One of the most frequent failure modes we observe is insufficient, or poorly structured oversight of EPC Contractors. It is not because the contract is a turn-key EPC contract given to a reputed and professional contractor that the Project should not devote sufficient attention and oversight. In reality, EPC contracts are as susceptible to failure and commercial issues as other setups, and both direct and indirect consequences can be massive. Our new White Paper 2017-10 ‘How to Maintain Sufficient Control of EPC Contractors on Projects’ focuses on how to properly organize Project Control of an EPC Contractor.

One of the most common issues we encounter when it comes to EPC contractors that have to deliver a sizable part of the Project is a relative weakness of the supervisory organization. Projects or Owners too often underestimate the amount of control required to obtain a smooth delivery. In addition, they fail to understand that the relatively limited supervisory investment required is key to avoiding later major issues that may have consequences several orders of magnitude larger.

We are not favoring here the excessive addition of technical experts as part of this oversight, which sometimes have the opposite effect of affecting significantly the progress of the contractor and its ability to propose alternate solutions. We are focusing mainly on contract and control personnel.

Delegation is not incompatible with control, and even with lump-sum EPC contracts, it is essential to maintain substantial control in the interest of the Project. The issue of proper supervision by the Project is applicable in particular to lump-sum contracts. Contrary to common belief, in reality lump-sum EPC contracts often prove to be more risky for the Project due to the lack of detailed visibility on the actual progress, and because any change or interface issue from the side of the Project will be translated immediately into a Change Order. In a number of circumstances, it is more appropriate to use other contractual approaches. In any case, sufficient supervision remains required on the Project side even in the case of lump-sum EPC contracts..

Our new White Paper 2017-10 ‘How to Maintain Sufficient Control of EPC Contractors on Projects’ gives some pointers as to the required setup and areas of focus. Professional supervision of EPC contractors is a must.

If you can’t access the link to the white paper, copy and paste the following link in your browser: http://www.projectvaluedelivery.com/_library/2017-10_Project_Control_EPC_Contractors_v0.pdf