Can EPC deliver more bang for your buck?

2012 GCC PoC 750x300

This blog is the third in the series of Middle East construction industry submissions by Deloitte Middle East leaders. For more information, link to the GCC Powers of Construction: Meeting the challenges of delivering mega projects report at http://bit.ly/163aZOD 

Engineering, Procurement and Construction projects in the Gulf Cooperation Council (GCC) countries are growing in size and complexity. This is particularly noticeable in the energy and infrastructure sectors, where the global thirst for petrochemicals, and the GCC’s hunger for world-class infrastructure has driven construction spend to exciting levels. At the same time, increased sophistication and technology use in clients and contractors alike are raising the expectations around delivering mega-projects successfully and in a capitally efficient manner. Simply put, project owners are expecting EPC contractors to deliver “the most bang” for their buck.

What does this mean?

Project owners are rethinking how their projects are selected and managed. By mixing a bit of science and analysis into project selection, an optimum portfolio of projects can be achieved, enhancing the business case for each individual project. Strict execution timeframes (and the lessons learned over the past decade) are helping project owners reassess their contracting strategies, placing more emphasis on risk sharing and incentive placement. At the same time, owners will be looking towards strong supervisory structures to provide assurance that their projects are on track to being delivered on time, on budget, and with the quality required to satisfy their stakeholders, making technology and skilled resources a vital ingredient.

Contractors will further need to adapt by re-assessing their operations from a technical, commercial and legal perspective. Greater financial transparency could drive a change in how contractors manage project costs, and could result in a shift towards systems which allow a project centric approach to project delivery. In addition, investment in training and development of human resource capability and skills could be prioritised, to ensure the required skills are available to compliment the strengthened supervisory structures being developed by project owners.

The EPC landscape is changing and now is the time for owners and contractors to understand what the future will hold, and decide how best they can prepare themselves to meet the challenge.

by: Malcolm Landman, assistant director, capital projects advisory, Deloitte ME

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