Managing International EPC Contracts in the Global Oil and Gas Industry

• Getting the focus right – what is included and what is excluded (for example, commissioning or simply delivery of an operational facility?).
• Checking scope against the project business case.
• Considering resource requirements.
• The importance of effective ‘trade-off’ decision-making processes.
• Identifying and managing critical lead times – what does this mean for the project procurement function?

Topic 2: Some key features of consideration of EPC contracts

• Single point ownership – ramifications, advantages and disadvantages.
• Time constraints.
• The fixed price basis – advantages and disadvantages.
• Procurement responsibilities – ramifications.
• Achieving/matching specification – quality and ‘fit for purpose’ – what guarantees have been given?
• Case study – The Gorgon LNG Project.

Topic 3: Some pertinent and relevant contractual provisions of central importance

• Governing law.
• Establishing the rights, duties and obligations of the parties to the contract.
• Understanding the ramifications of indemnity, insurance and liability (suppliers’ and buyers’) provisions.
• Provisions relating to risk and performance.
• Warranties and guarantees.
• Termination clauses.
• Damages – LDCs.
• Renegotiation clauses and review mechanisms.
• Price escalation clauses.
• Consequential loss exclusion clauses.
• Dealing with breach of contract.
• Assignment and novation of contract.
• Force majeure provisions.
• Intellectual property provisions.
• Time bar and prescriptive (limitation) periods.

Topic 4: Effective risk management

• Environmental analysis – understanding the commercial environment where you are operating.
• Competitor analysis – assessing competitors against what you are doing.
• Performing due diligence – knowing who the stakeholders are, what their interests are, and thinking in scenarios.
• Understanding the classifications of risk that might impact upon an EPC contract – i.e., financial risk; risk to the organisation (reputation, commitment of resources, etc.); risk of non-performance (contractor/subcontractor); risk associated with regulatory compliance (e.g., local content provisions and their ramifications, HSE policies and compliance issues); political risk (instability, nationalisation, etc. – consider force majeure); organisational bias towards pricing bids and tenders; uncertainties/inconsistencies within FEED impacting price.
• Establishing effective and realistic mitigation strategies (tied to the point above).
• What are our project capabilities (management and execution)?
• Case study – The Piper Alpha Disaster.

Topic 5: Commercial Performance Management

• Knowledge about vendor qualification, pre-qualification and post-qualification requirements and processes.
• Understanding the ITT process.
• Technological capability.
• Track record – personnel, equipment, operational capability and logistics.
• Procurement processes.
• Identification and inclusion of KPIs.
• Evaluation against established KPIs.
• Evaluate and control documentation.
• Claims management.
• HSE.
• Environmental policies.

Topic 6: Stakeholder Mapping and Analysis

• The problem with stakeholder agendas.
• Stakeholder power and influence – a shifting dynamic over a project’s lifecycle?
• Stakeholder identification and assessment – ‘stakeholder mapping’.
• Class exercise – stakeholder mapping.
• Scenario – dealing with stakeholder agendas.
• Establishing/re-establishing constructive engagement with stakeholder groupings.
• Dealing with local content and corporate social responsibility (CSR).

Topic 7: Managing Change Orders

• Change orders and the project scope.
• Understanding the reasoning behind a change order – is it applicable or appropriate?
• The three common reasons for change orders – client specification changes; poor scoping (errors and omissions); changes in the environment.
• Establishing the audit trail.
• Scenario – ‘The dangers of doing someone a favour’.
• The importance of price escalation clauses.
• Change orders and contractual breach – a significant issue?
• Scenario – ‘How the hours have flown by’.
• Change orders and liquidated damages clauses (LDCs) – a direct relationship?
• Change orders and force majeure.
• Class exercise – efficiency in managing change orders.

Topic 8: Creating and Leading High Performance Project Teams

• Operating within a constrained environment.
• Examining the ‘Iron Triangle’.
• The problem of scope creep.
• What makes a good client relationship?
• Operating within and without the ‘comfort zone’ – understanding your team members.
• How focused is your team? Corrective actions and strategies to deal with ‘drift’.
• Tuckman’s five stages model.
• Getting the ‘buy-in’ from the team – the single most important factor.
• Class exercise.
• The difference between a team and a group.
• The manifestation of ‘groupthink’ – a deadly danger.
• The role played by motivation.

Topic 9: Managing the project supply chain function from logistics to inventory

• Purchasing principles.
• Making purchasing decisions.
• Standardisation and supplier selection – what you get from ‘approved vendors’.
• Managing project-related logistics.
• Managing project inventories.

Topic 10: Dispute Resolution – an overview of options

• The rationale for dispute resolution methodologies in commercial contracts.
• Drafting dispute resolution clauses – what should they contain to be effective?
• The ‘ladder’ of dispute resolution – negotiation (formal and informal), mediation, adjudication (expert determination), arbitration.
• The ‘clash of cultures’ – conflicts in goals and objectives of the parties, different management styles, poor communication across stakeholder interfaces.
• The uncertainty of change – a breeding ground for disputes?