EPC Companies

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EPC Companies

The following is an overview of the EPC workflow. Each step is detailed in the order it typically occurs in the workflow. The responsible departments are briefly detailed in the EPC Workflow, with a more comprehensive explanation of the functions and roles that they perform is set out following this section. Also, included in the EPC workflow are the interdependencies between departments. Finally, a list of key terminology and their explanations is included for completeness.

EPC WORKFLOW

Project Planning — Feasibility Study

  • The Project Feasibility Study is the initial step in the EPC workflow. It essentially investigates whether the project is feasible. The things that need to be considered during the feasibility process are the technical feasibility, economic feasibility, legal feasibility, operational feasibility, and scheduling feasibility.
  • The feasibility study should also identify any internal project, internal corporate, or external constraints.
  • Typically, the project planning phase of a project is completed by the organization that is commissioning the project, or the key stakeholder. The key stakeholder is dependent on the investors, who ultimately pay the bills. The key stakeholder will in most circumstances use an engineering consultancy firm to undertake this work. The consultancy firm will have a wide range of staff that will handle specific aspects of the job, for example financial advisers, engineers, procurement and logistics specialists, and legal experts.
  • The feasibility study is used to inform the bidding process. Usually, it is included in the bid documentation which those invited to bid on the project receive.

Prequalification of Potential Bidders

  • This sees the organization that is offering the contract screening potential bidders determine if they meet the criteria to bid on the contract. The typical criteria screened for are experience, finance, managerial capabilities, reputation, and history. The companies that meet the criteria will receive an invitation to bid on the contract.
  • This is another part of the process which is completed by the key stakeholder. Often companies will express interest in the project, and provide the requested information so that a list of suitably qualified organizations are made aware of the project and given the opportunity to make a bid.
  • This process sees those interested making an application submit basic information to the key stakeholder. The key stakeholder typically engages a consultancy firm to assist in identifying the players they want to bid on the project.

Preparation of Bid and Presentation of Bids

  • Front End Engineering Design (FEED) focuses on the technical aspects of the project and costing for the project. It will identify any potential risks that may be encountered during the execution phase. This process essentially prices the whole contract through to completion.
  • A FEED can take up to 12 months to complete. The things that are taken into account include degree of automation, rates and levels, materials and specifications, standards and guidelines, assumptions, exclusions, and potential problems. In some instances the FEED will also incorporate any future expansions. This forms the basis of the final bid.
  • A determination of funding and budgeting is also completed in this phase. All of this information is used to inform the final bid.
  • A number of different departments are responsible for a range of different tasks within this process. These departments include the project management team, procurement department, financial department, and engineering, which is usually broken in into civil, electrical, and mechanical engineers, all of who will contribute to aspects of the project that are within there area of expertise.
  • Throughout this process, there is a high degree of dependency between the different departments, with each responsible for the various aspects of the project. These departments will, typically, report to the management team, who in conjunction with consultants and the financial department will be responsible for the final bid document.

Contract Award

  • Once all the bids have been submitted. They are reviewed and a decision made as to who is awarded the contract. Following the award of the contract the legal necessities will be completed including the completion of a formal contract that sets out the rights and responsibilities of the parties.
  • Once the contract is awarded, it is typically the management team and the legal team that will work, with the key stakeholder to formalize it. In some instances, the financial team may have input into this process.

Detailed Engineering

  • The detailed engineering is the final step in preparing to execute the contract. It involves defining the precise details of every aspect of the project. This forms the blue print of the project going forward. It will detail the procurement process, develop the schematics for construction, civil works, electrical, and instrumentation. In most instances, it will also detail the management of supplies, and the cost and control schedules used in project management.
  • This process is informed by the same departments that were involved in the FEED. The degree of dependency is intensified with a high degree of cooperation between the different departments so a comprehensive blueprint can be developed. Because the actions of one department will impact on the ability of others to complete their aspect of the project, there is a high level of dependency on the team of others.
  • Each department must work closely with the others. There is an expectation of honesty through this process, with departments encouraged to act honestly in respect of their aspect of the project, so as not to create a chain effect that impacts other departments.

Procurement

  • The procurement process involves all the aspects of sourcing the equipment and materials that will be necessary to complete the contract. Aspects of procurement that must be addressed are logistics and transport, receiving, procurement, invoicing, and purchasing.
  • Once the design is completed procurement can commence. There is no set time period for procurement. Initial procurement will get the materials and equipment necessary to commence work on the project.
  • Once work has commenced the procurement will continue throughout the construction. It is the responsibility of the procurement department to ensure the required equipment and material is available to construction, so that they do not have delays waiting for items, which could potentially see the project run over time.
  • Because EPC contracts are typically for a fixed fee, the procurement department bears the responsibility of ensuring the construction runs smoothly, and significant issues in the supply chain will affect the profitability of the project.
  • The procurement department is responsible for this aspect of the project, however they will need to work closely with the construction teams to ensure that the appropriate materials and equipment is available at the appropriate time. Although there is a blueprint setting out the timeline, in reality the project is a fluid entity that will have issues to overcome, that may delay progresses or if things go well and they get ahead of schedule.
  • The procurement department will work with the project manager, in the first instance, and the different departments in the second instance, to ensure that any changes to the blueprint are communicated and addressed in a timely manner.

Construction

  • The name speaks for itself. This is the department that is largely responsible for constructing the project.
  • During the construction process, the work is usually completed by construction teams, who work under the supervision of electical, mechanical, and civil engineers who oversee the process and ensure compliance with the blue plan and any terms and conditions of permits and licences,
  • The project manager will work with each of the different teams to ensure that the project remains both on schedule and budget.

Commissioning

  • Upon competition of the project it is delivered to the key stakeholder. There are several steps that need to be completed in this process. This includes the commissioning of the plant and firing it up and testing for issues prior to it being handed over.
  • The respective engineering departments are usually responsible for this process. There is a degree of dependency between the departments, each part taking responsibility for their aspects of the project.
  • The team who will operate the plant tend to become involved at this stage. Often there will be a period of operation before the plant is formally handed over to the key stakeholder. This allows for any issues to be resolved. Often these issues do not come to light until it is in use. This is the equivalent of a soft opening.
  • Extensive testing is completed over the course of this process to ensure that everything is working as it should be. At the conclusion of this process the project is officially delivered to the key stakeholders.
  • There is likely to be a comprehensive assessmentcomplian of the project before the plant is accepted and the final payment made. Regulatory and compliance inspections are also completed at this time.

Other Aspects

  • Government and Regulatory Approval — This is essentially the satisfaction of any external constraints. It includes identifying the key steps and processes that need to be completed in order to complete the project. This will include any permits or approvals, that the government at the location of the project requires in order to start the project and follow it through to competition

EPC PLAYERS

  • There are a number of different players and departments involved in the EPC process that have been identified above. A breakdown of the roles of each player is detailed below, Some peripheral teams or individuals have not been discussed as the role is self-explanatory.

Key Stakeholder and Investors

  • The key stakeholder is also known as the project owner. In some countries in the oil and gas industry this may be the governmental authority. The investors therefore could be the local taxpayer or the shareholders of the company that has commissioned the process.
  • The role of the key stakeholder is firstly to define the project. The stakeholder will work with consultants, in most instances, to define the project through the commission of a feasibility study. The key stakeholder is also responsible for setting out the bid process, receiving the bids and determining the winning bid.
  • They will then enter into a contract with the winning bidder. Some key shareholders are on site throughout the project construction, others take a more hands off approach. Consultants and legal counsel typically support the key stakeholder throughout the process.

EPC Contact Holder

  • The EPC contract holder is the company or organization that has won the contact.

Regulatory and Compliance Authorities

  • Depending on the location of the county tat the project is being commissioned in. These authorities are tasked with ensuring the project is completed in a way that complies with any relevant regulations. This could include the activities it is built for, environmental regulations, safety regulations, and building standards and codes.
  • At various times throughout the building process, there are likely to be inspections completed by these authorities. A final inspection is completed usually before it is handed over to the key stakeholder.

Project Management

  • The project manager works closely with the management team and assumes overall responsibility for the project. They work closely with the individual departments to ensure information is delivered by the time and for the cost agreed. Consultants support them in this role.
  • Throughout the project they act as the primary point of contact and ensure that the activities of the different players are aligned and the project is heading in the right direction. Essentially they work closely with all the other departments to ensure every thing is under control throughout the construction process.

Procurement Department

  • The procurement department is responsible for the acquisition and delivery of the supplies' ad equipment that is necessary to compete the project. Over time the procurement department may develop relationships with specific suppliers so that better deals can be accessed. The bear responsibility for the hiring or purchase of equipment needed.

Financial Department

  • The financial department, as the name suggests, is responsible for the financial aspects of the project, working closely with the other departments.

Civil Engineering

  • Civil engineering is department that takes responsibility for the design, construction, and maintenance of the physical environment, including the structural components of projects of this nature.

Mechanical Engineering

  • The mechanical engineering department is responsible for the machinery within the plant and its operation. In EPC, they take responsibility for this aspect of the project, but work with the other disciplines to ensure they are synchronized and the appropriate machinery is installed and tested at the appropriate time.

Electrical Engineering

  • This branch of engineering takes responsibility for all the electrical components of the project, which ranges from the lights and circuits. There activities are coordinated with the other engineering and construction teams.

Construction

  • Construction, needs no explanation, beyond, they are the team that builds or constructs the project.
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