Design-led EPC, what are the problems

What are the problems of design-led EPC (Engineering General Contracting)

The design-led EPC model is a common practice and trend in the international engineering community. What are the advantages of the model? What are the deficiencies and problems of design enterprises adopting the design-led EPC model? What are the solutions? This paper analyzes the above questions.

The four advantages of design-led EPC mode

Favorable communication and coordination with the owner. In the industry chain of the construction industry, the design enterprise has a great upstream advantage, the way and method of influencing the implementation of the project has unique conditions. Transformation of the general contracting enterprises by the design institute to master the owner's intentions and the requirements of the project function more clearly, can effectively alleviate and reconcile with the owners of the coordination pressure.

Favorable to improve the quality of the project, the EPC general contractor of the project design, procurement and construction of the whole process of quality control, to a large extent, to eliminate the quality of unstable factors.

Favorable to reduce the project transaction costs. EPC project owners only need to sign a contract with the general contractor can reduce the information collection, contract negotiation and management coordination workload, is conducive to reducing transaction costs.

Favorable to shorten the procurement cycle. Because the project materials and equipment selection by the general contractor to determine their own, in the design of the procurement work can start, can effectively reduce the procurement cycle.

Problems of design enterprises adopting design-led EPC model

The management system is not adapted. The original design enterprise long lines of functional management of the formation of layers of reporting, layers of responsibility, layers of management of the organizational system and management style, it is difficult to adapt to the requirements of the general contracting of the project.

The lack of composite talents. Traditional design institutes to the transformation of general contracting enterprises, not only the lack of EPC project bidding organization, a reasonable determination of the offer, the ability to obtain orders for commercial personnel, but also a lack of project management in accordance with international practice, with a strong ability to project management of the complex project management personnel.

Control ability is weak. Lack of overall control of the project procurement implementation of construction management and commissioning of the control capacity.

Inadequate resource integration. Design and construction in the EPC model is complementary, cross fertilization of the two most important links, by the design of the transition to general contracting companies generally have construction and procurement management short board. There is still a long way to go on how to reasonably and effectively integrate the technical force of professional design institutes and the human resources of construction units so that the technical force, human resources and capital can meet the requirements of EPC projects.

Solutions

Design enterprises in the transition to general contracting enterprises, its service function, organizational system, technology management system, talent structure and so on there are great limitations, in the concept of change, mode of operation, structural adjustment, management to follow up and talent training and the introduction of a great deal of work needs to be done, the solutions are as follows:

Transformation of the concept of service. Realize the depth of design and construction cross

EPC projects from the design stage should play a leading role in the design, the implementation of limit design, through the optimization of the program, material substitution, the application of new technologies, to maximize the reduction of costs, is the biggest advantage of the EPC model.

Therefore, designers are required to grasp the following points in the design process:

One is to fully understand the owner's intention. Before carrying out the design, strengthen the communication with the relevant departments of the owner, and fully reflect the owner's ideas in the design program.

The second is to provide optimized construction drawing design. Limit design should be carried out throughout the construction drawing design, to control the investment cost from the source, to ensure that the difference between the actual design and the workload prepared in the bidding is not large. Under the premise of meeting the basic requirements of the owner, provide design solutions that are both construction-friendly and investment-saving. At the same time, procurement, construction must be involved in advance, in the material selection, construction technology to facilitate the construction of the optimization program.

Third is to grasp the depth of the design. In the program design, preliminary design, construction drawing design, to fully meet the estimates, estimates and budget needs. The design program consider appropriate insurance coefficient, and do a good job in the program comparison and material and equipment selection of safety, quality and economic organic combination.

Improve the organizational structure and management system to enhance the ability to control resources

Most of the work of the general contracting of the project is done through is subcontracting. Therefore, the control of market resources, the management of subcontracting units, the integration of the process and integration ability is the key to determine the development of general contracting enterprises. According to the functional requirements of EPC mode, we should implement the matrix organizational structure commonly used by international engineering companies, set up organizations for marketing, engineering design, equipment procurement, construction management and project management, shorten the management chain, move the decision-making and management center of gravity forward, and give the project department enough autonomy and decision-making power. Adapt to the whole market segmentation with specialized team, specialize on the existing advantages, and for some infrequently encountered professions, it can be united with professional companies. Make full use of external forces to support and leave flexible space for the development of the enterprise.

The management system of EPC mode is not a simple addition of design management, procurement management and construction management, but a systematic project. Therefore, the establishment of a set of management system applicable to the EPC mode is very important for the transformation of the general contracting enterprise from the design institute. The perfect management system documents include documented organization, functional responsibilities, resource allocation, procedure documents, operation guidance documents, project management system and so on. Each EPC project should refer to the company-level project management system documents to develop management documents suitable for the project, to adapt to the uniqueness of the project and one-time demand.

Strengthening the construction of talent team, build a composite talent echelon

EPC mode of broad management scope requires general contracting companies must have a large number of know-how, through the business experienced composite project management personnel. The traditional design institute to train most of the technical aspects of the talent, a general lack of marketing, purchasing talent, especially the lack of composite project management talent, once a number of projects focused on site management personnel will be stretched to the limit. The most important thing to improve the talent structure is the introduction and training of talents.

Optimize the layout of the operating structure, enhance the quality of enterprise development

In the early stage of transformation of the premise of limited resources, in order to break through the bottleneck of marketing, we must establish a set of accurate, timely and efficient marketing decision-making mechanism, and adhere to the principle of doing something and not doing something on the undertaking of the project.

Specifically, it can be divided into the following three development steps:

One is to do the scale. Focus on advantageous resources, in large-scale large volume on the search for breakthroughs. The larger the scale of the project, the more conducive to saving management forces, the lower the cost, the higher the benefits.

The second is to do brand. To combine their own comparative advantages, focusing on specializing in, with the relevance of several sequences to carry out, in the conditions of maturity, to the associated products to expand to the section and sequence of advantages to form a brand advantage.

Third is to do high-end. Concentrate on tracking government-led key projects, key livelihood projects, high-tech projects and quality projects with profit margins, through the undertaking of high-end projects and cooperation with high-end customers, to further improve the core competitiveness of enterprises, enhance the value of the enterprise industry chain services and social value.

Strengthening risk management and control to ensure sound operation

Compared with separate design or construction general contracting, general contracting enterprises are faced with risks caused by the expansion of the contract scope, the expansion of the business scope and the expansion of the scope of management in the operation, the risk factors are more centralized, and the unforeseeable risks are more, so there is a greater need to strengthen the overall risk control.

One is to forward-looking management early warning risk. The project to be contracted should be carefully investigated and researched, all-round, multi-channel grasp of the engineering contractor and the project situation, to ensure that the contracted projects are in line with the company's strategic objectives of high-quality assets. At the same time, we should pay attention to retain the relevant evidence in the process, once the debt dispute, in addition to the normal litigation procedures, can correctly use the provisions of the contract law, to protect the legitimate interests of enterprises, and minimize the risk of business operations.

The second is to optimize the management process to avoid risk. Risks arise, fundamentally from the loopholes in the enterprise management process, the management process of the enterprise to carry out an all-round sorting and re-engineering, improve the management process of the enterprise, to establish a response to the business risk of "immunity".

Thirdly, the optimal combination of enterprise resources should be used to solve the risk. According to the actual enterprise to carry out appropriate resource integration, improve the control of enterprise resources and the use of efficiency, the establishment of strict and efficient capital management system, increase the accounts receivable clearance efforts to enrich the capital chain to enhance the enterprise's anti-risk ability.