The evolution of EPC contracting

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Shows how contracting for capital projects has evolved over the last 30 year or so

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  • Thx good for references
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  • As you know every project is UNIQUE .How is it possible to use your valuable slides to another project
    Kindest regards
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  • I posted the tutorials on dropbox also.

    Hopefully you will be able to download the files from there.

    Here are the links:

    https://www.dropbox.com/s/h99vuhvriyaybgv/Contracts%20Terms%20and%20Conditions.pdf

    https://www.dropbox.com/s/2hwlwisavezegko/Cost%20estimate.pdf

    https://www.dropbox.com/s/l3369udivstsr26/EPC%20Project%20execution%20orientation%20course.pdf

    https://www.dropbox.com/s/fghw0qi0ie9b3dq/Process%20diagrams.pdf

    https://www.dropbox.com/s/r25kfc5jemgtabh/The%20evolution%20of%20EPC%20contracting.pdf
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The evolution of EPC contracting

  1. 1. HERVE BARON ©2013–HervéBaron The evolution of EPC contracting Welcome to this presentation. It shows the evolution that took place in EPC contrcting schemes over the last 30 years. Comments are most welcome (herve.baron@gmail.com), which I will incorporate for the benefit of all. Hervé
  2. 2. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Clients contracting strategy  Phase 1
  3. 3. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable
  4. 4. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable Pro’s and Cont’s
  5. 5. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Clients contracting strategy  Phase 1 • EPCM • Re-imbursable Pro’s and Cont’s  Phase 1 • All risks with Client • Budget and schedule slippage • Extensive supervision staff
  6. 6. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff
  7. 7. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff
  8. 8. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff
  9. 9. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff
  10. 10. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff What difference did Phase 2 bring compared to Phase 1 for Engineering development?
  11. 11. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff Engineering continuum FEED then CFT for EPC
  12. 12. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P  Phase 3 Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff
  13. 13. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P  Phase 3 • LSTK Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff
  14. 14. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P  Phase 3 • LSTK Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff
  15. 15. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P  Phase 3 • LSTK Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff  Phase 3 • All risks with Contractor
  16. 16. HERVE BARON ©2013–HervéBaron Contracting schemes Clients contracting strategy  Phase 1 • EPCM • Re-imbursable  Phase 2 • EPCM • LS E&P  Phase 3 • LSTK Pro’s and Cont’s  Phase 1 • All risks with Client • Slippage budget and schedule • Extensive supervision staff  Phase 2 • Improvement over Phase 1 on schedule and budget • Extensive supervision staff  Phase 3 • All risks with Contractor Less and less need for a PMC
  17. 17. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK How does the Contractor mitigate risks?
  18. 18. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract
  19. 19. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract Pro’s and Cont’s
  20. 20. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract Pro’s and Cont’s  Phase 3 • Partial risk sharing
  21. 21. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract Pro’s and Cont’s  Phase 3 • Partial risk sharing 2 different schemes: 3a and 3b
  22. 22. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor Pro’s and Cont’s  Phase 3 • Partial risk sharing
  23. 23. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor Pro’s and Cont’s  Phase 3 • Partial risk sharing
  24. 24. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor Pro’s and Cont’s  Phase 3 • Partial risk sharing • Phase 3a − Reduced risk and supervision
  25. 25. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor • Phase 3b – intense cost pressure Pro’s and Cont’s  Phase 3 • Partial risk sharing • Phase 3a − Reduced risk and supervision
  26. 26. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor • Phase 3b – intense cost pressure − Multiple Construction Sub- Contractors Pro’s and Cont’s  Phase 3 • Partial risk sharing • Phase 3a − Reduced risk and supervision
  27. 27. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor • Phase 3b – intense cost pressure − Multiple Construction Sub- Contractors Pro’s and Cont’s  Phase 3 • Partial risk sharing • Phase 3a − Reduced risk and supervision
  28. 28. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor • Phase 3b – intense cost pressure − Multiple Construction Sub- Contractors Pro’s and Cont’s  Phase 3 • Partial risk sharing • Phase 3a − Reduced risk and supervision • Phase 3b − Increased competition − Extensive coordination
  29. 29. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract Pro’s and Cont’s  Phase 3 • Partial risk sharing
  30. 30. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract Pro’s and Cont’s  Phase 3 • Partial risk sharing What usually happened?
  31. 31. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract Pro’s and Cont’s  Phase 3 • Partial risk sharing • E&P delays => Sub-contractor has to accelerate hence claims
  32. 32. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract Pro’s and Cont’s  Phase 3 • Partial risk sharing • E&P delays => Sub-contractor has to accelerate hence claims What new scheme was introduced to mitigate?
  33. 33. HERVE BARON ©2013–HervéBaron Contracting schemes EPC Contracts Contractor’s strategy  Phase 3 • LSTK • Construction sub-contract  Phase 4 Pro’s and Cont’s  Phase 3 • Partial risk sharing • E&P delays => Sub-contractor has to accelerate hence claims
  34. 34. HERVE BARON ©2013–HervéBaron Contracting schemes EPC ContractsContractor’s strategy  Phase 3 • LSTK • Construction sub-contract  Phase 4 • EP / C in Consortium or JV Pro’s and Cont’s  Phase 3 • Partial risk sharing • E&P delays => Sub-contractor has to accelerate hence claims
  35. 35. HERVE BARON ©2013–HervéBaron Contracting schemes EPC ContractsContractor’s strategy  Phase 3 • LSTK • Construction sub-contract  Phase 4 • EP / C in Consortium or JV Pro’s and Cont’s  Phase 3 • Partial risk sharing • E&P delays => Sub-contractor has to accelerate hence claims
  36. 36. HERVE BARON ©2013–HervéBaron Contracting schemes EPC ContractsContractor’s strategy  Phase 3 • LSTK • Construction sub-contract  Phase 4 • EP / C in Consortium or JV Pro’s and Cont’s  Phase 3 • Partial risk sharing • E&P delays => Sub-contractor has to accelerate hence claims  Phase 4 − Improved risk sharing − No claims − Less competitive
  37. 37. HERVE BARON ©2013–HervéBaron Contracting schemes EPC ContractsContractor’s strategy  Phase 3 • LSTK • Construction sub-contract  Phase 4 • EP / C in Consortium or JV Pro’s and Cont’s  Phase 3 • Partial risk sharing • E&P delays => Sub-contractor has to accelerate hence claims  Phase 4 − Improved risk sharing − No claims − Less competitive Which scheme is better for COMPANY: 3 or 4? Why?
  38. 38. HERVE BARON ©2013–HervéBaron Typical EPC associations
  39. 39. HERVE BARON ©2013–HervéBaron http://www.toblog.fr/en/baron.html You enjoyed this presentation? Share my experience on other topics:  Engineering  Contract Management  Project Control Attend my classroom training The list and schedule of coming sessions is on my blog at: Going further

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