires the company providing the EPCM for the project to design the open pit/underground mine, solution mining facilities, process optimization and flowsheets, mine/mill expansions, piping and electrical layout, instrumentation and control engineering, and cost estimation. The engineering design teams must be able to execute the full range of design and specification of equipment within the mine and milling complex. Procurement is the link between the design and engineering and the installation or construction phases of a project. This often involves international purchasing and expediting. As well as, coordinating any required source inspections, and all logistics and travel functions that might be associated with the procurement of equipment and bulk materials that will be needed. Some other areas of procurement and logistics are recommending qualified bidders for construction projects, preparing and issuing RFP (request for proposal) packages, bid analysis, and purchase preparations and recommendations. If the company involved is also in charge of the overall management of the project, the next steps will be preparing and awarding the purchase orders, expediting suppliers’ data submissions, and then inspecting equipment and material before making sure all freight documentation is correctly filled out so that there will be no delays. Depending on the size and scope of the project, the logistics and procurement segment of a project can be a daunting task. Now that the engineering part of the project is done, deadlines to project commencement must be met and there can be many delays or hurdles that must be overcome in order to keep the project on time.

Any company that offers procurement and logistic services must have good relationships with equipment suppliers and freight companies to ensure that equipment and materials will be delivered safely and on schedule. In addition, risk management of the overall project is high at this stage, so anyone working on the logistics phase of a project must have contingency plans ready. Team building, risk, business, legal, and time management skills are essential to ensure a successful completion of any project. The EPCM project manager is accountable for the outcome of the project in terms of all deliverables, usually stated as performance, time, costs, and scope. It is the project manager that will ensure that the project is executed with due care and diligence and within the contractual definition of the required deliverables. Below is a chart showing the hypothetical structure of the organization of a project management team.

In many projects, the construction management and project management are done together. Many companies offer this service to their client. As they have been involved with the engineering and procurement and logistics, they are the logical choice to be in charge of the construction of the facilities, while overseeing the project management of the entire project. An EPCM company will offer construction management and supervision as part of their overall project management. Management and supervisory services range from initial preconstruction planning to construction and installation, to plant commissioning, start up assistance and operational phase accompanied by contract management, cost control, and quality checks. A post implementation review is also part of the project management.

SUCCESSFUL EPCM PROJECTS

Many mining operations have used EPCM consulting companies to guide a mine from conception to operation. Below is a few of the larger projects and companies involved in delivering EPCM services to the industry.

The award winning innovative design of the dike ensured that there was no environmental damage to the project’s ecologically sensitive area. Components of the Diavik diamond project include an open pit diamond mine, a process plant, kimberlite containment dikes and the associated infrastructure. Other parts of the project are roads, a power generation plant, fuel storage, airstrip, accommodation, water supply and other services and facilities. The Diavik diamond mine development includes a 3 km long, 25 meter high water retaining dike to permit dewatering and development of the diamond mine. The mine is expected to produce 1.5 million tons of kimberlite material. The project was completed ahead of schedule and under budget.

Wardrop, a Tetra Tech company, was awarded the EPCM contract for the Mt. Milligan copper gold project, located in British Columbia. Wardrop completed the feasibility study for the mine before being awarded the EPCM contract. Mt. Milligan will be a conventional truck shovel open pit mine and will have a 60,000 tpd copper flotation process plant. Mt. Milligan was also a very environmentally sensitive project that involved extensive consultation with the First Nations groups in the area and the affected communities. As a result, the mine will have a very small footprint of approximated 4 km x 3 km.
and Construction Management