Questions regarding EPC qualifications
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In 2017, we were involved in an EPC project; that project was undertaken independently by a company with the necessary construction qualifications, while the design work was subcontracted to us. After being away from design for a few years, I returned to the industry last year and came into contact with EPC projects again. This time, however, I had some questions regarding the required qualifications; the contractors said that to undertake EPC projects independently, one needs to have both construction and design qualifications, otherwise a consortium must be formed in order to take on such projects. The replies from the Ministry of Housing and Urban-Rural Development, as well as the guiding guidelines issued, were quite early on; it’s not clear what the requirements are now for qualifications in EPC projects Is it necessary to have both design and construction qualifications in order to undertake projects independently, or is it sufficient to have either design or construction qualifications, with the parts that require such qualifications being subcontracted to entities that do possess them? Whether to form a consortium or not will result in significant differences in the approaches to risk management; I would appreciate your advice!
Ministry of Housing and Urban-Rural Development, Document No. Jianshi Gui [2019] 12: **National Development and Reform Commission’s notice on issuing the ‘Administrative Measures for the General Contracting of Building Construction and Municipal Infrastructure Projects’. Regarding the qualifications for EPC design and construction, both are required in accordance with the \"EPC Management Measures\"; this applies only to housing construction and municipal infrastructure projects
Currently, for the EPC turnkey contracting of chemical projects, the mainstream approach is for engineering companies (design institutes) with the appropriate qualifications to take on the EPC role. If a JV model is used, the relevant project contracting qualifications are at a lower level rather than being higher.
In accordance with the relevant regulations on EPC management, having the appropriate design or construction qualifications is sufficient to undertake EPC projects of corresponding scale.
Thank you very much; now I understand this issue much better! We have approached the EPC project through a consortium approach, and our discussions on this matter have been rather awkward. In all the consortia we’ve encountered, it is always the construction party that takes the lead, but these parties fail to change their way of thinking and continue to carry out the work according to the traditional construction methods ； It’s impossible to even start managing EPC through design, which invisibly increases the risks significantly. It seems that either the design institute itself has to take the lead, or a reliable contractor needs to be found again; otherwise, the risks cannot be controlled.
It is relatively easy to find construction subcontractors. Moreover, with a JV approach, there is an uncertain risk factor regarding whether the partners will be able to purchase equipment and materials that meet the design requirements. If those standards are not fulfilled, it will only make things more complicated between the two parties. So, one must still hold their fate in their own hands.
What is the JV approach? ? ? ? ? ?
China State Construction’s projects are a typical example; it has its own design institute
Joint venture, Joint Venture.