EPC in Iran is the most preferred type of Contract by Owners, Project Management Professionals know it due to its simplicity for Owner’s Contract Management
EPC in Iran is heard very much among large General Contracting Firms. Design–build or EPC (Engineering, procurement, and construction) is a project delivery system, in contrast to design–bid–build or Traditional Hard Bid. It is a fairly new system and it was only in 1993 that the Design-Build Institute of America (DBIA) was established. Many project managers are still unaware of the advantages to use this system on either owner’s or contractor’s side. In this article, we hope to inform our readers that EPC in Iran is very much preferred over other systems, specially in the Iranian Oil & Gas Industry.
EPC in Iran Instead of Design-Build
Design–Build relies on a single point of responsibility contract and is helps to minimize cost, time and risks for the project owner by overlapping the design and construction phases of a project to construct the best design that suits the owner needs and budget. Iranians use the term EPC instead of Design-Bid-Build in their contract terminologies.
EPC in Iran is preferred because of the following advantages:
The traditional approach consists of the appointment of a designer on one side, and a contractor on the other side. The owner has to spend time and money twice to ensure what he wants is correctly specified in bid documents, and what the contractor is providing will serve his needs and wants. When a contractor wins the bidding process by minimum profit margins, he will look into ways to detect discrepancies and deficiencies in design specification to receive change orders and make profit at the designer’s fault. The relation between designer and contractor is not a win-win situation and they are at odds due to conflict of interests. The EPC in Iran procurement route changes the traditional sequence of work if a Design-build or EPC Project Manager Professional is on board. It answers the client’s wishes for a single point of responsibility in an attempt to reduce risks and overall costs. The designer team and contractor team work side by side to come up with the best design built at the lowest cost to satisfy owner’s needs and wants.
In cases that the owner’s scope is clear on what is needed but doesn’t insist on how it is designed or constructed, or the uncertainties of the project especially risks are high, owners prefer to use a major contractor who would lead the EPC in Iran team and come up with the best solution.
Although the EPC in Iran team can be led by a contractor, a designer, a developer or a joint venture, as long as a design–build entity holds a single contract for both engineering and construction. However, since construction costs are the main factor in winning the bid, it is best if the contractor leads the team and has a good designer as a partner.
EPC in Iran and Professional Project Managers
The main difficulty with EPC is creating a good working partnership between the engineering and construction team. To lead an EPC in Iran team, a Design-build or EPC Project Manager Professional is needed who knows all PMBOK standards of procedures and techniques by heart and is well experienced in use of them and is well aware of the Business Culture differences. A separate consultant entity who doesn’t take sides and is paid from the joint venture will serve as a better facilitator to the team, rather than using the full time staff. A PMP who is well trained and experienced will be valuable consultant to the EPC in Iran Joint Venture.
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