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ENCI 693ENCI 693Project Engineering Project Engineering
ManagementManagement
Session #1 Introduction / EPC Session #1 Introduction / EPC BusinessBusiness
Janaka Ruwanpura and Don McKenzieJanaka Ruwanpura and Don McKenzie
Winter 2011 Winter 2011
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1. Introduction1. Ground Rules2. Course Outline (see handout)3. Teaching Assistants4. Course Context5. Project Development and Execution Process6. Importance of Engineering Management to
Project Success7. Discussion
2. The “EPC” Business3. Typical Industrial Project4. EPC Company Resources5. Commercial and Contractual
Considerations
AgendaAgenda
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1. Participation is key Share your experience!
1. Relate learning to your scenario Challenge the instructor! Disagree with respect!
2. Expect good quality of work
3. Open to your concerns
4. Return promptly from breaks
5. Cell phone off during class
Ground RulesGround Rules
“EPC” Business
CompanyResources
Typical Project
CommercialConsideratio
ns
Introduction
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Course OutlineCourse Outline
Learning OutcomesLearning Outcomes Final Grade DeterminationFinal Grade Determination Timetable, topics and the Timetable, topics and the
instructorsinstructors WorkloadWorkload
Quizzes Individual Case Studies Final Group Project and Presentations
“EPC” Business
CompanyResources
Typical Project
CommercialConsideratio
ns
Introduction
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Teaching Teaching AssistantsAssistants
Ph.D. Candidates with several years Ph.D. Candidates with several years of professional experienceof professional experience Fereshteh Khoramshahi ([email protected]) Reza Dehghan ([email protected])
They are responsible to mark your They are responsible to mark your quizzesquizzes
“EPC” Business
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
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1. Project Engineering Management from a Balanced Perspective Owner’s and Contractor’s viewpoints
2. Methods of dividing and executing projects will vary: Owner needs Nature of project Location of project Level of industrial activity
3. Owner’s view of project span: Recognition of need Project Execution Corrections of shortcomings Ongoing operations
4.4. Contractor’s view:Contractor’s view: Limited to specific responsibilities assigned to
contractor
Course ContextCourse Context
“EPC” Business
CompanyResources
Typical Project
CommercialConsideratio
ns
Introduction
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Project Development & Execution Project Development & Execution Process ChevronProcess Chevron
PHASE 2SELECT fromAlternatives
Determine Project Feasibility andAlignment withBusiness Strategy
PHASE 1IDENTIFY & Assess
Opportunities
Finalize Project Scope, Cost and Schedule and Get the Project Funded
Select thePreferred Project Development Option
Evaluate Asset to Ensure Performance to Specifications and Maximum Return to the Shareholders
PHASE 3DEVELOP Preferred
Alternative
PHASE 4EXECUTE
(Detail EPC)
PHASE 5OPERATE &
Evaluate
Produce an Operating Asset Consistent with Scope, Cost and Schedule
1 2 3 4 5
… … Need discipline to follow process by all project stakeholdersNeed discipline to follow process by all project stakeholders
“EPC” Business
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
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1. Project Schedule Engineering critical to specification and award of
long delivery equipment Engineering deliverables needed for construction
2.2. Project CostProject Cost Most of our ability to influence / control project costs
is during the early part of the projecta. Scope definitionb. Engineeringc. Equipment selection
Importance of Engineering Management to Importance of Engineering Management to Project SuccessProject Success
“EPC” Business
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
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QuestionsQuestions
CommentsComments
“EPC” Business
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
Introduction DiscussionIntroduction Discussion
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The “EPC” Engineering BusinessThe “EPC” Engineering Business
Project Project Engineering Engineering Management Management
CourseCourse
University of University of CalgaryCalgary
Winter 2011Winter 2011
CompanyResources
Typical Project
CommercialConsideratio
ns
Introduction
“EPC” Business
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1. Engineering Consultants2. Engineering Design & Drafting3. Engineering-Procurement Firms4. EPC/CM Firms5. EPC Firms6. Engineered-Equipment Companies7. Specialized Technology Companies8. Technology-Midstream Operators9. Engineering Joint Ventures
Types of Engineering FirmsTypes of Engineering Firms
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
“EPC” Business
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EPC Versus ConsultantEPC Versus ConsultantNormal CharacteristicsNormal Characteristics
EPC CompanyEPC Company Consulting CompanyConsulting Company
Can Engineer, Procure and Can Engineer, Procure and Construct * complete projectsConstruct * complete projects
Provide Engineering, Procurement Provide Engineering, Procurement or Construction services onlyor Construction services only
Specialized by facility type or Specialized by facility type or industry (e.g. tank farms, power industry (e.g. tank farms, power industry)industry)
Specialized by technical Specialized by technical competency (e.g. civil engineering, competency (e.g. civil engineering, international logistics)international logistics)
Many large firms, few smallMany large firms, few small Few large, many smallFew large, many small
** All EPC’s subcontract some construction workAll EPC’s subcontract some construction work
Some “EPCM’s” subcontract all construction work to multiple construction Some “EPCM’s” subcontract all construction work to multiple construction contractors.contractors.
CompanyResources
Typical Project
CommercialConsideratio
ns
Introduction
“EPC” Business
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“Company which provides integrated Engineering, Procurement and
Construction Services to deliver completed facilities (“project”) to
multiple clients”
What is an “EPC” Company?What is an “EPC” Company?
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
“EPC” Business
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1. Owner’s job is to produce and sell product
2. Projects result from:1. Change in Feedstock (raw materials)2. New products3. Expansion4. Modernization (new technology)
3.3. Project justification influenced by:Project justification influenced by:1. Market trends2. New resources3. Technology changes4. Environmental legislation5. Politics
The Need for Engineering FirmsThe Need for Engineering Firms
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
“EPC” Business
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1. EPC is not core business for owners2. Specialists in project execution3. Specialists in “Technologies”4. Access to large resource levels5. Access to diverse resources
(Internationally)6. Access to fluctuating resource levels
Why are there EPC companies?Why are there EPC companies?
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
“EPC” Business
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1. Engineering design, in all project phases2. Engineering design systems and tools3. Procurement of commodity and
fabricated materials4. Construction planning5. Integrated “EPC” planning and
scheduling6. “As-built” technical definition of the
completed project (Regulatory)
““EPC” Engineering DefinedEPC” Engineering Defined
CompanyResources
Typical Project
CommercialConsideratio
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Introduction
“EPC” Business
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A Typical Project DescriptionA Typical Project Description
The typical project that we will refer to for the The typical project that we will refer to for the remainder of the course will be a grassroots 100k remainder of the course will be a grassroots 100k BBL/day Atmospheric and Vacuum (A&V) Unit. We BBL/day Atmospheric and Vacuum (A&V) Unit. We have chosen this project for the following reasons:have chosen this project for the following reasons: Is core competency type project for your instructional
team Grassroots, because it has minimal outside influences Relevant to the Alberta Oil Sands economy while being a
common type unit found in many other refineries around the world
Is NOT a “Mega-Project” Requires an execution strategy which employs resource
utilization (Time, Money, People, Material) on a world-wide basis for Engineering, Procurement, Fabrication and Construction
Has a schedule which runs typically 36 to 48 months, Concept Inception through Commissioning
CompanyResources
CommercialConsideratio
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Introduction
Typical Project
“EPC” Business
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Typical A & V UnitTypical A & V Unit
CompanyResources
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Introduction
Typical Project
“EPC” Business
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Typical A & V Units are Extensively Typical A & V Units are Extensively ModularizedModularized!!
CompanyResources
CommercialConsideratio
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Introduction
Typical Project
“EPC” Business
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Typical A & V UnitTypical A & V Unit
MaterialMaterial QuantityQuantity
Pieces of Major EquipmentPieces of Major Equipment 150150
EarthworkEarthwork 100,000 m100,000 m33
ConcreteConcrete 12,000 m12,000 m33
Structural SteelStructural Steel 4,000 Te4,000 Te
PipingPiping 70,000 m70,000 m
Electrical Electrical 350,000 m350,000 m
InstrumentsInstruments 1,8001,800
CompanyResources
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Introduction
Typical Project
“EPC” Business
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Typical Project Cost StructureTypical Project Cost Structure
TOTAL CAPITAL COSTTOTAL CAPITAL COST
$ Millions$ Millions ManhoursManhours
Mechanical EquipmentMechanical Equipment 7575
Bulk Materials (Structural Steel, Bulk Materials (Structural Steel, Piping, etc.)Piping, etc.)
8585
Construction (Module Assembly, Construction (Module Assembly, Site)Site)
175175 200,000 Field Non-Manual200,000 Field Non-Manual1,800,000 Craft1,800,000 Craft
““Engineering” CostEngineering” Cost 5050 500,000 Home Office500,000 Home Office
Owners CostOwners Cost 4040
ContingencyContingency 7575
TOTAL PROJECTTOTAL PROJECT 500500
CompanyResources
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Introduction
Typical Project
“EPC” Business
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Typical Project Personnel Typical Project Personnel ResourcesResources
FEL 1 FEL 2 FEL 3 Start-up & Commissioning
“EP” “C”ProjectPhase
EP(300 People)
C(2,000 People)
Owner Personnel
EPC Personnel & Sub-Contractors
Res
ourc
es
CompanyResources
CommercialConsideratio
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Introduction
Typical Project
“EPC” Business
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Project Team (EPCM) - ExampleProject Team (EPCM) - Example
Project Director /ManagerProject Director /Manager&&
Functional Team LeadsFunctional Team Leads
EngineeringEngineeringManagerManager Sr. Project EngineerSr. Project Engineer
Supply ChainSupply ChainManagerManager
ConstructionConstructionManagerManager
HSE & HSE & RegulatoryRegulatoryTeam LeadTeam Lead
Corporate Corporate Human Human
ResourcesResources
Corporate Corporate Business Business ServicesServices
ProcessProcessCivilCivilStructuralStructuralMechanicalMechanicalElectricalElectricalI&CI&CMaterialsMaterialsDraftingDrafting
Project AdminProject AdminCost EstimatorsCost EstimatorsCost ControlsCost ControlsSchedulingSchedulingDoc ManagementDoc Management
ContractsContractsPurchasingPurchasingExpeditingExpeditingMaterials Materials ManagementManagementQA/Vendor QA/Vendor InspectionInspectionLogisticsLogistics
SuperintendentsSuperintendentsLabour RelationsLabour RelationsField InspectionField InspectionQuantity SurveyQuantity SurveyConstructabilityConstructabilitySite SafetySite Safety
EnvironmentalEnvironmentalOH&SOH&SPermitsPermitsRegulatoryRegulatory
-- RecruitingRecruitingBenefitsBenefitsEmployee Employee RelationsRelationsTrainingTraining
AccountingAccountingPayrollPayrollFinanceFinanceTaxTaxLegalLegalITIT
CompanyResources
CommercialConsideratio
ns
Introduction
Typical Project
“EPC” Business
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Engineering Team (EPCM) - Engineering Team (EPCM) - ExampleExample
Engineering ManagerEngineering Manager&&
Team LeadsTeam Leads
Process Process EngineeringEngineering
Team LeadTeam Lead
Civil-StructuralCivil-StructuralEngineeringEngineering
Team LeadTeam Lead
Mechanical Mechanical EngineeringEngineering
Team LeadTeam Lead
Electrical Electrical EngineeringEngineering
Team LeadTeam Lead
InstrumentationInstrumentation& Controls& Controls
Team LeadTeam Lead
Materials Materials EngineeringEngineering
Team LeadTeam Lead
DraftingDrafting
Team LeadTeam Lead
Technology Technology licensinglicensingProcess DesignProcess DesignHeat Heat IntegrationIntegrationMaterial Material BalancesBalancesEmissionsEmissionsOperabilityOperabilityStart-Up & Start-Up & erf’m Testingerf’m Testing
CivilCivilFoundationsFoundationsStructuralStructuralArchitecturalArchitecturalSpecs, Datasheets, Specs, Datasheets, MTOsMTOs
Mech Equip Mech Equip DesignDesignPiping designPiping designSpecs, Specs, Datasheets, Datasheets, MTOsMTOs
Elect Equip DesignElect Equip DesignPower systems & Power systems & distributiondistributionMotor control Motor control centrecentreEl.heat tracing El.heat tracing designdesignSpecs, Datasheets, Specs, Datasheets, MTOsMTOs
Controls Controls SystemsSystemsInstrumentsInstrumentsCablingCablingESD LogicESD LogicSpecs, Specs, Datasheets, Datasheets, MTOsMTOs
Metallurgy& Metallurgy& CorrosionCorrosionCoatings & Coatings & MaterialsMaterialsSpecs & Specs & DatasheetsDatasheets
Piping draftingPiping draftingElectrical Electrical draftingdrafting3D Modeling3D ModelingOperating Operating ManualsManuals
CompanyResources
CommercialConsideratio
ns
Introduction
Typical Project
“EPC” Business
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EPC Corporate Organization EPC Corporate Organization ChartChart
CEO
Manager of Operations
ChiefPiping & Layout
ChiefProcess
ChiefProcess
Technology
Manager of Engineering
ChiefProject
Engineer
ChiefMechanical
ChiefCivil/
Structural
Manager of IS&T
Manager of Facilities &
Office Supplies
ChiefControl
Systems
ChiefElectrical
Chief Financial
Officer
Corporate Controller
Manager of Human
Resource
Manager of Admin.
ServicesManager of
Risk / Insurance
Corporate Communications
& Public Affairs
ChiefEng Doc
MgmtGroup
Manager of Projects.
Special Assignments
Manager of Business
Development
General Manager
Office “A”
General Manager
Office “B”
Project Managers
Manager of Project Controls
Manager of Construction
Manager of Quality
Manager of Systems
Integration
Manager of Procurement
Manager of HSE
CommercialConsideratio
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Introduction
CompanyResources
“EPC” Business
Typical Project
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Corporate DepartmentsCorporate Departments
ENGINEERING - Design, Etc.
PROCUREMENT - Managing The Supply Chain
- Buying
- Expediting
- Inspecting
- Logistics
- Contract Formation
- Contract Administration
CONSTRUCTION (H.O.) - Construction Strategy Development
- Construction Planning
- Construction Scheduling
QUALITY - Procedural Auditing
- Continuous Improvement
- Value-improving Processes (Vip’s)
HEALTH, SAFETY & ENVIRONMENTAL - Workplace, Environmental Compliance and Improvement
BUSINESS DEVELOPMENT - Strategic Marketing Management
- Prime Contract Administration
- Sales
- Sales Proposals
CommercialConsideratio
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Introduction
CompanyResources
“EPC” Business
Typical Project
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Engineering Disciplines & Engineering Disciplines & SpecialtiesSpecialties
PROJECT ENGINEERINGPROJECT ENGINEERINGTECHNICAL CO-ORDINATIONTECHNICAL CO-ORDINATIONWORK PLANNINGWORK PLANNINGSCOPE (OF WORK) CONTROLSCOPE (OF WORK) CONTROLCOST & PROGRESS MONITORINGCOST & PROGRESS MONITORINGMATERIAL REQUISITIONINGMATERIAL REQUISITIONINGCONSTRUCTION PACKAGE DEFINITION (“EWP”: “CWP”)CONSTRUCTION PACKAGE DEFINITION (“EWP”: “CWP”)
CIVIL/STRUCTURAL/ARCHITECTURAL ENGINEERINGCIVIL/STRUCTURAL/ARCHITECTURAL ENGINEERINGCIVIL ENGINEERING (AND DESIGN)CIVIL ENGINEERING (AND DESIGN)**STRUCTURAL ENGINEERINGSTRUCTURAL ENGINEERING**MATERIAL SPECIFICATIONMATERIAL SPECIFICATION**BUILDING, SIZING / SPECIFICATIONBUILDING, SIZING / SPECIFICATION**
PROCESS ENGINEERINGPROCESS ENGINEERINGTECHNOLOGY SPECIALISTSTECHNOLOGY SPECIALISTSUNIT OPERATIONSUNIT OPERATIONSPROCESS SIMULATIONPROCESS SIMULATIONSYSTEM FLOWSHEET DEVELOPMENTSYSTEM FLOWSHEET DEVELOPMENT**
PROCESS CONTROL SYSTEMS ENGINEERINGPROCESS CONTROL SYSTEMS ENGINEERING“FIELD” INSTRUMENTATION SELECTION“FIELD” INSTRUMENTATION SELECTIONELECTRONIC INSTRUMENTATION SYSTEM DESIGNELECTRONIC INSTRUMENTATION SYSTEM DESIGN**AUTOMATION SPECIFICATIONAUTOMATION SPECIFICATIONAUTOMATION DESIGNAUTOMATION DESIGN
MECHANICAL ENGINEERINGMECHANICAL ENGINEERINGEQUIPMENT SPECIFICATION AND DESIGNEQUIPMENT SPECIFICATION AND DESIGNEQUIPMENT TYPE SPECIALISTSEQUIPMENT TYPE SPECIALISTS**(ROTATING MACHINERY, PRESSURE VESSELS, ETC.)(ROTATING MACHINERY, PRESSURE VESSELS, ETC.)METALLURGY SELECTIONMETALLURGY SELECTION**SAFETY SYSTEM MANAGEMENT (LOSS CONTROL)SAFETY SYSTEM MANAGEMENT (LOSS CONTROL)**
ELECTRICAL ENGINEERINGELECTRICAL ENGINEERING
POWER SYSTEM DESIGNPOWER SYSTEM DESIGNEQUIPMENT SPECIFICATIONEQUIPMENT SPECIFICATION**POWER DISTRIBUTION DESIGN (“WIRING”)POWER DISTRIBUTION DESIGN (“WIRING”)INSTRUMENTATION DISTRIBUTION DESIGNINSTRUMENTATION DISTRIBUTION DESIGN
PIPING ENGINEERINGPIPING ENGINEERINGOVERALL PLANT LAYOUT (3D-MODEL)OVERALL PLANT LAYOUT (3D-MODEL)PIPING MATERIAL SELECTION (BY “CLASSIFICATION”)PIPING MATERIAL SELECTION (BY “CLASSIFICATION”)**PIPING LAYOUT DESIGNPIPING LAYOUT DESIGNPIPING STRESS ANALYSISPIPING STRESS ANALYSIS**PIPING MATERIAL TRACKING / CONTROLPIPING MATERIAL TRACKING / CONTROL
CommercialConsideratio
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Introduction
CompanyResources
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Typical Project
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Technology ResourcesTechnology Resources
Proprietary process technologies (“licenses”)
Work procedures:- single – discipline
Work procedures:- multi – discipline
Work procedures: - multi – department (EPC)
Work procedures:- multi – company (technical co-ordination)
Company – specific computer programs
Information technology infrastructure
Resource allocation systems
CommercialConsideratio
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Typical Project
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EPC Company HeadcountEPC Company HeadcountOfficeOffice PermanentPermanent
StaffStaffSpecialists/Specialists/ConsultantsConsultants
(A)(A)
Agency/Agency/ContractorsContractors
(B)(B)
TotalTotalEmployeeEmployee
ss
LocatedLocatedOutsideOutsideOfficesOffices
EngineeringEngineering
014 Engineering Management014 Engineering Management
021 Process021 Process
023 Mechanical023 Mechanical
024 Piping and Layout024 Piping and Layout
025 Civil / Structural025 Civil / Structural
026 Control Systems026 Control Systems
027 Electrical027 Electrical
029 Project Engineering029 Project Engineering
ProcurementProcurement
050 Procurement050 Procurement
ConstructionConstruction
070 Construction (Field)070 Construction (Field)
080 Field Client Support080 Field Client Support
Project ManagementProject Management
016 Project Management016 Project Management
030 Project Controls030 Project Controls
OtherOther
010 Corporate010 Corporate
012 Administration Support012 Administration Support
013 Business Development013 Business Development
015 Quality Management015 Quality Management
017 Health, Safety and Environmental017 Health, Safety and Environmental
020 Document Management020 Document Management
028 Information Systems Technology028 Information Systems Technology
040 Construction (Home)040 Construction (Home)
060 Corporate Services060 Corporate Services
33
280280
130130
226226
207207
226226
179179
125125
162162
128128
1717
3737
158158
1111
8181
55
1919
66
159159
9595
2525
100100
33
2020
66
1414
77
55
11
11
22
11
22
77
22
3838
4343
288288
107107
6868
8888
66
1919
5050
11
55
2525
77
44
88
66
11
77
33
321321
193193
520520
328328
301301
272272
132132
181181
179179
1818
4242
183183
1111
9090
66
1919
1010
169169
108108
2626
109109
00
88
11
66
22
1414
99
1919
1010
161161
1818
44
1111
00
22
00
11
22
22
44
77
00
TotalsTotals 2,3792,379 7171 771771 3,2213,221 281281
CommercialConsideratio
ns
Introduction
CompanyResources
“EPC” Business
Typical Project
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Why are Personnel Resources Why are Personnel Resources Important?Important?
1. “Typical” (large) project requires 300 personnel at peak
2. No more than 50% of an office / company dedicated to a single project (“rule of thumb”)
3. “Small” project ($50 million?) requires 50 – 100 personnel at peak
4. Difficult to be “full service” company under 200 personnel
CommercialConsideratio
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Introduction
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“EPC” Business
Typical Project
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Manpower Resource (Back log) CurveManpower Resource (Back log) CurveShowing timelines for major projectsShowing timelines for major projects
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Mar
-07
May
-07
Jul-0
7
Sep-0
7
Nov-0
7
Jan-
08
Mar
-08
May
-08
Jul-0
8
Sep-0
8
Nov-0
8
Jan-
09
Mar
-09
May
-09
Jul-0
9
Sep-0
9
Nov-0
9
Jan-
10
Mar
-10
May
-10
Jul-1
0
Sep-1
0
Nov-1
0
Jan-
11
Mar
-11
May
-11
Jul-1
1
Sep-1
1
Nov-1
1
Proposed New Project
Project #3-Oilsands Mine
Project #2-Bitumen SAGD
Project #1-Bitumen Upgrader
Non Project Personnel
3200 Employees
CommercialConsideratio
ns
Introduction
CompanyResources
“EPC” Business
Typical Project
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Mark-Ups and FeesMark-Ups and Fees
1. Poorly defined in the industry2. Sometimes a “fee” is total engineering
price
3.3. ““Overhead” is a matter of opinion!Overhead” is a matter of opinion!
4.4. Analysis of “all-in” rate per manhour of Analysis of “all-in” rate per manhour of production effort is requiredproduction effort is required
Introduction
CommercialConsideratio
ns
“EPC” Business
Typical Project
CompanyResources
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EPC Contractors Cost StructureEPC Contractors Cost Structure(Home office services only)(Home office services only)
PROJECT AVERAGEPROJECT AVERAGE$ / HR$ / HR
PROJECT PERSONNEL (85%)PROJECT PERSONNEL (85%)- SALARIES- SALARIES- BENEFITS (30%)- BENEFITS (30%)- TOTAL PAYROLL- TOTAL PAYROLL
505015156565
PROJECT – SPECIFIC SERVICESPROJECT – SPECIFIC SERVICES- AUTOMATION- AUTOMATION- REPRODUCTION- REPRODUCTION- COMMUNICATION- COMMUNICATION- BUSINESS TRAVEL- BUSINESS TRAVEL
66111122
PROJECT DIRECT COSTPROJECT DIRECT COST 7575
OVERHEAD ALLOCATIONOVERHEAD ALLOCATION- FLOOR SPACE- FLOOR SPACE- BUSINESS DEVELOPMENT, OPERATIONS & OTHER EMPLOYEE COMPENSATION- BUSINESS DEVELOPMENT, OPERATIONS & OTHER EMPLOYEE COMPENSATION
551515
PRE-TAX PROFITPRE-TAX PROFIT 55
TOTAL BILLING PRICE (“ALL-IN RATE”) (RANGE $85 - $125)TOTAL BILLING PRICE (“ALL-IN RATE”) (RANGE $85 - $125) 100100
Introduction
CommercialConsideratio
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Typical Project
CompanyResources
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Commercial ProposalCommercial Proposal
Definition of client project and services required Definition of client project and services required (scope of work)(scope of work)
Company capability Company capability
-- TechnologyTechnology
-- PersonnelPersonnel Project execution planProject execution plan
-- Organization (key personnel)Organization (key personnel)
-- Resources requirementsResources requirements
-- Schedule of activitiesSchedule of activities
-- Estimated cost of servicesEstimated cost of services Price structure for services proposedPrice structure for services proposed Proposed form of contractProposed form of contract
Introduction
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Joint Ventures and Sub-Joint Ventures and Sub-ContractsContracts
Contractors form a joint “Entity” for specific Contractors form a joint “Entity” for specific venturesventures
Joint Venture shares scope/ risk among multiple Joint Venture shares scope/ risk among multiple contractorscontractors
Sub-Contractors have no contract with the OwnerSub-Contractors have no contract with the Owner
Introduction
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Types of Commercial ContractsTypes of Commercial Contracts
Lump SumLump Sum Fixed price; fixed work scope Limited commitment to schedule High risk /opportunity to contractor
Unit RateUnit Rate Fixed price per unit of production Well defined units of measure Limited commitment to schedule Moderate risk / opportunity to contractor
Cost ReimbursableCost Reimbursable Direct costs are reimbursed at cost Profit and overhead charged separately Lower risk / opportunity to contractor
Variations and Combinations of the AboveVariations and Combinations of the Above
Introduction
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Typical Contracting Typical Contracting ArrangementsArrangements
“E”
EPC Contractor“P”
“C”
SelfPerform
Construction
CM
Sta
rt-U
p &
Com
mis
sion
ing
Sta
rt-U
p &
Com
mis
sion
ing
Owner
Owner
“E”CM
C
Suppliers of Materials
Suppliers of Materials
EPC Contractor“P”
ConstructionSub-
Contractor
ConstructionSub-
Contractor
Contractual Relationship
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EPC BusinessEPC Business
DiscussionDiscussion
CommentsComments
QuestionsQuestions
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Thank YouThank You
