Project developers for Oil Terminals, SPM/CBM/FSO and Maritime Operations

Transcription

1 Project developers for Oil Terminals, SPM/CBM/FSO and Maritime Operations

2 Contracting Strategies for Terminal Construction page 2

3 Contracting Strategies for Terminal Construction Choosing the way to contract the design and construction for a tank terminal construction project is a decision of which the influence on the project is often underestimated. The contracting strategy has a large and early impact on the execution and organization of the project. The choice influences the price, the risk and the duration of the project. And it determines the required level of pre-contract engineering. To guarantee efficient and fast early stages of the project, it is essential that the decision for a contracting strategy is taken early in the project. There are many ways to contract the construction of a tank terminal. This presentation describes the advantages and disadvantages of the various available options. How to contract engineering, procurement & construction of a tank terminal project page 3

4 Client managed construction When the client wished to manage everything himself Managed by the project organization of the client Typically a high number of contracts with different kinds of suppliers Client Engineer Consultant Contractor Equipment Material Package unit This requires large resources and expertise from the client. There are many alternative solutions. page 4

5 EPC Single contract Engineering, Procurement & Construction E, P & C by one main contractor Single contract based delivery of the complete scope of a project, typically with guarantees for the operational functionality of the installation. The required pre-contract engineering, often called FEED (Front-End Engineering Design), can be limited to a conceptual functionality design. The main contractor typically engineers and constructs a large part of the project themselves The main contractor procures the other parts of the project from suppliers and sub-contractors Engineer Suppliers Client EPC Contractor Sub Contractors page 5

6 Package Unit approach Multiple EPC contracts Functional or geographical clearly separated packages of work, each contracted in an EPC manner. Could be 2, 3 or a high number of packages. Introduces interfaces between the packages, both technical and organizational. The interfaces require more detailed precontract engineering (FEED s). Requires coordination by the client between the contractors of each package. Engineer Client Package 1 Package 2 Package 3 Suppliers Suppliers Suppliers page 6

7 EPC Contract formats Lump-sum Turn-key The contractor will deliver a functional construction (just turn the key) for a single, fixed all inclusive price (lump-sum). Functionality and delivery date are contractually guaranteed, often with penalties if not met. The client has essentially no influence on the detail design or construction of the project. The risk for overruns in time and budget are on the shoulders of the contractor. Design and Construct The contractor will first deliver the design, often for a fixed fee. This design is to be approved by the client. Based on the design and agreed unit rates, the contractor will calculate a fixed fee and delivery date for the construction. The client has a strong influence on the detail design of the project.. The risk for schedule and budget are on the shoulder of both parties. Unit Rates The contract consists of a price list of all units (supplies, manhours) to be delivered by the contractor. The contractor will invoice based on actually procured supplies and spent manhours. The client has a strong influence on the detail design and the construction of the project.. The risk for schedule and budget are on the shoulder of the client.. page 7

8 Most common contract forms For tank terminals, The most commonly chosen contracting strategies are: EPC, lump-sum turn-key Package units, design and construct Other strategies might however fit certain client-project combinations better. page 8

9 The contracting processes compared EPC Lump-sum Turn-key 1. Define location and required functionality of the terminal. 2. Contract an engineering company to make a FEED. This FEED can be limited to a functional, conceptual design. 3. Do a pre-qualification to determine the short-list of potential EPC contractors. 4. Define the contract format, incl. the contractor guarantees, HSE requirements etc. 5. Issue a Request for Proposal (RfP) consisting of the contract and the FEED to the short-listed contractors 6. Evaluate the bids and negotiate and award the contract. Package Units, Design and Construct 1. Define location and required functionality of the terminal. 2. Contract an engineering company to make a FEED. This FEED should be a basic design that defines the technical interfaces between packages.. 3. Do for each package a pre-qualification to determine the short-list of potential contractors. 4. Define the contract format(s), incl. the contractor guarantees, HSE requirements etc. And define the interface management procedure. 5. Issue for each package a Request for Proposal (RfP) consisting of the contract and the relevant part of the FEED to the short-listed contractors 6. Evaluate the bids and negotiate and award the contracts. page 9

10 EPC lump-sum turn-key Advantages Total project costs fixed in early stage All liability by the main contractor Small project team required by client Only functional design required up-front Mainly applicable for greenfield projects Disadvantages High project costs (risk factor added by Contractor) Almost no influence on the project by the Client Up-front engineering not sufficient for environmental permit application page 10

11 Package units, design and construct Advantages Most of the liabilities by the contractors Potential for negotiating low project costs LImited amount of engineering required before contracting Detailed influence on the design by the Client Makes good use of expert knowledge from contractors Disadvantages Late availability of fixed contracted project costs Large project team required by client Interfaces between contractors need to be engineered and managed by Client page 11

12 EPC management (EPCm) Engineering, Procurement & Construction management Engineering and management of Procurement and Construction typically by an engineering firm but could also be two or even three separate companies. The contract with the EPCm company(ies) can be lumpsum or based on unit rates or a combination of both. Contracts with contractors and suppliers directly with client but managed by EPCm engineers. The contracting strategy is to be agreed between client and EPCm engineers. EPCm Engineers Suppliers Client Contractors For large and/or complex (brown field) projects page 12

13 EPCm Advantages Potential for lower project costs Much influence on project by Client Quality determined earliest by choice of contractor/supplier Flexibility to change/adapt during design Fits brown field projects well Disadvantages More engineering hours Large project team required Late availability of final contracted project costs risk for overruns of initial budget and schedule page 13

14 How to make the contracting decision? Questions to ask yourself Do you want to be fast? EPC Do you want detailed influence on the quality of construction? Design & construct Is your project large and complex EPCm Do you want a low risk for budget over-run? Lump-sum, Turn-key Do you have your own, large project organization? Package units Do you want detailed influence on the design? EPCm Do you have limited experience in constructing a terminal? EPC Do you want guarantees on the functionality of the terminal EPC Do you want to negotiate yourself for the lowest price? package units Do you find this confusing? Engage Riverlake Solutions! page 14

15 Management contacts Jan Thijs Maatman MSc. Mining and Petroleum Engineering Since 1999 experience in contracting oil & gas Mobile Erik van Sliedregt MSc. Mechanical Engineering Since 1998 experience in marine contracting construction and production mangement Mobile Wilbert Versteeg Master of Business Sience Since 1996 experience in marine contracting oil & gas Mobile Feiko Jager MSc. Maritime Technology Since 1987 experience in oil terminal and maritime logistics Mobile page 15

16 Office Contact Sales Office Parklaan BC Rotterdam, The Netherlands Tel: Fax: Head Office 26, rue du Mont-Blanc 1201 Geneva, CH page 16