Whose opinion carries weight in equipment procurement for EPC turnkey projects?

This post was last edited by ms3210 on 2009-11-1 17:25. I also want to know; logically, it should be the owner who decides. But the designers have their own reasons too! It seems it’s necessary to specify this in the contract to avoid unclear responsibilities.

Of course, it’s the owner who decides. The owner makes the choice and then provides the technical parameters to the design institute

Personal opinion: Choosing the equipment manufacturer based mainly on the general contractor’s suggestions can be considered a good approach. The reasons are as follows: 1. As the owner, choosing the EPC turnkey contract model for a project is typically applicable to large or super-large projects that require substantial investment, or to medium-sized projects for which the owner lacks relevant experience in project management ； 2. When selecting an EPC general contractor, the owner usually conducts a thorough evaluation of the contractor’s relevant performance record, credit status, management capabilities, and ability to fulfill contracts ； In other words, it is mutual trust that leads to the corresponding choices ； 3. As a turnkey project under the EPC model, the contractor is responsible, as stipulated in the contract, for tasks such as the design, procurement, construction, and commissioning of the project, and assumes full responsibility for aspects such as the safety, quality, timeline, and cost of the project. For discussion!

This post was last edited by ms3210 on 2009-11-1 20:56. In fact, the EPC general contracting model is a form of project contracting that is being increasingly used and refined in China at present. Under this model, all tasks related to a project’s design, procurement, and construction are entrusted to a single contractor, who is responsible for handling most of the coordination and management aspects. The owner is only responsible for reviewing the relevant design and construction plans, and hires an inspector in accordance with the contract to oversee the work and assist with the payment of costs. However, there are some differences between the conditions of owners in our country and the requirements of EPC general contracting regarding its operation and standards. For example: Phenomenon 1: Incomplete market mechanisms. In the past, our country mainly adopted a \"project command center\" management model, which involved significant coordination efforts among different parties responsible for design and construction, equipment manufacturing and procurement, as well as commissioning. This led to issues such as disconnects between various parties, unclear responsibility assignments, and mutual shirking of duties. After the adoption of EPC, most owners of foreign-funded projects expressed their approval, but for some projects funded by private investors or the state, the owners felt that their authority was diminished after the implementation of EPC, and they continued to prefer to assign tasks such as surveying, design, procurement, construction, and supervision separately, which posed an obstacle to the promotion of EPC. Phenomenon 2: Owners do not follow proper procedures. Some owners have adopted the EPc turnkey project management approach, but the actual implementation and operation are not carried out in a standardized manner: some projects have inadequate or unsound preliminary design plans, which pose many problems for the construction drawing design ； There is pressure to accelerate the project timeline, which forces the contractor to incur additional costs and undermines the quality of the work ； There are those who like to interfere in equipment procurement, which leads to a mismatch between the quality of the equipment, the delivery timeline, and the construction schedule, thus affecting the project progress ； There are also those who emphasize that it is a fixed-price contract and refuse to adjust costs due to changes in the project. Regarding the equipment procurement as mentioned by LZ, I personally believe that the opinions of the general contractor usually play a key role, with the contract terms being the main factor to consider. The general contractor will develop a comprehensive set of procedures for the management of equipment and material procurement, specifying the procedures for various procurement activities and the principles to be followed, including aspects such as procurement, follow-up requests, inspection, transportation, on-site management, and overall supervision ； The project owner or the owner’s representative is primarily responsible for approving the project’s equipment procurement documents and overseeing the equipment procurement process. These are just my personal opinions for your reference!

Agree with the person above; during study*

In current EPC projects, it is common for the general contractor and the project owner to form a joint procurement team to purchase equipment and supplies, which helps to minimize issues such as ** and quality problems that may arise during procurement. If that is not the case, and disagreements arise during procurement, it is necessary to analyze each situation on its own. Minor issues are easy to resolve, while major conflicts usually stem from doubts regarding the quality and performance of the products supplied by the vendors. In such cases, it is best for the general contractor, when setting procurement limits, to try to follow the owner’s opinions as much as possible. If there are still differences, the employer should compromise, but the responsibilities of the general contractor must be clearly defined.

In project management, there are EPC and EPCM. EPC means that an engineering company takes on the overall responsibility for the project, while EPCM means that an engineering company is responsible for project management and related tasks. Under normal circumstances, the procurement of equipment for EPC projects is decided by the engineering company, whereas in EPCM projects it is the owner who makes the decision. But based on my experience, it mainly depends on the owner’s attitude – after all, those who pay the money are in charge. Even if it’s the EPC owner who wants to make the decision, generally the engineering company will agree to the owner’s wishes

If it is a project funded by a state-owned enterprise, then construction companies generally respect the owner’s opinions – after all, it is the owner who is paying for the project, so it’s necessary to satisfy them. As long as there are no serious safety hazards, the construction company will turn a blind eye to such issues.

Theoretically, the owner is not supposed to be able to choose the equipment manufacturer, as this violates relevant laws; however, such practices are common in China, where unwritten rules prevail: it is the owner who decides, and even if one has the money, there’s no need to worry about finding a general contractor

I think it depends on whether the device is a key component of that system; if so, the owner must have the final say. Because after a project is completed and put into operation, the key equipment determines whether it can achieve the required production levels; based on past experience, it is the owner who bears the responsibility for ensuring that such goals are met.