The relationships among design, bidding and construction, and the owner during project construction
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The relationships among design, bidding and construction, as well as the owner during a project’s development: The design requirements were provided by Company A, and Company D was selected through bidding to carry out the project design； The bidding conditions were proposed by Company A ； The tender selected the supervision company E ； A construction company, C, was selected through bidding ； Construction process management is the responsibility of Company A (including civil work, procurement of key equipment, installation progress, and commissioning, as well as the overall construction of the factory) ； Project owner company B accepts it after the commissioning and acceptance are completed successfully. However, all costs associated with the implementation of this project are determined and paid by the project’s owner company, B. All aspects of the work, including construction, the selection of equipment, and the choice of design options, are decided by company B before they are handed over to company A for execution. During this process, issues such as disagreements arise. The construction of this project requires an investment of 200 million RMB. Could we discuss whether it is feasible, as described in the above project organization structure, for Company A to act simultaneously as the designer, the contractor, and the quality supervisor?
1. What on earth are the people at Company B doing? They let others do everything; don’t they know how to manage construction? Can one drive a car without knowing anything at all? 2. If your family has bought a new house that is still in its raw state, you can contract a decoration company to carry out the renovations; you can even ask them to purchase the furniture and household appliances, provided that your approval is given for each item purchased. Similarly, the organizational structure for the above projects is entirely feasible; it just requires larger investment
When Company A takes on tasks such as the technical design, installation, and commissioning of this project, could project quality control get out of control if Company B does not have a thorough understanding of the relevant technologies? At the same time, Company A is not a professional design and construction company; it is a project department of an enterprise.
Our company has encountered similar project initiatives; during the actual implementation process, aspects such as quality, safety, schedule, and cost are all under the responsibility of A, B, D, and E, and the instructions given are inconsistent, which makes it very difficult for the contractors to work. This is what happens in general contracting projects that take into account national conditions.
The situation described by the poster seems to refer to an EPC turnkey project carried out by Company A; in other words, Company A won the bid for this project from Company B (the owner) and is then responsible for the project’s design, procurement, construction bidding, and management. However, the supervision company is supposed to be selected through a bidding process conducted by the owner, and it acts on behalf of the owner to exercise its authority. Although there is currently the abnormal practice of supervisors acting according to the owner’s wishes, the supervision company does not represent either party involved in the project.
The actual situation is as follows: Company A holds a stake of about 30% in Company B’s investment, while the other three investors are foreign companies. Company A is involved in site selection, the purchase of imported main equipment, and related domestic approvals; however, in cases where an EPC contract is used, and there are no fees associated with such a contract, all expenses such as those related to business trips must be approved by Company B. In the case of a general contract, this management approach can make construction more difficult to a certain extent.
The model mentioned by the original poster is a typical PMC project management approach, only adapted for use in China. There will certainly be no problems with the operation itself, as this model has already been used in international projects as well as in Europe and the United States. At present, there are no true EPC engineering companies in China’s petrochemical industry, but many design institutes have begun to attempt to engage in EPC work; however, most of them start by focusing on PMC services first. PMC stands for Project Management General Contracting, and its role and status are equivalent to that of the owner’s agent. If the project is large, there may also be EPC firms as well as companies such as P and C under the PMC party. Currently, some large domestic design firms, such as Global, are actively recruiting talent to work on PMC projects. But of course, the profitability of PMC is not as high as that of EPC; however, this is a transitional phase, and EPC companies certainly also want to engage in this business. Internationally, the cost of engaging a PMC service is relatively low. From 2003 to 2006, the owner of the CSPC project in Huizhou, Guangdong, hired a PMC company to take full responsibility for project management. But the cost was extremely high, amounting to over 300 million dollars in total. In other words, the level of companies that provide PMC services internationally is quite high. This post was last edited by zhanong on 2008-1-17 11:38.]
Correction: In 1993, the principal role of supervision in the construction market was recognized; it does not mean **that**. The supervisor is Party B relative to the owner; it carries out its work based on the authority granted to it by the owner under the supervision contract, and at the same time operates under the constraints of the regulations regarding supervision as well as relevant laws and rules. Internationally, supervision companies are referred to as consulting firms and fall under the scope of owner-side management. In other words, supervision and coordination of the project implementation process are carried out as authorized by the terms of the owner’s contract. The Quality Supervision Station, Boiler Inspection Institute, Technical Supervision Bureau, and similar agencies are the ones that represent the **party. This post was last edited by zhanong on 2008-1-17 12:59.]
The supervisor is responsible for coordinating the relationship between the construction company and the owner
It seems like the relationship is quite complex; the supervisor shouldn’t be A – they should be separated. The others should be equivalent to the EPC general contractor
In foreign engineering projects, Company A acts as a supervision company, representing the interests of the owner.
Construction of this project is about to begin, and the organizational structure remains unchanged; Company A really has a tough time, yet nothing can be said about it!