The evolution of EPC contracting
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The evolution of EPC contracting

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

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

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  • As you know every project is UNIQUE .How is it possible to use your valuable slides to another project
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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 The evolution of EPC contracting Presentation Transcript

    • HERVE The evolution of EPC contractingBARONWelcome 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 © 2013 – Hervé Baron
    • HERVE Contracting schemesBARON EPC ContractsClients contracting strategy Phase 1 © 2013 – Hervé Baron
    • HERVE Contracting schemesBARONClients contracting strategy Phase 1 • EPCM • Re-imbursable © 2013 – Hervé Baron
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 • EPCM • Re-imbursable © 2013 – Hervé Baron
    • HERVE Contracting schemesBARON EPC ContractsClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Budget and schedule slippage • Re-imbursable • Extensive supervision staff © 2013 – Hervé Baron
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 © 2013 – Hervé Baron
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 • EPCM • LS E&P © 2013 – Hervé Baron
    • HERVE Contracting schemesBARON EPC ContractsClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 • EPCM • LS E&P © 2013 – Hervé Baron
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff © 2013 – Hervé Baron
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff © 2013 – Hervé Baron What difference did Phase 2 bring compared to Phase 1 for Engineering development?
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Engineering continuum Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff FEED then CFT for EPC © 2013 – Hervé Baron
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff © 2013 – Hervé Baron Phase 3
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff © 2013 – Hervé Baron Phase 3 • LSTK
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff © 2013 – Hervé Baron Phase 3 • LSTK
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff Phase 3 © 2013 – Hervé Baron • All risks with Contractor Phase 3 • LSTK
    • HERVE Contracting schemesBARONClients contracting strategy Pro’s and Cont’s Phase 1 Phase 1 • All risks with Client • EPCM • Slippage budget and schedule • Re-imbursable • Extensive supervision staff Less and less need for a PMC Phase 2 Phase 2 • Improvement over Phase 1 on • EPCM schedule and budget • LS E&P • Extensive supervision staff Phase 3 © 2013 – Hervé Baron • All risks with Contractor Phase 3 • LSTK
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Phase 3 • LSTK How does the Contractor mitigate risks? © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Phase 3 • LSTK • Construction sub-contract © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 • LSTK • Construction sub-contract © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract 2 different schemes: 3a and 3b © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract • Phase 3a − General Construction Contractor © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract • Phase 3a • Phase 3a − Reduced risk and supervision − General Construction Contractor © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract • Phase 3a • Phase 3a − Reduced risk and supervision − General Construction Contractor • Phase 3b – intense cost pressure © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract • Phase 3a • Phase 3a − Reduced risk and supervision − General Construction Contractor • Phase 3b – intense cost pressure − Multiple Construction Sub- Contractors © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract • Phase 3a • Phase 3a − Reduced risk and supervision − General Construction Contractor • Phase 3b – intense cost pressure − Multiple Construction Sub- Contractors © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract • Phase 3a • Phase 3a − Reduced risk and supervision − General Construction Contractor • Phase 3b − Increased competition • Phase 3b – intense cost pressure − Extensive coordination − Multiple Construction Sub- Contractors © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • Construction sub-contract What usually happened? © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • E&P delays => Sub-contractor has • Construction sub-contract to accelerate hence claims © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • E&P delays => Sub-contractor has • Construction sub-contract to accelerate hence claims What new scheme was introduced to mitigate? © 2013 – Hervé Baron
    • HERVE Contracting schemes BARON EPC ContractsContractor’s strategy Pro’s and Cont’s Phase 3 Phase 3 • Partial risk sharing • LSTK • E&P delays => Sub-contractor has • Construction sub-contract to accelerate hence claims Phase 4 © 2013 – Hervé Baron
    • HERVE Contracting schemes BARONContractor’s strategy Pro’s and Cont’s EPC Contracts Phase 3 Phase 3 • LSTK • Partial risk sharing • Construction sub-contract • E&P delays => Sub-contractor has to accelerate hence claims Phase 4 • EP / C in Consortium or JV © 2013 – Hervé Baron
    • HERVE Contracting schemes BARONContractor’s strategy EPC Contracts Pro’s and Cont’s Phase 3 Phase 3 • LSTK • Partial risk sharing • Construction sub-contract • E&P delays => Sub-contractor has to accelerate hence claims Phase 4 • EP / C in Consortium or JV © 2013 – Hervé Baron
    • HERVE Contracting schemes BARONContractor’s strategy EPC Contracts Pro’s and Cont’s Phase 3 Phase 3 • LSTK • Partial risk sharing • Construction sub-contract • E&P delays => Sub-contractor has to accelerate hence claims Phase 4 Phase 4 • EP / C in Consortium or JV − Improved risk sharing − No claims − Less competitive © 2013 – Hervé Baron
    • HERVE Contracting schemes BARONContractor’s strategy EPC Contracts Pro’s and Cont’s Phase 3 Phase 3 • LSTK • Partial risk sharing • Construction sub-contract • E&P delays => Sub-contractor has to accelerate hence claims Phase 4 Phase 4 • EP / C in Consortium or JV − Improved risk sharing − No claims − Less competitive © 2013 – Hervé Baron Which scheme is better for COMPANY: 3 or 4? Why?
    • HERVE Typical EPC associationsBARON © 2013 – Hervé Baron
    • HERVE Going furtherBARONYou enjoyed this presentation?Share my experience on other topics: Engineering Contract Management Project ControlAttend my classroom trainingThe list and schedule of coming sessions is on my blog at: http://www.toblog.fr/en/baron.html © 2013 – Hervé Baron