the evolution of epc contracting
DESCRIPTION
Shows how contracting for capital projects has evolved over the last 30 year or soTRANSCRIPT
![Page 1: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/1.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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
![Page 2: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/2.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC Contracts
Clients contracting strategy
� Phase 1
![Page 3: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/3.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
Clients contracting strategy
� Phase 1
• EPCM
• Re-imbursable
![Page 4: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/4.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
Clients contracting strategy
� Phase 1
• EPCM
• Re-imbursable
Pro’s and Cont’s
![Page 5: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/5.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/6.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/7.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/8.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/9.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
![Page 10: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/10.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
What difference did Phase 2 bring compared to Phase 1 for
Engineering development?
![Page 11: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/11.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
Engineering continuum
FEED then CFT for EPC
![Page 12: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/12.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
![Page 13: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/13.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
![Page 14: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/14.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
![Page 15: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/15.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
� Phase 3
• All risks with Contractor
![Page 16: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/16.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 onschedule and budget
• Extensive supervision staff
� Phase 3
• All risks with Contractor
Less and less
need for a PMC
![Page 17: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/17.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
How does the Contractor mitigate risks?
![Page 18: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/18.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
• Construction sub-contract
![Page 19: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/19.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
• Construction sub-contract
Pro’s and Cont’s
![Page 20: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/20.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
• Construction sub-contract
Pro’s and Cont’s
� Phase 3
• Partial risk sharing
![Page 21: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/21.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/22.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/23.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/24.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/25.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/26.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/27.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/28.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/29.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
• Construction sub-contract
Pro’s and Cont’s
� Phase 3
• Partial risk sharing
![Page 30: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/30.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
• Construction sub-contract
Pro’s and Cont’s
� Phase 3
• Partial risk sharing
What usually happened?
![Page 31: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/31.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
• Construction sub-contract
Pro’s and Cont’s
� Phase 3
• Partial risk sharing
• E&P delays => Sub-contractor hasto accelerate hence claims
![Page 32: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/32.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’s strategy
� Phase 3
• LSTK
• Construction sub-contract
Pro’s and Cont’s
� Phase 3
• Partial risk sharing
• E&P delays => Sub-contractor hasto accelerate hence claims
What new scheme was introduced to mitigate?
![Page 33: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/33.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Contracting schemes
EPC ContractsContractor’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 hasto accelerate hence claims
![Page 34: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/34.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 hasto accelerate hence claims
![Page 35: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/35.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 hasto accelerate hence claims
![Page 36: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/36.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 hasto accelerate hence claims
� Phase 4− Improved risk sharing
− No claims
− Less competitive
![Page 37: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/37.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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 hasto accelerate hence claims
� Phase 4− Improved risk sharing
− No claims
− Less competitive
Which scheme is better for COMPANY: 3 or 4? Why?
![Page 38: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/38.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
Typical EPC associations
![Page 39: The evolution of EPC contracting](https://reader037.vdocuments.net/reader037/viewer/2022102700/548735b9b4af9f780d8b5350/html5/thumbnails/39.jpg)
HERVE
BARON
©2
01
3 –
He
rvé
Ba
ron
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