Turnkey: EPC contracts of Gazprom Neft

The plan for the transition to the EPC system also provides for the reduction of personnel in subsidiaries - Gazprom Invest and Gazprom Komplektatsiya, which act as customers for a number of Gazprom's projects. RBC's interlocutors at Gazprom and the company's contractors estimate the scale of possible redundancies in Gazprom and its subsidiaries at 300 to 500 people. Two employees of the monopoly do not exclude leaving the company or transferring to another position of the head of department 336 Skrepnyuk and call it “Prozorov’s apparatus victory”. They also argue that the cuts are still being prepared. According to one of the scenarios, some of the employees whose functions will not be in demand after optimization will be transferred to the subsidiaries of the concern.

Sergei Kupriyanov, press secretary of the chairman of the board of Gazprom, Alexei Miller, declined to comment on plans to switch to EPC contracts, possible redundancies and the correspondence of his head. Official representatives of Gazprom's largest construction contractors - Stroygazmontazh, Stroygazconsulting, Petona - declined to comment. The representative of Stroytransneftegaz did not respond to RBC's request.

Gazprom office in Moscow (Photo: Ekaterina Kuzmina / RBC)

Benefits and risks of EPC contracts

The press service of NIPIGAZ, part of the Sibur holding and acting as one of the general EPC contractors for the construction of the Amur GPP, told RBC that work on the terms of an EPC contract allows you to reduce costs by monitoring all stages of the project. “For the customer, this model allows interacting with one counterparty, administering the contract only with him, monitoring the progress of the entire project and its timing. At the same time, a general contracting agreement in Russian practice most often implies the preparation of working documentation and the execution of the construction works themselves (Gazprom most often orders the design of the pipeline construction from its own structures. - RBK), but as a result of agreements, the scope of work may be expanded. Therefore, there can be no formal difference between the traditional Russian general contract and the Western EPC contract, ”a representative of NIPIGAZ explained to RBC. He added that the EPC contractor must have all the competencies required to perform the work, from the availability of the right specialists in the company to the ability to purchase the necessary equipment.

RBC's source at Stroygazmontazh (SGM) explained that it is already working under EPC contracts on infrastructure projects. He cited as an example the reconstruction of the children's camp "Artek", the construction of a gas pipeline to the Crimea, the construction of approaches to the Kerch bridge. Therefore, he is convinced that the contractor will cope with Gazprom's contracts using the EPC model, the main thing is that there is a sufficient number of contracts.

RBC's sources close to Stroygazconsulting and Stroytransneftegaz are also convinced that these companies will cope with the function of EPC contractors for Gazprom's projects. One of them believes that the EPC contract model is beneficial to the contractor. “The main advantages are the growth in volumes and revenues,” he notes.

However, for some of Gazprom's partners, the new model does not seem so attractive. The manager of the company, which is one of Gazprom's design contractors, said that due to the prospect of a decrease in the volume of orders, the company could cut down to two-thirds of its designers (up to 500 people across all branches). The transition to EPC contracts, in his opinion, threatens this company with falling out of the chain of the concern's contractors.

RBC's source in another contracting structure working with Gazprom on large construction sites says that the problem with EPC contracts is the increased number of risks imposed on the contractor. “If the contract price is fixed, then it is important that all payment stages are strictly followed. If payments under the EPC contract are delayed, this will lead to shifting risks back to the customer or to a revision of the contract price upward. After all, the contractor has to take additional loans or negotiate with subcontractors to defer payment. It can also affect the project delivery time, ”he said. According to the interlocutor, the margin for an EPC contractor, who has the freedom to hire contractors, may be slightly higher than for a general contract. This is possible with the maximum exclusion of intermediaries from the chain of service providers, including intermediaries for the supply of pipe products, he suggests.

Who will lose contracts

A top manager of a company involved in the supply of pipe products for Gazprom's projects estimates the savings on intermediary services in the cost of pipe supply contracts at 1-2.5% of the contract volume (the higher the contract amount, the lower the intermediary's percentage in it ). He explains that the intermediary takes on certain risks, first of all, they relate to the quality assurance of the materials. “Most modern large projects use high-tech pipes with a guaranteed service life of about 50 years. But out of a desire to save money, an EPC contractor can purchase products with a service life of 10-20 years. By this time, the contractor himself may cease to exist. Then the risks of the consequences of such savings, including the risk of accidents, fall on future generations and on the customer of the project, ”he believes. RBC's source is convinced that it is very risky and difficult to transfer pipe supplies to EPC contracts. Volatility in the metals market reaches tens of percent per year, in these conditions it is difficult to guarantee the quality of supplies at fixed prices for several years in advance, he explains.

He also notes that the EPC contract implies more freedom for the contractor and less control by not only the client, but the public. “Now Gazprom is obliged to report the costs of its large projects and to disclose the winners of major tenders, and after switching to the EPA, we may not learn anything at all about the part of the contractors that the contractor will find, and real value their services. Thus, the possibility of officially attracting newly created companies with a staff of five people to Gazprom's multibillion-dollar orders is reduced, but they may appear as subcontractors for the EPC contractor, and the market will not know about them, ”he warns.

The micro-enterprise Inter Management, created in August 2016, employing no more than five people, won 34 contracts from Gazprom within the framework of the construction of the Power of Siberia gas pipeline, Interfax on 23 April. total amount contracts amounted to almost 8 billion rubles.

Photo: Alexander Chizhenok / Interpress / TASS

Hundreds of billions for contractors

Gazprom's investment program for 2018 could total about RUB 1 trillion, Vesti-Finance reported in early December, citing information from Gazprom. Vedomosti wrote in mid-December that in 2017 it will amount to over 910 billion rubles, 625.45 billion rubles. of them (68.7%) will go to capital construction projects.

According to the head of the analytical company East European Gas Analysis Mikhail Korchemkin, if the new scheme of work is introduced already in 2018, then orders for the construction of a part of the Power of Siberia, the Gryazovets - Slavyanskaya and Ukhta - Torzhok-2 pipelines in total by 300 billion rubles, which may amount to a little less than a third of Gazprom's investment program for the next year. He agrees that "strange" contractors, companies with a small authorized capital, will lose their main status, but they may end up in the chain of subcontractors under EPC contracts, and it will be difficult to track payments to them. Korchemkin believes that the profitability of projects will increase in comparison with the current scheme of interaction with Gazprom, and the revision of project prices towards growth will continue, despite the formal principle of “fixed prices” in the European EPC model.

He also believes that part of the monopoly's costs following the introduction of a new models will go for the future, since they are reflected in the reporting after the commissioning of pipelines and other facilities.

The manager of one of the construction contractors of Gazprom estimates the volume of EPC contracts of the concern in 2018 in the amount of 100 billion to 230 billion rubles. According to him, most of the contracts for the construction of the Power of Siberia and the forthcoming expansion of the Sakhalin-Khabarovsk-Vladivostok pipeline have been contracted on the basis of the previous general contracting principles. According to his forecast, if the EPC is introduced next year, such construction projects as the Gryazovets-Slavyanskaya pipeline worth up to 100 billion rubles, contracts for the reconstruction of pipelines (from 30 billion to 50 billion rubles per year) and their overhaul (up to 80 billion rubles per year).

Alexandra Galaktionova, head of research group InfraONE, believes that Gazprom's transition to EPC will clear the market of gray contractors. In her opinion, large contractors Gazprom is capable of performing the function of EPC contractors, and such complex contracts will be more profitable for them, since, for example, preparatory construction works can be carried out in parallel with the design. She estimates the profit in terms of money at about 5% to the current profitability. Gazprom, in turn, will be able to save on non-core divisions and reduce contract services. The increase in the average contract value, and, consequently, the collateral under it, may cut off medium-sized contractors from Gazprom's EPC contracts. At the same time, the risks of the customer increase: if an unreliable company gets a complex contract, the losses will be more serious than if one of the stages of the project fails, the analyst concludes.

When implementing investment and construction projects in the field of construction industrial facilities it is necessary to carefully select contractors capable of performing the required amount of work and achieving the required production performance of the facility with an adequate assessment of the existing risks and market conditions. The increasingly widespread EPC / M-contract has begun to form in Russia a civilized market for EPC / M-contractors, most of which are currently not ready to meet the entire set of requirements for the implementation of such projects. Most of the EPC contracts today are won by large investment and construction or industrial construction holdings, offering to cover the entire range of obligations of such a contract and sometimes beyond that. Of course, from the legal point of view, the Customer of the EPC / M-contract is not so much concerned with the structure of the holding of a potential Contractor as with its reliability, competence and solvency, but its structural transparency and efficiency allow us to draw the necessary conclusions about the ability to implement the contract. To this end, within the framework of this article, the possibility of building a structure of a construction holding company, as optimized as possible for the implementation of EPC / M contracts, will be considered.

At the moment, the EPC / M-contract is the main model for organizing work on the construction of large industrial facilities around the world. In the EPC / M-model, the Customer at the first stage chooses a single general contractor who presented the best technological, technical and commercial solutions, and at the second stage he is ready to carry out the design according to the approved technology and then implement the construction in full. The scope of obligations of such a general contractor includes detailed design and detailed engineering, as well as the purchase of building materials, structures, technological equipment and components. In addition, the EPC / M-contractor selects subcontractors for construction and installation works or hires its own workforce. He has the right to resort to attracting intermediate general contractors, transferring them to partial execution of work on the construction of large objects or packages or to perform certain types of specialized work in full. It is obvious that the combination of all these competencies within the framework of one legal entity is both unreasonable and ineffective due to the different models of motivation for each separate stage in the implementation of an investment and construction project. The formation of a holding company that is optimal for the implementation of EPC / M-contracts is a self-evident decision for the development of the construction business as a whole.

In order to smoothly proceed to the discussion of the main idea of ​​the article, the terminology used should be fixed. In the context of this article, the investment and construction process is understood as a certain sequential set of stages in achieving investment goals through the implementation of investment projects in the field of creating and / or changing real estate objects. The investment and construction process, like any process, generally represents a sequential change in the state of an object in time, therefore, the presence in a construction holding of competencies that provide support for each stage is a defining competitive dominant. In general, the investment and construction process is a logical sequence of stages in the implementation of an investment project, which can be narrowed down to nine main positions (see Fig. 1). An investment and construction project hereinafter is understood as any time-limited project investment venture, aimed at creating a new unique real estate object, the presence and use of which is necessary to achieve investment goals.

In the general case, the basic investment and construction process makes it possible to clearly outline the specifics of the EPC / M-models of the construction contract. To describe the EPC / M-models, it is necessary to determine the boundaries of the transfer of responsibility between the Customer and the EPC / M-contractor during the construction process (see Fig. 2 and 3).

Rice. 1. Basic Investment and Construction Process.

Typical EPC contract

EPC- English abbreviation (engineering, procurement, construction - engineering, supply, construction), which, most often, means a turnkey construction contract with a fixed price. An EPC contractor is a general contractor who performs the bulk of the work of an investment and construction project for a fixed price and assumes all the risks of its implementation from the moment of design until the moment the finished object is handed over to the customer (including the fulfillment of warranty obligations), for which he bears financial responsibility in front of the customer.

The EPC contract is used, as a rule, in those projects where an experienced general contractor can accurately estimate the size of their costs, as well as the degree of risks. The EPC contract assumes that the EPC contractor performs the bulk of the work on its own, therefore, no special remuneration is provided for organizing and managing the work of the involved lower-level counterparties.

In practice, the EPC agreement does not include those items of project costs that relate directly to the obligations of the Customer, which include, for example, the supply of engineering communications to construction site, preparation of construction, industrial and social infrastructure, receipt of raw materials, Supplies and organizing their delivery to the site. The model is based on the fact that the EPC contractor has the necessary experience to integrate and optimize various construction and procurement activities within a single project. The advantage of this model is the shortest terms of the project implementation, since it is not necessary to complete it completely to start construction. design work, they can be carried out in parallel, since sometimes 25% of the design work is enough to start the construction stage. It is customary to issue an EPC contract on a turnkey basis for projects industrial construction, in which licensed proven technologies are involved, and the negotiation of a fixed cost protects investors and customers from most investment and construction risks.

Rice. 2. Implementation of an investment and construction project through an EPC contract.

Typical EPCM contract

EPCM- English abbreviation (engineering, procurement, construction management). The subject of the contract, as in the case of EPC, is design, equipment, construction and handover to the customer of a completely finished turnkey facility. The EPCM contractor is the general contractor, i.e. concludes contracts with subcontractors on its own behalf.

An EPCM contractor is a general contractor fully performing investment project and assuming the risks of project management from the moment of design until the moment the finished object is handed over to the customer (including the fulfillment of warranty obligations). The EPCM contract provides for the total cost of the project, taking into account the remuneration of the EPCM contractor, and a fixed date for putting the facility into operation, and achieving the basic technical parameters of the facility. Method (approach) EPCM allows you to manage the project, and not specific work. Specific work is performed by professionals. The task of EPCM is to assess the required properties (capabilities, professionalism, labor resources etc.) of the selected contractors / suppliers, distribute the work and areas of responsibility correctly between them. Further - to coordinate their actions, resolve controversial issues, plan general scheme of the project, change plans in case of critical changes with minimal consequences, and then with all stops.

Rice. 3. Implementation of projects through the EPCM contract.

The main quality of an EPCM contractor is his experience and skills in organizing construction and procurement works and hiring personnel for the management and integration of contractors' labor. This model is ideal in situations where labor costs or basic materials and components are high, i.e. when the contractor is not prepared to bear the risks associated with fixed-price activities.

General characteristics of EPC / EPCM models

Today it is not a secret for anyone that the EPC / M-contracting market in Russia is undergoing a stage of formation and it is hardly possible in the current market situation to find ideal models for the implementation of such contracts. Various hybrid models are in use, which are becoming more and more optimal in terms of risks and costs for customers. As a rule, they are combined individual characteristics considered typical EPC and EPCM models. So, for example, a general contractor may not take on the risks of fluctuations in tariffs for wages, but at the same time guarantee the quality of work and standard productivity in accordance with the schedule of construction and installation works fixed in the contract. Taking into account the high dynamics of prices for materials, the increase in the cost of which causes biased marginal coverage of the risks of fluctuations in the future, can be paid by the Customer according to actual cost or be corrected according to the algorithm previously agreed with the Customer. In general, the emergence of the EPC / M-services market will lead to the emergence of new innovative schemes for the implementation of contractual strategies, which will ultimately lead to an increase in customers' budgets due to higher reserves for covering risks and unforeseen circumstances. Typical conditions for the implementation of the EPC / M-approach to the implementation of investment and construction projects can be considered:

• The customer selects a business solution and determines the sources of financing for the project, performs preliminary design studies, primarily to prepare for a tender for the selection of an EPC / M-general contractor. At the same time, he fixes the technical parameters or standards of the construction object, and also coordinates the amount of interference in the design, which may affect the value of the contract;
• Bidders incur significant costs in preparing quotations, so only two or three pre-selected contractors are allowed to participate. In order to increase the interest of contractors, preliminary work with them is recommended to clarify the goals of the project, its technical characteristics, sources of financing and the provision of raw materials;
• The customer wants to have a higher degree of protection for the main risks of the project, such as: cost, timing and quality. That is why he guarantees the EPC / M-contractor a higher cost of the project in comparison with the contract for a regular construction general contract.

From the point of view of protection for the Customer, there is one more (fourth) main risk of the project, in addition to the above three, namely the risk of failure to reach the design parameters and indicators technological unit... The price / risk ratio in an EPC / M-contract is most often expressed in the choice of a pricing model, which in general can be reduced to four main ones:

• Fixed cost, i.e. when the customer pays fixed amount without restrictions to the likely level of the contractor's profitability;
• Fixed unit rates- i.e. when for the period of construction, unit prices for specific types of work are fixed with a possible change in the physical volume of work. Usually, in this case, a maximum of fluctuations in physical volumes is agreed, beyond which the unit prices are revised;
• The estimated cost of the work, drawn up by the design institute and approved by the Customer, plus a fixed remuneration, which can be calculated on an agreed basis;
• In accordance with the pricing procedure agreed in the contract. In this case, the Customer can set a limit on direct costs, but agrees with the simultaneous preparation of estimates and construction, as a result of which the parties are forced to fix the procedure for calculating the cost of work and pay in accordance with this procedure.

Based on this simple risk classification and pricing options, a 4x4 matrix can be constructed possible options(see Fig. 4) implementation of EPC / M-contracts in different conditions of division of duties between the Customer and the Contractor.

Rice. 4. Matrix of distribution of typical risks for different schemes of EPC / M-contract.

For example, in the case of a fixed contract price, the Customer prefers to cover all risks, but at the same time he must understand that he is automatically eliminated from influencing the choice of project decisions and gets what is. Such a contract is beneficial in the case of a passive non-professional customer in the field of design, when the Contractor is set with strict price and other parameters limitations. Another option is when the parties use fixed prices: The customer can vary the scope of work, put forward his wishes, while the Contractor takes the risk of deadlines and the final price, leaving behind the quality and production indicators. A variant is possible when the price is formed according to the "costs plus remuneration" algorithm. V in this case The customer assumes the price risk, since in pursuit of the amount of remuneration the contractor can artificially inflate the cost design solutions and the corresponding estimates, while the Customer leaves all other risks on the shoulders of the Contractor: the Customer receives quality, timing and productivity, and, in addition, he can objectively intervene in the development of the project.

Finally, there may be a case when the Customer, in fact, manages the design, accepts the technical and Constructive decisions, and the contractor just puts them on paper. In other words, the Customer bears the risk of price, timing and productivity, while the Contractor only bears the risk of the quality of the work. Such a scheme is most likely for an active Customer, who in the future plans to operate the facility on their own. This is especially pronounced in projects of reconstruction, expansion, modernization and technological re-equipment, in which the Customer determines the requirements for the final result of work professionally. And all these forms of relationship may well be implemented through the EPC / EPCM approaches. In other words, one should not think that the EPC / EPCM contract is a certain fixed form of relations between the Customer and the Contractor in terms of price and risks, they may well be very flexible and the need for one or another contract format is determined by the requirements for operating the investment object.

Of course, for the implementation of projects under the EPC / M scheme, there are certain stringent requirements for general contractors. In addition to experience in implementing EPC / M contracts, contractors are required to have significant equity capital in order to take financial liabilities for property risks, the cost of which is often a significant fraction of the contract price. To obtain guarantees from the bidder, guarantees for the return of advances, performance guarantees, guarantees of the warranty period, the usual requirement is the volume equity capital contractor exceeding the project cost by three to five times. Under EPC / M contracts, deductions for default are usually determined, and the general contractor undertakes to ensure that the customer completes the project on time and with the required quality.

What is EPC / M-holding

As you know, a holding is a set of a parent (parent) company and subordinate ownership (subsidiary) enterprises. Holdings are not legal entities, but their activities, most often, are perceived by the markets in the context of unlimited time, therefore, it always makes sense to talk about holdings as about permanently operating economic entities.

The construction of a construction EPC / M-holding is carried out on the basis of a process approach and involves the creation of divisions of the holding in accordance with the basic investment and construction process (see Fig. 5).

Rice. 5. Combined (horizontal-vertical) process holding.

The process approach assumes such a configuration of a combined construction holding that meets all or several stages of the investment and construction process, depending on the mission and targets of the owners of the holding. The volume of companies, the configuration of vertical and horizontal groupings depend on the place of the holding in the market, on the niche it occupies and the type of work performed, but at the same time, the principle of the presence of all participants to perform the entire range of works from the general contractor (EPC / EPCM contractor) to all types of developers is preserved.

In the process holding, individual industrial or financial companies take their place in the respective groupings based on their place and role in the process, which harmonizes the overall holding business process and makes the holding more flexible to new types and forms of construction contracting.

In general, the configuration of the EPC / M-holding is a derivative of the process approach in the construction corporate entity (see Fig. 6). In such a holding, industrial assets for the production of building materials and structures, as well as for the assembly of blocks and assembly units of equipment, are subsidiaries of a special RM-company (supply management company). At the same time, financial and investment resources are attracted by the parent company of the holding, which is the accumulator of corporate profits and the guarantor of the return of third-party investments and credit resources. One of the clear advantages of EPC / M-holding is the ability to participate in a variety of projects as a participant of any level.

Rice. 6. Basic structure of EPC / M-holding.

An obvious difference between the EPC / M-holding is the presence in its structure of subsidiaries responsible for the main areas of implementation of the EPC / M-approaches in construction, namely design and engineering companies, packaging and logistics companies capable of working with foreign manufacturers and suppliers of software. international standards... And, of course, construction companies, ready to provide a full range of services for organizing a construction site and the construction of large industrial facilities. Within the framework of this concept, EPC / M-holding is understood as a unique design and construction corporation created for the effective implementation of investment and construction projects with the prevailing use of the EPC / M-approach.

By optimizing such a holding only for an EPC / M-contract, one can formulate the main advantages of creating an EPC / M-holding.

1. Accumulation of profits and growth of capitalization in the main carrier of the EPC / M-brand.

2. The ability to develop and accumulate key competencies in the implementation of EPC / M contracts in the parent company, without the need to provide full implementation functionality within one legal entity.

3. The possibility of obtaining bank guarantees, attracting external financing and other instruments, incl. for the implementation of foreign economic agreements from a single financial center.

4. Possibility of creating individual systems of personnel motivation in each company of the EPC / M-holding, which is responsible for its stage of implementation of the investment and construction project.

5. The possibility of forming a single list of constructed objects under a common brand, which increases the competitiveness of the holding as a whole and of each company in individual contracts and other obvious advantages.

Universal EPC / M-holding, i.e. A non-specialized holding company focused on the implementation of projects in any type of construction may consist of the following companies.

1. The parent company of the holding - EPC / M-integrator: concludes contracts with customers, provides financial guarantees, insurance, training and recruitment of project team personnel, including for subsidiaries, scientific and technical development, general brand management, PR, GR and IR support, participates in tenders. In addition, the parent company provides circulating financing, develops pricing and tariff policies for complex EPC / M services and individual works, develops a business development strategy and conducts an ongoing audit of contract performance. The project is implemented through the creation of project management teams (see Fig. 7).

2. The general contractor for the construction (SM-contractor) is a 100% subsidiary company (there may be several of them depending on the divisional, industrial or mixed structure of the holding), which ensures the organization of work on the construction site from start to finish, including all responsibilities for construction of VZiS. Responsible for the provision of social, logistics and transport infrastructure, for the supply of energy networks and other similar issues. In addition, the general construction contractor carries out a competitive selection of subcontracting companies, draws up a single interconnected construction schedule, and coordinates it with the project management group at the head office. The general contractor is responsible for the supply of building materials and structures for the project in full, except for the main technological equipment, for which a specialized participant of the EPC / M-holding is responsible;

3. Engineering contractor (EM-contractor) - a 100% subsidiary of the parent company, responsible for the development of technical specifications for design, surveys and surveys of unfinished construction, organization, coordination and support of design work, selection of general and sub-designers. Responsible for agreeing on the design schedule, making changes and additions during construction, coordinating with supervisory authorities, examinations and other works included in technical engineering. If the EPC / M-holding is built on a single industry, for example, energy, petrochemicals, then the creation of a dedicated engineering center is not necessary - it is enough to have an appropriate department in the parent company. But if EPC / M-holding is positioned as a universal one, it is better to have a universal center for coordination of design work. At the same time, such a center to a large extent does not perform design work itself - it organizes contractual work between corporate and external designers.

Rice. 7. Scheme for the implementation of contracts in the EPC / M-holding.

4. A specialized construction subcontractor is a 100% subsidiary of the parent office, which is responsible for performing specialized work on all projects of the holding, such as electrical work, plumbing and ventilation work, communication equipment, instrumentation, commissioning. The question is that specialized construction companies are often key at the final stage of construction and the presence of their own so-called "buffer" of competencies allows you to organically solve such problems. Of course, specialized subcontractors work on contracts with general contractors, but in case of underutilization, they have the right to work for external consumers.

5. The contractor for completing the main technological equipment (RM-contractor) is a 100% subsidiary of the parent company, which is responsible for complex technological procurement, including international logistics and selection of suppliers. One of the difficult tasks of such a company is to agree on the cost of the main technological equipment for participation in competitive selection. In addition, the formation of a base of equipment suppliers and tracking the update of their product line are important components of the professional competence of such a company.

6. Science and Technology Center (STC) is a 100% subsidiary of the parent company EPC / M-holding, which must be allocated for autonomous operation if there is a technological component in tenders for EPC / M-contract. In cases where the Customer holds a competition not only for design work, but also for the choice of the best technology, it makes no sense to involve designers before determining the winner among the owners of technological patents. Usually, the patent owner participates in a competition in tandem with the supplier of the main equipment, therefore it is important to agree on the timing of the equipment delivery before preparing a tender proposal for the EPC / M-contract.

7. In the structure of the EPC / M-holding, it is possible that there are other specialized companies responsible for an important section of the business process, in particular, if the holding involves the work of several thousand employees, it makes sense to talk about an independent recruitment agency that combines its work with the organization of personnel training at the corporate university. To form a fleet of construction equipment, it is possible to have your own leasing company, as well as a personnel rental company to perform one-time and temporary work.

Organizational structure of project management in EPC / M-holding.

Organizational structure management of a specific project for the implementation of an EPC / M-contract in a holding cannot be closed only within the framework of the parent company. By far the most effective method project implementation - the creation of an interpenetrating organizational structure that allows not only to flexibly respond to the specifics of each project, but also vice versa - to describe and put standard business processes and procedures between the elements of the organizational structure on the corporate quality management system. The entire cycle of implementation of an EPC / M-project for the construction of a specific facility should be based on logical and understandable relationships of all participants in the corporate business process, taking into account the existing system of motivation for effective work in each company.

The proposed in Fig. 8, the basic organizational structure for the implementation of the EPC / M-contract allows you to create the necessary system of regulations and instructions within the general quality management system, even taking into account adjustments for the individuality of projects. At the same time, this structure clearly lacks important services, namely the project controlling department (a kind of internal audit) and the information technology service, which unites all companies within the holding on the basis of a single information system management accounting and control.

Rice. 8. Organizational structure of project management in EPC / M-holding.

In conclusion, I would like to note that in the life of the EPC / M-holding it is not necessary to be expressed explicitly, some of the functions may overlap and complement each other in the companies of the holding. In addition, the trend of reforming construction holdings is rapidly demonstrating exactly this direction of development, in connection with which it remains to wish the management of corporations not to waste time.

Here: PR - Public relations, GR - Government relations, IR - Investor relations.

In this context: CM - Construction manager or Site manager.

In this context: EM - Engineering manager or Design manager.

In this context: RM - Procurement and Logistic manager.

In the Russian Federation and the CIS countries, the concept of EPC / EPCM contract and contractor is at the stage of implementation. in international engineering standards, there are many terms and definitions for the concept of EPC \ EPCM. None of them fully describes the various approaches that are used in the design and construction of new enterprises and engineering structures. Unfortunately, there are no uniform terms and definitions that would most fully describe the entire set of production processes.

Choosing to use the correct form of contract can have a significant impact on the costs and risks associated with the construction of large projects. Construction costs vary in proportion to the risk that the customer is willing to assume. The lower the level of commercial risk that the owner is willing to face, the higher the level of construction and project management costs. in business, this logically follows from the risk-reward link.

The two most common types of work contracts are turnkey EPC contracts and EPCM contracts. There are several options for these approaches that can be adapted in accordance with the requirements of each individual project, for example, EPCC - Engineering, Procurement, Construction and Commissioning.

DEFINITION AND COMPARISON OF EPC / EPCM CONTRACTS

EPC(Engineering, Procurement and Construction - design, procurement of equipment and construction): means that the EPC contractor, according to the contract, undertakes to provide the customer with turnkey services for the design, procurement of equipment and construction of the facility. Projects under this form of contract are for the most part under the control of the contractor and outside the direct control of the customer. The contractor under the EPCsam contract concludes all contracts directly with contractors.

Also, an EPC contractor, subject to the necessary experience, personnel, engineering knowledge and construction equipment, can perform work under an EPC contract without involving contractors. These companies are called full cycle EPC contractors. ZAVKOM is a full cycle EPC contractor.

EPCF(Engineering, Procurement, Construction and Financing - design, procurement of equipment, construction and financing): means that the EPCF contractor, according to the contract, undertakes to provide the customer with design, procurement and construction services, and will finance the project from its own or external sources.

EPCM(Engineering, Procurement and Construction Management - management of design, procurement of equipment and construction): means that the EPCM contractor, according to the contract, undertakes to provide the customer with management (process management) services for design, procurement and construction. in this case, the customer personally enters into contracts with contractors for design, procurement and construction. These processes (design, procurement, construction) are managed by the EPCM contractor on behalf of the customer.

EPC and EPCM are the most common types of contracts in the construction industry. Depending on the level of risk that the customer of the project is ready to take on, budget constraints and the scope of authority, the customer determines which of the types of contracts in the most to a greater extent suitable for the project.

FEATURES OF CONTRACTS

Benefits of EPC Contracts:

• Minimal financial and legal risks
• Acquisition of all the necessary "services" from one supplier: the EPC contractor is the only legally and financially responsible person to the customer
• Non-interference in the project
• Minimum need for recruiting personnel and setting up a construction management

Benefits of EPCM Contracts:

• The total cost of the project is 5-10% lower
• A sense of belonging among the customer's employees
• Greater control over the project
• Financing flexibility

Typical EPC project

Typical EPCM project

Differences in types of contracts

Each of the customer companies, when deciding to start construction of the facility, must make a choice for themselves - which type of contract suits it best. The choice is made based on the assessment of legal and financial risks for each specific situation. Below is a simplified diagram that demonstrates the differences between the two types of contracts.

An EPC contract (abbreviated as Engineering, Procurement, Construction) is a contract concluded between a customer and a contractor. According to this agreement, the contractor performs the full cycle of work and is responsible for the risks associated with construction.

EPC is just one of the possible types of contract. So, for example, if the customer is interested in the opportunity to participate in management at different stages of the construction process (in the choice design organization, suppliers, construction contractors), then it concludes a different type of agreement - an EPCM contract (EPC + Management). What is EPC in business practice and what are the main features and advantages of this standard, we will consider in the article.

EPC: disadvantages and advantages

The EPC is based on the concentration of the three process elements - Engineering, Procurement and Construction - in the hands of the EPC contractor - the general contractor. The customer fixes in the contract the financial and legal responsibility of the contractor in terms of the announced construction stages, and then receives a turnkey project, practically without direct control and management. Contracts with subcontractors are also concluded by the contractor. But if the EPC contractor has sufficient qualifications, personnel and the necessary equipment, then he can perform work without the involvement of third-party contractors. In this case, such a company is called a full cycle EPC contractor.

On the territory of Russia, the concept of an EPC contract and a contractor is gradually being introduced into construction practice. The complexity of this implementation is due, among other things, to the lack of a unified terminology and conceptual scope in engineering standards adopted at the international level. Considering that the options for the form of the contract can affect the magnitude of risks and costs, customers always pay special attention to the shortcomings of the EPC standard:

But the turnkey EPC standard has its own advantages, which makes it (along with the EPCM standard and, in part, the EPC + Financing standard) one of the most common types of contracts. Among the benefits, the following are most often called:

1. Simplification of management in the industry for the customer - implementation of the construction practice of the “one window” principle, when all issues are resolved through the general contractor, which minimizes the need for organizing the construction management and recruiting personnel.
2. Fixing the characteristics of the cost and timing of projects prescribed in the contract. Thanks to this form, financial and legal risks are significantly reduced, since solely the EPC contractor retains all legal and financial responsibility to the customer.
3. Freeing up time by the customer for employment in parallel projects, since according to the EPC standard it is assumed the possibility of non-interference in the project.

However, all the "pluses" and "minuses" are correctly considered in comparison with alternative possibilities. In relation to the EPC, such alternatives are the type of contractual structure Multi Lot and EPCM.

Place of the EPC standard among other types of contract

The most common types of contracts alternative to EPC are considered to be Multi Lot and EPCM.

1. Multi lot... This type, which is also called "Multi Prime" in the West, is better known in our country as a self-help construction. Here, the customer independently concludes many separate contracts with contractors and manages them himself, creating his own division for this.
2. EPCM(where M stands for "Management"). In parallel, the customer concludes an agreement with the general contractor, and separate direct contracts with contractors. At the same time, management takes place in a coordinated way, when the customer and the general contractor coordinate their actions in relations with other contractors.

Comparison with these models makes it possible to mark the EPC type at the top of the list as the most expensive in terms of financing. The total cost of a project in the EPCM type is lower by 5-10% (since a significant part of management processes are carried out on their own), and in the Multi Lot type - by 25-35%. In addition, the types of EPCM and, especially, Multi Lot, are much more flexible than EPC in terms of financing. They also allow the customer to be more involved in the project, which provides both greater control and greater involvement in the process than the EPC type.

Therefore, the EPC agreement is, first of all, interesting when:

• the client company does not have its own construction project management service,
• it is inappropriate to intervene in management and take on (share) the relevant risks,
• the customer's attention is absorbed by other projects, and there are not enough management resources to switch them to a new object,
• there is a reliable contractor who can be fully entrusted with the construction.

In addition, EPC contracts are most often sought to be concluded on projects financed with the help of banks or other financial institutions. First of all, this applies to project financing. This is explained by the fact that banks and financial structures, issuing loans, are interested in project companies taking on the minimum amount of risks. And in EPC contracts, most of the risks, including the risks of delays and unexpected additional costs, are borne by the EPC contractor.

With regard to the "fixed price", it is noted that its prescribed size does not yet exclude the possibility of dividing it into component parts during the design process with a breakdown by estimate. However, the excess of the cost of work, materials, equipment in comparison with the prices of the contract is still provided by the contractor. In this rule, situations where there are changes in the volume and scope of work (if these changes are initiated by the customer), non-fulfillment by the customer of contractual obligations, as well as circumstances related to the category of force majeure, become an exception.

Additional reasons for choosing an EPC contract

With the right choice of the general contractor, the EPC contract is the most reliable and convenient type of contract for the customer. Even though the Multi Lot type is generally 25-35% cheaper, the high cost is often offset by the advantages of faster (earlier than competitors, or more timely) commissioning of the facility. Sometimes, thanks to this, the difference in cost is more than covered.

The high pace of work of the general contractor is largely due to the fact that the EPC contractor is the only responsible person, which makes it possible for him to carry out the parallel development of the design and working documents simultaneously with the procurement of equipment, materials and even the implementation of construction and installation work. Often, for example, without waiting for development and / or approval project documentation in full, the contractor begins contracting for a share of long-term production equipment. Parallel design is especially relevant for gas projects related to the processing and preparation of associated petroleum gas. There is a peak in production in these projects, and the importance of the timely construction of a gas treatment unit can hardly be overestimated. If the project is "late", the profitability of the project drops sharply.

In general, an EPC is more beneficial to the customer than to the contractor.

Until recently, there were frequent cases when no contractor responded to an EPC-type tender offer. But with the emergence of numerous construction organizations and with the growing competition between them, the number of EPC-type contracts concluded is constantly growing.