Process Engineering introducing EPCM Contract to their CapEx investment projects!

19. september 2024 | Process Engineering A/S

• Food Processing
• Hygiejne og fødevaresikkerhed
• Ingredienser og tilsætninger

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𝐓𝐡𝐞 𝐄𝐏𝐂𝐌 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭 𝐢𝐬 𝐰𝐞𝐥𝐥 𝐤𝐧𝐨𝐰𝐧 𝐢𝐧 𝐭𝐡𝐞 𝐎𝐢𝐥 & 𝐆𝐚𝐬 𝐚𝐧𝐝 𝐏𝐡𝐚𝐫𝐦𝐚𝐜𝐞𝐮𝐭𝐢𝐜𝐚𝐥 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐚𝐧𝐝 𝐢𝐭 𝐡𝐚𝐬 𝐚𝐥𝐬𝐨 𝐦𝐚𝐝𝐞 𝐢𝐭𝐬 𝐞𝐧𝐭𝐫𝐚𝐧𝐜𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐅𝐨𝐨𝐝 & 𝐁𝐢𝐨𝐭𝐞𝐜𝐡 𝐒𝐞𝐜𝐭𝐨𝐫. 𝐓𝐡𝐞𝐫𝐞 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐚 𝐬𝐢𝐠𝐧𝐢𝐟𝐢𝐜𝐚𝐧𝐭 𝐬𝐡𝐢𝐟𝐭 𝐢𝐧 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐢𝐧𝐠 𝐦𝐨𝐝𝐞𝐥 𝐰𝐢𝐭𝐡𝐢𝐧 𝐭𝐡𝐞 𝐅𝐨𝐨𝐝 & 𝐁𝐢𝐨𝐭𝐞𝐜𝐡 𝐒𝐞𝐜𝐭𝐨𝐫 𝐢𝐧 𝐫𝐞𝐜𝐞𝐧𝐭 𝐲𝐞𝐚𝐫𝐬. 𝐎𝐰𝐧𝐞𝐫𝐬 𝐚𝐫𝐞 𝐧𝐨𝐭 𝐰𝐢𝐥𝐥𝐢𝐧𝐠 𝐭𝐨 𝐚𝐜𝐜𝐞𝐩𝐭 𝐥𝐚𝐫𝐠𝐞 𝐫𝐢𝐬𝐤 𝐩𝐫𝐞𝐦𝐢𝐮𝐦 𝐚𝐬 𝐰𝐞𝐥𝐥 𝐚𝐬 𝐟𝐚𝐬𝐭-𝐭𝐫𝐚𝐜𝐤 𝐝𝐞𝐥𝐢𝐯𝐞𝐫𝐲 𝐢𝐬 𝐬𝐮𝐜𝐜𝐞𝐬𝐬 𝐜𝐫𝐢𝐭𝐞𝐫𝐢𝐚

𝐄𝐏𝐂𝐌 𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭

The EPCM contract has different meaning depending on who you are talking to. In its simplest form, an EPCM contract is a consultancy agreement for the provision of technical services. The Process Engineering services include:

• Basic - & detailed engineering
• Contracting management for procurement of all equipment, materials and works services
• Installation and commissioning management
• Project management

Process Engineering’s Food & Biotech Sector includes approx. 25 skilled engineers and technicians with approx. total 400-years’ experience within project management, process design, installation and commissioning from this sector. This experience enables us to provide the EPCM Contract service to our international customers.

𝐂𝐚𝐩𝐄𝐱 𝐒𝐚𝐯𝐢𝐧𝐠𝐬

Advantages of EPCM contract are CapEx investment savings of app. 10 – 30 %. The contracting management by Process Engineering includes procurement services which enable customers to purchase all equipment and services directly through the different suppliers. When considering the nature of EPC companies this comes as no surprise, that within the same company structure provide both project management, engineering, mechanical and component manufacturing, together with mechanical, piping, electrical and instrument erection and commissioning capabilities. In the best case, they combine two or three maybe even four of these capabilities and then – they have to subcontract the rest. The large risk premium by EPC companies is excluded and purchase is carried out per items or packages within the same line of equipment and services. The procurement is based on fixed prices according to agreed scope of supply. Thus, there will be no changes to the agreed prices unless the customer issue a change variation order. Cost savings & - overruns risk are born or belong to the customers.

𝐅𝐚𝐬𝐭-𝐭𝐫𝐚𝐜𝐤

Process Engineering’s experience with EPCM Contracts and a number of investigations point to EPCM contracts providing the fastest path to project completion, one of those being where 32 relatively similar projects following different contract schemes are compared, resulting in statistically safe comparisons between the 2 above mentioned project types. The conclusion herein is clear, namely that the initial tender period, price comparison period and contract negotiation related to the EPC contracts cause these to be longer than those for the incentivized EPCM contracts.

𝐏𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐆𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞

Guarantees are negotiated individually with each supplier. Issued directly to owner from the suppliers and contractors.

𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐛𝐲 𝐄𝐏𝐂𝐌 𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭

Process Engineering offer total liability for the EPCM Contract services. The liability covers services provided by Process Engineering e.g. basic - & detailed engineering, contracting management, installation -& commissioning management and project management. Obviously, these contractual terms depend on several factors and can vary widely from contracts to contracts.