Page 50 - impiantistica_3_2015

Fig 1 - Flow diagram – The construction of a large-scale industrial
contracting strategy
works may be beyond the technical or financial
means of a single enterprise. Accordingly, the
Company may contemplate entering a contract
with a group of enterprises able to provide
jointly the resources and expertise necessary to
construct the works”.
This paper is aimed at providing a thought
process and a methodology for approaching the
evaluation of alternative contracting strategies
for a typical large scale industrial complex. A
discussion on the parameters characterizing
said alternatives is offered as the basis for a
scoring and ranking process. The merits of the
methodology and an example of firsthand results
are also presented. This work is structured as
follows:
• Chapter 1 provides a thought process at a
macro level for developing an EPC contracting
strategy for a given project;
• Chapter 2 is dedicated to listing the contracting
methods and alternatives that are commonly
evaluated as per industry practices;
• Chapter 3 is devoted to the methodology
proposed for the rational evaluation of above
mentioned alternatives;
• Chapter 4 and 5 aim to cover in detail the
initial step of the methodology, dealing with
the scoring and the parameters proposed for
the evaluation;
• Chapter 6 provides an example of firsthand
results obtained using the methodology
during the execution of a FEED (Front-End
Engineering Design) project;
• Chapter 7 offers a closing discussion.
1. Development
of a contracting strategy
Figure 1 provides a flow diagram describing the
thought process at a macro level for developing an
EPC contracting strategy for a given project. In said
flow diagram it is straightforwardly presented the
idea that the choice of a contracting strategy for a
given purpose is a dynamic and an iterative process
whereby market pressures, the prioritization of
Company’s expectations, and the allocation
of contractual risks are subject to analysis and
adjustments.
48 Impiantistica Italiana - Maggio-Giugno 2015
Internal factors
The initial point in figure 1 is the valuation of
Company’s internal environment. Such valuation
includes:
• what are Company’s internal policies,
previous experiences, preferred strategies,
commercial priorities and long-term objectives
in connection with the Plant?
• what are Company’s internal capabilities
available to control, execute and manage
the Plant’s Engineering, Procurement and
Construction?
• what are the Company’s internal constrains
and drivers to execute the Plant, is Company’s
intention to pursue a public tendering process
for all and every contract in connection with
the Plant?
• what is the Company’s perception in relation to
his market power and his ability to attract both
financing and reputable EPC contractors?
Contractual relationships and
project’s delivery methods
Subject to the valuation of Company’s internal
factors as recommended previously, the contractual
relationships among the project participants can
take various arrangements. In this phase Company
may decide, for instance,
• to which extent there is a need of a PMC
(Project Management Consultancy) contractor;
• to which extent there is a need to include
the Plant’s Initial Operation into the EPC
Contractor’s Scope of Work (SoW).
Moreover the type of relationship with the
stakeholders that the Company is aiming for at the
moment it decides to carry out the Plant, plays also
an important role in this stage.
Contracting methods
At this stage, subject to the results of the previous
steps, the Company shall be in a position to identify
the most appropriate EPC contracting method in
terms of various alternatives, as follows:
• possible splits of the Plant in packages,
• possible splits of SoW,
• contractual compensation schemes; and
• completion, taking over and acceptance
schemes.
Market information phase
(external factors)
Having identified and structured at a macro level
the contracting strategy it better suits Company’s
objectives (in terms of internal factors and delivery