evolution of epc contracting
DESCRIPTION
Evolution of EPC ContractingTRANSCRIPT
![Page 1: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/1.jpg)
HERVE BARON
© 2013 – Hervé Baron
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 ([email protected]), which I will incorporate for the benefit of all.
Hervé
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HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts
Clients contracting strategy
Phase 1
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HERVE BARON
© 2013 – Hervé Baron
Contracting schemes
Clients contracting strategy
Phase 1 • EPCM • Re-imbursable
![Page 4: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/4.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes
Clients contracting strategy
Phase 1 • EPCM • Re-imbursable
Pro’s and Cont’s
![Page 5: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/5.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 6: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/6.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 7: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/7.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 8: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/8.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 9: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/9.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 10: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/10.jpg)
HERVE BARON
© 2013 – Hervé Baron
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?
![Page 11: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/11.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 12: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/12.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 13: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/13.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 14: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/14.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 15: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/15.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 16: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/16.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 17: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/17.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts
Contractor’s strategy
Phase 3 • LSTK
How does the Contractor mitigate risks?
![Page 18: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/18.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts
Contractor’s strategy
Phase 3 • LSTK • Construction sub-contract
![Page 19: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/19.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts
Contractor’s strategy
Phase 3 • LSTK • Construction sub-contract
Pro’s and Cont’s
![Page 20: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/20.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts
Contractor’s strategy
Phase 3 • LSTK • Construction sub-contract
Pro’s and Cont’s
Phase 3 • Partial risk sharing
![Page 21: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/21.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 22: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/22.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 23: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/23.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 24: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/24.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 25: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/25.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 26: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/26.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 27: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/27.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 28: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/28.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 29: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/29.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts
Contractor’s strategy
Phase 3 • LSTK • Construction sub-contract
Pro’s and Cont’s
Phase 3 • Partial risk sharing
![Page 30: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/30.jpg)
HERVE BARON
© 2013 – Hervé Baron
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?
![Page 31: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/31.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 32: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/32.jpg)
HERVE BARON
© 2013 – Hervé Baron
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?
![Page 33: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/33.jpg)
HERVE BARON
© 2013 – Hervé Baron
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
![Page 34: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/34.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts Contractor’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
![Page 35: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/35.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts Contractor’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
![Page 36: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/36.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts Contractor’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
![Page 37: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/37.jpg)
HERVE BARON
© 2013 – Hervé Baron
Contracting schemes EPC Contracts Contractor’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?
![Page 38: Evolution of EPC Contracting](https://reader034.vdocuments.net/reader034/viewer/2022050806/5695cfa61a28ab9b028ef334/html5/thumbnails/38.jpg)
HERVE BARON
© 2013 – Hervé Baron
Typical EPC associations
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HERVE BARON
© 2013 – Hervé Baron
http://www.toblog.fr/en/baron.html
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