Engineering, Procurement, Construction (EPC) Contract Management

Engineering, Procurement, Construction, Pre-commissioning, Commissioning for the well, wellhead platforms, offshore facilities are considered to be very risky because of their complications and large money required, therefore we need good contract management to check whether the obligations, rights, specification, performance, commitment and so on are met properly and to optimize contract performance, eliminate risk involved in EPC contract throughout the lifecycle.

Not having a good contract management process in place has consequences both to the Client and the Contractor as well as to Consultant Company, Vendor, and Sub-contractor (if applicable). If the Contract Management is not managed, controlled, monitored, and implemented properly, the parties are likely to fail to meet its goals that they had for the project associated with the contract. Such failures may include delayed schedule, cost overruns, quality, safety and more.

EPC contracts have been used in both medium and complicated large scale oil and gas projects in Vietnam since 1990s. Phan Tuong Liem made a research by studying EPC Contract Management of his own project (Rang Dong Full Field Development Project Block 15.2 Offshore Vietnam). The objectives of his study were to:

1. study implementation of JVPC EPC contract management.

2. state problems that occurred in the execution of EPC project.

3. give out some recommendations to EPC contracts.

4. learn lessons from JVPC project.

Conclusion

In order to have a successful project, contract management played an important role. During the administration of a project, any major or minor activities involved a sequence of activities that were covered by different Clauses and Sub-clauses in the Contract.  However, in reality not all Clauses/Sub-clauses covered all activities without unchanged, unrevised. Because of modification and design change which were not fully mentioned in the Contract, as well as cost of extra work and so on.

The contract usually had at least three copies to be distributed: original copy for The Client, Contractor and filed Field Contract Manager to follow.

To mange well the contract, the Owner had enough qualified manpower to take care for each particular part and or area  of the project such as Supervisor, Superintendent, QA/QC Engineer, Cost Control Engineer, Scheduling Engineer, Administrator, Coordinator and so on who are involved in the project. The Project Manager himself could not take care the whole contract management.

Contractor knew how to allocate manpower, material, and equipment to meet the project target. Any personnel involve in the project especially key personnel had their profiles to show that they were qualified, competent and approved by the Client.

Abstract

Contract Management is the process that enables both parties to a contract to meet their rights, duties, obligations and responsibilities (i.e. allocate the risks) in order to deliver the objectives, services, required from the contract.

It also involves building a good working relationship between the customer and provider in general, and between Owner and Main Contractor or Main Contractor and Subcontractor so on. It continues throughout the life of a contract and involves managing proactively to anticipate future needs as well as reacting to situations that arise.

The main purpose of contract management is to obtain the services, performance, commitments as agreed in the contract between the Client and the Contractor. This means optimizing the efficiency, effectiveness and economy of the service, the performance, or relationship described in the contract, balancing costs against risks and actively managing the Clients/Owners and the Contractors relationship. Contract management may also aim for continuous improvement in performance over the life of the contract.