Page 52 - impiantistica_3_2015

Initials stand for:
• E: Engineering; P: Procurement; C:
Construction; S: from Commissioning to Initial
Operation; m: Management.
No further splits, alternatives and/or combinations
are in general evaluated. The reason is that the
intended successful completion of the works (in
terms of quality and schedule) strongly relies on the
continuity of the activities along the implementation
of the SoW.
Contractual Compensation
Scheme
EPC contracts may be classified according to
the method of payment to the contractor and/
or depending on the level of risk involved. The
range of risk transferred to the contractor runs
from a fixed-price contract to a totally non-
risk cost-reimbursable contract. The following
compensation schemes are in general considered
as valid alternatives [2]:
• Lump Sum Contracts
• Cost-Reimbursable plus Fixed Fee Contracts
(cost-plus)
• Cost-Reimbursable plus Incentive Contracts
(target cost)
• Time and Materials Contracts (unit price)
• Convertible Contracts
Completion, taking over and
acceptance scheme
With regard to the take over (i.e. transfer from
contractor to Company of works’ care, custody
and control), the following alternatives are worth to
be taken into consideration.
• Alternative 1: Take Over upon Mechanical
Completion i.e. at works’ Ready for
Commissioning i.e. the time when the works
is completed mechanically.
• Alternative 2: Take Over at Ready for Start-
Up i.e. this term generally describes the time
in which all preparatory work for starting
operation has been done.
• Activities following the Take Over in the
Alternatives above are carried out by Company
with Company’s own personnel. The output of
the works is to be owned by Company.
• Alternative 3 (product-in-hand): Take Over
after an Initial Operation period (trial operation) intention is to develop clear and unambiguous
of 3 months and upon successful completion
of the Performance Test i.e. the works remain
in physical possession of the contractor until
the completion of the Performance Tests.
50 Impiantistica Italiana - Maggio-Giugno 2015
As two important highlights, it is to be noted that
financing is, very often, contingent on the degree of
confidence regarding the operation of the revenue
generating facility; and that, normally.
EPC contractors require the contractual exclusion
of indirect and consequential damages such as the
loss of profit.
Moreover, depending on the Company’s financing
needs and the extend of the period that Company
requires contractor to operate the plant, then rather
than study a conventional EPC contracting strategy,
an alternative such as a “concession strategy” may
also be worth to be explored.
In the concession strategy, as defined by the United
Nations, the contracting authority shall select a
concessionaire to finance, design and construct
the Plant and shall then give the concessionaire
the right to operate it commercially for a certain
period, at the end of which the facility shall be
transferred to the contracting authority (i.e. Build-
Operate-Transfer Projects). Normally said period
encompasses (as minimum) a time necessary for
the concessionaire to recover the investment as
well as the operating and maintenance expenses
[3].
3. Methodology
Bounded rationality means that “individuals who
intend to make rational choices are bound to make
satisficing (rather than maximizing or optimizing)
choices in complex situations” [4].
Bounded rationality means that
“individuals who intend to make rational
choices are bound to make
satisficing (rather than maximizing or
optimizing) choices in complex situations”
With regard to the evaluation of contracting
methods, the methodology presented herein is
intended to overcome the bounded rationality
mentioned above by guiding a full rational process
based on the comparative evaluation of the various
alternatives. Said evaluation is to be carried out
by means of a set of predefined parameters and
score points. These parameters, once shared with
the Company, constitute the foundations of the
process credibility and of the success of the full
rational process.
All parameters that affect each contracting
alternative in terms of split in packages, split of
work, type of compensation scheme and contract,
taking over and plant acceptance scheme and that
are relevant to, and feasible for, the Company’s
Project, are herein defined and analyzed. The