1. Project Execution in Process Industry
EPCM / EPC Mode – An Indian Dilemma
D. P. MISRA Director, Development Consultants Private Limited Past President-IIChE

2. INDIAN SCENARIO Generally EPCM mode of project execution except in
Fertilizer : Sulphuric Acid plants, SSP & DAP plants, in EPC besides OMIFCO
Refining : Last 4 years projects in EPC
Petrochemicals : MCC PTA / IOC LAB / IOC PTA projects in EPC
Minerals : Recent mineral separation plants in EPC

3. PROJECT EXECUTION – EPCM MODE
Know how
Basic Engg
Detailed Engg
Project Management
Procurement Assistance
Construction Supervision / Management
Commissioning Assistance
Civil Works
Erection of Eqpt / Supplies

4. PROJECT EXECUTION – EPC / LSTK MODE
Know how
Basic Engg
Detailed Engg
Project Management
Supply of items delivered site
Civil Works
Erection of Eqpt / Supplies
Commissioning

5. CLIENT’S SCOPE (EPCM MODE)
Places Order – Know how / Basic Engg. Contractor
- EPCM Contractor
Reviews Engineering
Places order (Based on EPCM Contractors’s Recommendation)
- Eqpt / Supplies
Civil Works Contractor(s)
- Erection Contractor(s)
Interfaces with EPCM Contractor
Makes Payments

6. CLIENT’S SCOPE (EPC MODE)
Places Order – Know how / Basic Engg. Contractor
- Project Management Contractor (PMC)
- EPC Contractor
Interfaces with PMC & EPC Contractor
Makes Payments

7. DILEMMA FOR INDIAN PUBLIC SECTOR
PRACTICE
EPCM Mode : Generally on reimbursable basis in Europe & USA
: Indian Private / Public Sector
EPC / LSTK Mode : Middle East & South East Asia
(Competitive)
: Indian Public Sector.
DILEMMA FOR INDIAN PUBLIC SECTOR
- EPC or EPCM (?)

8. EPC mode takes more time but Contractor responsible for overrun.
TIME OF COMPLETION
EPCM Mode
Basic Engg 4 36
EPCM Contractor Selection
Execution of Project
Bid 1
Selection 2
Execution 30
EPC Mode
Basic Engg. 4
Selection 3 42
PMC selection
EPC Contractor Selection
Execution of Project
ITB 3
Submission 4
Selection 2
Execution 28
EPC mode takes more time but Contractor responsible for overrun.

9. PREPARATION & EVALUATION OF BID
EPC ITB : Involves FEED, Job Standards, Approved Vendors for supplies etc. & hence more time consuming than EPCM
Submission & Selection : EPC Bid needs evaluation of hardware and software and hence much more time consuming

10. FLEXIBILITY EPCM Contractor : More flexible to accommodate
client’s suggestion for improvement
of plant Quality at change order to his
fees
EPC Contractor : Less flexible as it will affect total contract value & time.

11. PLANT QUALITY
EPC mode : Normally much less inbuilt margin and plant quality focussed to contract price & schedule
Quality some sometimes gets compromised
EPCM mode : Client’s involvement at each step ensures proper quality and better margin for operation

12. CLIENTS INVOLVEMENT
EPCM mode : Concerned in every Purchase Order and day to day Project Management
with EPCM Contractor.
Client’s Involvement larger and costly
EPC mode : Only for initial order on PMC & EPC contractor. Involvement much less & the reason Indian Public Sector likes.

13. TOTAL COST OF PROJECT
EPC mode : Generally higher (10 to 30%) due to additional tax / duty burden, technical & commercial contingency.
EPCM mode : Less due to client paying exact cost of purchase to Vendors / Contractors besides less tax / duties.

14. FINANCIAL RISK EPC mode : Contractor’s responsibility
Lenders like it.
EPCM mode : Client’s responsibility.

15. TIMELY COMPLETION
EPC Mode :15 Contractor’s Single Point responsibility
More likely to happen due to high penalty
EPCM Mode : Contractor equally responsible
Penalty only against fees
Experience indicates on time completion
and also overrun

16. AVAILABILITY OF INDIAN CONTRACTORS FOR HYDROCARBON SECTOR
EPCM EPC
Private Sector Private Sector
TCE Consulting Engineers L&T
Jacobs H&G Punj Lloyd
Acker Solution * Tata Projects
Technimont ICB * Uhde India
Toyo India * Lurgi India
Uhde India * Technimont ICB
Chemtex
Technip India *
Lurgi India
Dalal Mott McDonald
L&T Chiyoda
SNC Lavlin
* Overseas counterpart sometimes may bid for the project on EPC basis

17. AVAILABILITY OF INDIAN CONTRACTORS FOR
HYDROCARBON SECTOR
EPCM EPC
Public Sector Public Sector
Engineers India Ltd Engineers India Ltd
Mecon
PDIL

18. SUMMARY Elements of Comparison Project Executed on
EPCM Basis EPC/LSTK Basis
Time of Completion Shorter Longer by 6 months
Preparation of bid documents Simpler Complex and time
consuming
Work Scope Flexibility More Flexible Much Less Flexible
Quality & Life of Plant Better Good enough to meet
contractual requirements
Client’s involvement More Less
Risk of Cost Owner Contractor
Total Cost of Project Less Costlier Costlier
Project Completion on schedule Less likely More likely
Availability of Indian Contractors Many available Limited to 2 & 3

19. CASE STUDIES FLOAT GLASS PLANT
Executed on EPCM basis
Completed on time in 31 months
Cost saving leading to Bonus
Safety & Quality of International Standard
Contingencies protected by negotiations

20. SPONGE IRON PLANT AT DOLVI, ALIBAUG
CASE STUDIES
SPONGE IRON PLANT AT DOLVI, ALIBAUG
Completed in record time of 28 months
Better Free Issue Management – saving in cost and time
Saving of Rs. 40 Million only in structurals by optimized design
Integrated Team between Client and EPCM Contractor

21. WHAT IS GOOD FOR INDIAN PROCESS PLANTS
Project Execution in EPCM mode
- Due to advantages of Total Cost, Time & Quality
- Creates opportunities for Indian Engg. Contractors, Vendors &
Contractors
Project Execution in EPC mode due to Lenders’ requirement and
for Standard Package plants

22. THANK YOU