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Information about Why EPC

Published on November 7, 2013

Author: vivektmax

Source: slideshare.net


A project promoter or developer has an option to give single contract on turnkey basis on single contractor or to source project packages/components from several suppliers. Advantages of an EPC single contract are highlighted in this presentation.



Factors for Success of Power Plant • Project Financials – Project cost • Capital Cost • Interest Cost • Development Expenses – Operating cost of the plant • Heat rate

Developer's Risks • Technical Risks – Proven Technology – Developer / Contractor’s Competence & Experience • Commercial Risks – Feasibility – Project schedule – Contractor’s Financial Strength

Developer's Concerns • To Ensure Return on Investments – Technical & commercial viability – Guarantees • Project Cost - No Escalation. • Performance- Adequate Guarantees • Schedule -Adequate Guarantees – Approach for contract execution • Single point responsibility ( EPC ) • Conventional procurement from equipment manufacturers ( NON-EPC)

Developer's Concerns • Equipment Performance – To remain within the planned revenues • Project Schedule – To Ensure No Delays – To maintain predicted cash flows • Project Overruns – To keep the overall cost within the project outlay

Conventional Power Project Execution Appointing an Engineering Consultant Buying out multiple packages Awarding Construction Contract Project Management Liaison with various agencies Checking on performance

The EPC Way Single point responsibility for: System Configuration Basic Design Procurement Erection & Commissioning Performance Trial Training & Handing over

Conventional Execution-Limitations A Overall Project • Overall performance guarantee • Overall schedule • Overall price guarantee Conventional Route • None • Individual package supplies • Does not constitute overall performance guarantee • Difficult to fix responsibility •None •None

The EPC Advantage A Overall Project •Overall Performance Guarantee EPC Route •Higher Damages on Total Project •Larger risks for EPC Contractorhence obliged to perform •Overall performance assured •Overall Schedule Guarantee •Overall commissioning schedule maintained •Overall Price guarantee •Firm price contract

Conventional Execution-Limitations B Engineering •Responsibility & Coordination Conventional Route •Interactions with multiple agencies : •All documents need to be checked •Needs dedicated manpower •Miss-outs in scope

The EPC Advantage B Engineering •Responsibility & Coordination EPC Route •Single point responsibility •Fewer documents to be checked •Faster communication •Lower resources required •Total scope responsibility •No miss-outs & surprises allowed

Conventional Execution-Limitations C Procurement •Buying Power Conventional Route Lower negotiation power •Single project execution •No vendor partnership •Limited vendor data •Sourcing Lower global sourcing

The EPC Advantage C Procurement •Buying Power EPC Route Better negotiation power •Multiple project execution •Vast vendor data bank •Vendor partnership •Rate contracts •Sourcing Lower purchase cost •Global sourcing at lower cost •Higher flexibility in vendor selection

Conventional Execution-Limitations D Construction Conventional Route •Faculties required Resources required for : •Project Management •Scheduling •Quality •Inspection •Erection & Commissioning •Needs to be installed

The EPC Advantage D Construction EPC Route •Faculties required •These faculties already exist with EPC contractor

Conventional Execution-Limitations E Project Management •Skills required Conventional Route •May require to acquire project management skills •Scheduling: L1,L2,L3 •Planning •Monitoring •Integration

Conventional Execution-Limitations E Project Management Conventional Route •Monitoring Requires to generate : •Daily reports •Weekly reports •Monthly reports •Critical issue reports

The EPC Advantage E Project Management EPC Route •Skills required •Skills and Resources •already with EPC contractor •Monitoring Progress review through : •Daily reports •Weekly reports •Monthly reports •Critical issue reports

Conventional Execution-Limitations F Quality Conventional Route •Skills Resources/ Skills need to be in place for : •Design Reviews •Quality plans •Site/Vendor •Resources •Quality Inspectors

The EPC Advantage F Quality •Skills EPC Route Following are part of EPC setup : • Reviews •Quality plans •Site/Vendor Quality checks •Resources •Quality Inspectors

Conventional Execution-Limitations G Results Conventional Route •Project cost ? •Project Schedule ? •Project Quality ?

The EPC Advantage G Results EPC Route •Project cost •Fixed •Project Schedule •Guaranteed •Project Quality •Guaranteed

The EPC Advantage - A Case Study Tangible Benefits 1 2 3 4 5 Boiler & Accessories Steam Turbine Generator Electricals Civil Work Miscellaneous Items Engg. & Project 6 Management Cost etc. 7 Erection & Commissioning 8 Total Project Cost IDC Development costs Difference in LD's 66 78 45 21 15 66 78 45 21 15 6.6 7.8 2.25 1.05 1.5 5 30 30 30 0.5 1.5 260 ? ? 285 Fixed Fixed 21.2 7.3 LD on Total 28.5 Value for EPC

The EPC Advantage A Case Study Intangible Benefits Project Management Personnel Cost Inspection & Expediting Cost Contingency , Escalations & Miss-outs Cost Overruns due to delayed commissioning

The EPC Way Benefits to : •The Developer •The Lender


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