CLIENT RISK PROFILES IN EPS CONTRACTING MODELS

In the realm of large-scale engineering projects, the Engineering, Procurement, and Construction (EPC) and Engineering, Procurement and Construction Management (EPCM) contracting models are widely employed for their streamlined approaches. However, the emergence of the EPS (Engineering, Procurement, and Construction Services) contracting model as an alternative, introduces distinct advantages and unique risk profiles for the client, technology company, and construction teams.

EPS contracting entails a comprehensive service package where an entity provides engineering, procurement, and certain construction services under a single contract. Unlike traditional EPC & EPCM contracts, EPS contracts offer the advantage that clients are intricately involved in aspects of a project where they have the most influence to affect long-term operational aspects of their facilities, while simultaneously allowing the EPS contractor the freedom to execute project deliverables where minimal client involvement is required. This allows technology companies to provide innovative solutions to clients, at a reduced risk to the project.

EPS projects start with a basic engineering (BE) or front-end engineering and design (FEED) study to inform a process flowsheet on a rates reimbursable basis, leading to an optimised facility for clients. At this point in a projects lifecycle a client has the most impact to affect the long-term operability of their facility at the lowest overall cost to their project. The EPS contracting model allows the client to be integrally involved in this phase of the project, thus affording them the ability to build flexibility into the solution, and looking at other factors that will reduce the long-term operating costs, as well as environmental impact of their project.

Conventional EPC contracts often marginalize client input in design decisions, potentially neglecting key considerations for future operational success. Similarly, while the EPCM model allows client input into design, it necessitates additional resources for client management of the EPCM contractor.

Once the BE/FEED package has been defined, the EPS contractor is able to provide the client with a fixed price for the build and implementation of the design, requiring minimal client involvement thereafter. At this point the client can choose to convert the BE/FEED package to an execution project, leading to the convertible EPS contracting model.

Clients are typically best suited to secure the local infrastructure, source transport and arrange local contractors in their region//location to implement the project. The EPS contractor assumes support services on site by assisting the client with site installation supervision, commissioning and ramp-up, on a rates reimbursable basis and supplying the process guarantee on the project.

The client benefits of executing a project using the EPS contracting method include:

• Single Point of Accountability: With EPS contracting, clients benefit from dealing with a single entity responsible for the entire project, simplifying project management and reducing coordination efforts.
• Reduced Technology Risk: Clients leverage the expertise of technology companies to implement cutting-edge solutions, mitigating the risk associated with technological advancements.

In summary, EPS contracting offers clients a paradigm shift in project management, providing enhanced accountability, reduced technology risk, and increased involvement in critical decision-making phases. By understanding these differences, stakeholders can leverage the unique advantages of EPS contracts to achieve successful project outcomes in an ever-evolving engineering landscape.

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