Page 41 - Civil Engineering Project Management, Fourth Edition

Civil Engineering Project Management
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Thus problems can occur if faulty performance is partly due to conditions
arising which are not covered by the promoter’s specification.
Where a DBO contract is let on the basis that the contractor also finances the
project, associating with a bank for the provision of the necessary funds, the
operating period may then be long term, for 15–20 years or more. This is
typically a Private Finance Initiative (PFI) project, described in Section 1.7.
The risks on the contractor are then increased since they include a substantial
dependency on the terms of the income he is to receive. The promoter has the
cost of setting up a long-term supervisory system to cover the operation
period and may face the risk of circumstances arising which are not covered
in the original contract.
(c) Engineer, procure and construct contracts

An engineer, procure and construct (EPC) contract is a form of D&B contract
under which a design engineer or firm of design consultants heads a team
which includes an experienced contractor and perhaps a plant supplier. The
promoter specifies his project requirements in outline which the team designs
in detail in continued liaison with him. The EPC organization arranges and
manages construction, letting specialist work packages out as necessary to
suitable sub-contractors. The promoter pays the actual cost of the work plus a
fee, subject to a guaranteed maximum price, or to a target cost with an arrange-
ment for the sharing of savings or excess costs on the target.

(d) Partnering

Details of partnering are given in Section 1.9. There are two types: ‘term (or full)
partnering’ which covers an intention to carry out a series of projects together
or for a given period; and ‘project-specific partnering’, i.e. co-operation for one
job at a time.
Normally a promoter negotiates a partnering agreement with his consultant
(if he employs one) and a contractor of his own choosing, usually because of
past satisfactory experience of working with him. If competitive tendering is
required, then a selected list of contractors may be invited to bid – on the basis
of experience, quality of staff available, and costs plus charges for overheads
and profit, etc. (similar to cost reimbursement contracts outlined in Section 1.3).
But if open competitive tendering is used, the advantage of basing a partnering
agreement on past successful working with a contractor may be lost.

(e) ‘Term’ or ‘Serial’ contracting

This comprises letting an ordinary construction contract for carrying out a
series of works of an identical nature – re-surfacing roads, for example – for a