EPC vs EPCM

EPC / EPCM Definition & Comparison:

Many different terms are tossed around the construction industry loosely describing the different methodology used to design and construct new facilities and turnarounds. Unfortunately, there are no tried and true definitions for the different methods and numerous variations of each of the most popular methods.

Determining the correct form of construction contract to pursue can have a great effect on the cost and risk associated with the construction project. The cost of construction varies inversely with the amount of business risk the “owner / financers” are willing to accept. The less business risk the owner wishes to assume, the higher the cost of construction and management. This follows the “risk-reward” motto for business.

The two most common types of construction contacts are EPC “turn-key” and EPCM. Each of these methods have variations that can be adapted to each project as needed; example (EPCC Engineering, Procurement, Construction, and Commissioning, EPCI Engineering, Procurement, Construction, and Installation), etc.

EPC (Engineering, Procurement and Construction): means the company is contracted to provide engineering, procurement and construction services by the owner. Think Design & Construct style contracts, where the project is largely Contractor managed and the cost risk and control are weighted towards the Contractor and away from the Owner. The EPC contractor has direct contracts with the construction contractors.

EPCM (Engineering, Procurement and Construction Management): means the company is contracted to provide engineering, procurement and construction management services. Other companies are contracted by the Owner directly to provide construction services and they are usually managed by the EPCM contractor on the Owner's behalf. Think Professional Services contracts, where the project is largely Owner managed and the cost risk and control is weighted towards the Owner.

EPC and EPCM contracting are both very prevalent types of contracts within the construction industry. Dependent on the level of risk the Owner of a project is willing to accept, budget constraints, and the Owner’s organization core competencies, will determine which method is best for their project.

EPC contracting tends to be more expensive, to the Owner, due to the shift of project risk away from the Owner and to the EPC Contractor. On average, a project’s cost 10% - 20% more using EPC style of contracting than a project using the EPCM style of contracting. This is due in large part to the project’s risk being more evenly distributed between the Owner and contracts / suppliers.

Construction contracting trends have been leaning towards the EPCM style of contracting and away from EPC contracting for several reasons but both methods have their place in business today.

EPCM Advantages:

• Lower Overall Cost
• Staff’s Sense of Ownership
• More Control over Process
• Better for less defined projects with anticipated changes to scope of supply
• Less Legal Litigation (Identify issues early and remedy situation before larger problems arise)
• Owner’s Financing Flexibility

These are just a few of the advantages of EPCM style of construction contracting.

EPC contracting has it place in the construction industry as well. Under certain situations, it makes better sense to use this type of construction contracting than other methods.

EPC Advantages:

• One Stop Shopping "One point of Contact"
• "Hands off" approach to project
• Minimal Staffing Requirements
• Minimal Legal Risk
• Best for Well defined projects with Detailed Engineering Complete before EPC Contractor selected (Minimal Unknowns).

As stated before, these construction contract methods can be tailored to the individual projects / owner’s needs. Some companies can go as far as breaking up each portion of the EPC / EPCM (Engineering, Procurement, Construction / Construction Management) to separate companies. One company can do the engineering; another can do the procurement, while still another can do the construction / project management).

Each company must decide for themselves, with the advice of legal and financial counsels, as to which method of construction contracting is best for their particular project and situation.

souce: http://prodigyengr.com

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Trans-Asia, NorAsian Energy sign farm-in agreement

MANILA, Philippines - Trans-Asia Oil and Energy Development Corp. and NorAsian Energy Ltd (NEL) signed yesterday a farm-in agreement in service contract 55 in offshore Palawan.

In a disclosure to the Philippine Stock Exchange (PSE), TA Oil said NorAsian acquired an 8.18% participating interest in the service contract.

TA Oil did not disclose how much was the acquisition deal for the said shares.

In late 2009, TA Oil started with its data gathering at the SC 55 in West Palawan.

The SC 55 consortium commenced a 590-square kilometer 3D seismic survey in its contract area in offshore West Palawan . TA Oil has a 15% participating interest in SC 55.

SC 55 covers 9,000km2 in the south west Palawan Basin. It is located on a regional oil and gas fairway that extends from the productive Borneo offshore region in the southwest to the offshore Philippines production assets northwest of Palawan .

Aside from TA Oil, Otto Energy owns an 85% working interest in SC55. Otto Energy Ltd., an Australian oil and gas firm holds the remaining 85% of the contract. Otto acquired its 85% interest in SC55 in 2006, through the purchase of NorAsian Energy Ltd. Otto Energy was supposed to farm-out 60% of its interest in SC 55 to BHP Billiton Petroleum Pty. Ltd. but negotiations fell through.

TA Oil is the energy arm of the Phinma Group. The company continues to be active in several exploration projects, particularly in large and high-potential areas. At present, the company is represented in 4 service contracts.

By Donnabelle L. Gatdula, The Philippine Star
Posted at 02/05/2011

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2011: A Year of Opportunity

Jan 19, 2011 - 2011 may go down in history as "The Year of Opportunity." Venture capitalist Saku Tuominen, founder of the Idealist Group, says in the Monocle Small Business Guide 2010/11, "The world is more connected than ever before and production costs, especially on the digital side, are falling dramatically. With a good idea, great implementation and the right timing, practically anybody can challenge anyone these days. Never in the history of mankind have there been so many opportunities for small companies."



Zoltan Acs, director of the Center for Entrepreneurship and Public Policy at George Mason University, echoes that sentiment: "The world is at a sort of 'ground zero' in its struggle to create hundreds of innovative products -- and in the process millions of jobs -- to deal with an ever-growing population and the demands of emerging economies such as Brazil and China. This struggle has captured the aspirations of thousand of entrepreneurs around the world. Despite the impact of the economic downturn, entrepreneurs are enjoying a renaissance. A global entrepreneurial revolution is spreading like wildfire."


The more you look around, the more you see evidence of this shift. A recent Nokia advertisement entitled "We're All Entrepreneurs Nowadays" reads: "What is your definition of success? Being happy? Solving a problem? Helping others? We all define it in our own way, but what's clear is that, in this new world, the important thing is to succeed on our own terms, and be participants in life, rather than spectators. For the vanguard of micro-entrepreneurs, success means empowerment and the ability to direct their own culture."


Governments and large institutions are getting savvy about the importance of ensuring the success of an entrepreneurial world. The World Economic Forum, The World Bank, and Heritage Foundation are great examples of organizations actively engaged in creating incentives and the right environments in which small businesses and startups can take root, grow and flourish.


In Asia, especially in China and Hong Kong, small businesses going into technology, medical and pharmaceutical sectors are finding government support. The government of the United Kingdom has recently announced a program to create a network of technology and innovation centers to spread knowledge from academic researchers to entrepreneurs.


Want more tips on having a successful 2011? Check these out:

• How to Achieve Your Financial Goals
• 2011: The Year of...
• How to Achieve Your Sales Goals

The GEDI (Global Entrepreneurship & Development Index) is helping by measuring how fast the global entrepreneurial society is spreading. By focusing on the "three As" of entrepreneurial development -- attitudes, activity and aspiration -- the GEDI can help determine what the right time and place is to launch a new business.


I for one have decided that this year is the year to launch and build a business that moves beyond the single-shingle, band-of-one, solo-adviser business model. Am I happy with what Seth Godin termed a shipping list for 2010? Sure, but I know that if I'm simply twice as bold, I can double my impact on the world. And to leave that potential on the table is, well, wrong. I know I can make a difference; it's now a matter of scale and scope. I have committed to bringing Shibumi Creative Works into the world, and help companies struggling with design-driven innovation find their way.


Risky, daunting, difficult? Yes, yes, and yes. Is it a mistake -- is failure possible, or even probable? It's not a question worth considering, much less spending energy on answering. Why? Because it may just be the best mistake I've ever made.


I'm taking a lesson from James Dyson, founder of Dyson, who explains in the same issue of Monocle: "I'm an engineer. And given that I've spent my career making mistakes, some would say I'm not a very good one. It's the best way to learn and we should encourage young people to make more mistakes. Don't be afraid to take risks -- or to swear like a trooper when things don't go your way. Just make sure you learn why for next time."


What would you do if you were twice as bold? Whatever your answer, make 2011 the year you do it!


source: American Express OPEN Forum

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New York state regulators green-light $1.4B Queens power plant

State utilities regulators gave final approval on Thursday for the construction of a $1.4 billion power plant in Astoria, Queens. Now, the company that plans to build it needs to find a buyer for the electricity it will generate.

The Public Service Commission said the plant would replace an older, less-efficient plant.

It would be built in two phases over four years on a 15-acre section of Consolidated Edison’s 600-acre property on the East River that has long been the city’s hub of electricity generation.

“You could see that yellow plume from where we live,” said Anthony J. Gigantiello, an Astoria resident who is president of the Coalition Helping to Organize a Kleaner Environment, or Choke.

He was referring to the emissions from the stacks atop the 40-year-old plant that NRG Energy, a power company based in Princeton, N.J., wants to replace. NRG bought the Astoria plant and another on Staten Island from Con Edison a decade ago.

Mr. Gigantiello’s group formed to oppose the construction of more power plants in the area until some of the older ones that produce the most pollution are shut down. Its primary target was an 800-megawatt plant on the Con Edison site, which was retired last year.

“We’re right in the middle of all these power plants,” Mr. Gigantiello said. “Whenever you close an old generator, we’re all for that.”

He said his group also approved of the plan to replace the 40-foot-tall stacks with some that will release emissions 250 feet from the ground, reducing pollution in the immediate area.

NRG is looking for a buyer to sign a long-term contract to purchase all or a large part of the plant’s output, said David Gaier, a spokesman for the company. Without a buyer lined up, Mr. Gaier said he could not provide a precise schedule for completion of the plant.

Con Edison has no plan to buy power directly from the proposed plant, said Joseph Oates, Con Ed’s vice president of energy management. The NRG plant, which would be fueled by natural gas, would be used during times of high demand. While it would be more expensive to operate than some new plants in the city, the NRG plant could help fulfill the regulatory requirement that plants within the city limits be able to provide at least 80 percent of the city’s peak demand for electricity, Mr. Oates said.

By PATRICK McGEEHAN, The New York Times
Published: January 20, 2011

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10 Ways To Get A Job With Help Of Social Media

Everyone’s talking about using social media for job-hunting. But how, exactly, should you do that?

Here are 10 Ways To Get A Job With Help Of Social Media using three popular online tools: Facebook, Twitter, and LinkedIn.

Let people know you’re looking.

Whether on LinkedIn, Facebook, or Twitter, let your friends and followers know that you’re looking for a job. Even better, tell them what type of job you’re looking for. They may not know of any openings right now, but if they know you’re available, they’ll think of you when a position opens up. That will help you hear about openings before they’re listed on popular job boards.


Don’t be afraid to network on Facebook.

Facebook may be for fun, but don’t make the mistake of overlooking your network there, especially if you already have hundreds of friends. Facebook can sometimes be more useful for job hunting than LinkedIn, because friends who know you personally have more of a stake in helping you. They want you to succeed—so use that to your advantage.


Make sure your Facebook profile is private.

Much of your Facebook profile is public by default, and you probably don’t want a potential employer browsing your personal updates. Under Account, then Privacy Settings, choose “Friends Only.” That way, an employer who Googles you won’t be able to see the details of your profile, your photos, or your personal status updates.


Find information about hiring managers.

Before you submit your resume, look up the hiring manager on LinkedIn and Twitter. (If he’s smart, he’ll make his Facebook profile private.) LinkedIn profiles and Twitter feeds are gold mines of information on individuals. Knowing more about the person who’s hiring can help you tailor your cover letter to their needs and desires.


Hyperlink your resume.

Add the URL for your Twitter handle and LinkedIn profile to your contact information on your resume. (But don’t add your Facebook profile, since that’s private.) Not only does this offer the employer another way of getting in touch with you and seeing how you interact online, it also shows that you’re social media-savvy, a skill valued by many employers.


Be strategic with Facebook lists.

Facebook’s list feature allows you to continue building your network without worrying about professional contacts seeing your personal updates. Under Account, then Friends, create a new list, and customize your privacy settings so professional friends can only see what you want them to see. That way your close friends can still keep up with your photos and personal updates.


Create the connections you need to get the job.

It’s all about who you know, right? Don’t just use the connections you already have. Figure out who you need to know to land a certain job—likely the hiring manager—and make that connection, whether by getting them to follow you on Twitter by retweeting their tweets, or growing your LinkedIn network until they become a third-degree connection. Twitter in particular offers opportunity to connect with professionals who might not otherwise give you the time of day.


Get Google on your side.

If don’t like what pops up when you Google yourself (because you know an employer will Google you), create a LinkedIn profile. Fill out your profile completely and become active on the network. That will help push your profile to the top of Google’s search results, which means a potential employer will see what you want them to see.


Join industry chats on Twitter.

Look for chats that revolve around your industry, or better yet, the industry you want to work in. Joining online conversations helps you keep up-to-date on the industry, meet helpful contacts, and showcase your expertise in your field. You may also want to network with other job seekers through weekly conversations like #jobhuntchat or #careerchat.


Seek out job-search advice.

All three of these networks are great places to find advice on job-hunting and mingle with other job seekers. Join LinkedIn groups that focus on job search. Follow career experts on Twitter, and “like” their pages on Facebook. That way you’ll get tips for your search even when you’re not looking for them.


Posted on January 11, 2011 by Jaspal - gilygily.com

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Does Improving Efficiency Really Save Energy?

by Karl Stephan, Engineering Ethics Blog

You might almost say that what health is to doctors or justice is to lawyers, efficiency is to engineers. Making machines more efficient summarizes a good bit of everything that has gone on in technology and engineering over the last couple of hundred years or so. And if you broaden the definition of efficiency to include useful (or desirable) work performed per unit cost (and not just per unit of raw energy input), then everything from airplanes to zippers has gotten more efficient over the years. Increased efficiency in energy-consuming products has been viewed as the no-brainer answer to the problem of rising energy demands around the globe. Instead of building more coal-fired power plants, conservationists say, just replace X million incandescent bulbs with compact fluorescents, and you’ve save tons of carbon at virtually no infrastructure cost. This is all very well, but a recent article in The New Yorker calls into question the universally accepted idea that increasing energy efficiency truly leads to less energy consumed.


A nineteenth-century economist named William Stanley Jevons was among the first to point out that improved energy efficiency in manufacturing iron, for example (Jevons’ father was an iron merchant) doesn’t necessarily mean that you will end up using less coal to make iron in the long run. What can happen, especially when the cost of energy is a large portion of the finished product cost, is that when the price goes down due to smaller energy usage, people start using more iron—so much more, in fact, that even with more energy-efficient production, the total amount of iron sold is so much larger that the industry as a whole ends up consuming more energy than before, not less.


Jevons’ idea obviously applies to a lot of things besides iron. Take computers, for example. The first electronic computer occupied a room the size of a small house and consumed about 150 kilowatts of power. Its computing ability was much less than what a tiny 8-pin embedded microprocessor can do today. On a strict efficiency basis, measured by almost any yardstick—energy consumption, cost, space, weight—today’s microprocessor is thousands or millions of times more efficient. But guess what? In 1946 there was exactly one electronic computer of the type I’m describing (ENIAC, installed at the U. S. Army’s Aberdeen Proving Ground), and today there are many millions of computers of all sizes, plus giant server farms that tax the power-generating capability of the entire power grid of the Northwest U. S. The total amount of electricity devoted to electronic computing has gone from 150 kW in 1946 to many gigawatts today, if you count all the mobile phones on batteries, the computerized cash registers, and so on.

So what’s an engineer to do? Give up on making things more efficient because people will only use more of them? This is a great example of a case where doing the right thing in a micro-environment (a single company or even industry) may lead to complicated consequences in a macro-environment such as the economy of a country or even the globe. In fact, it goes to the heart of what engineering is all about, and makes one face the question of how to justify energy consumption on a fundamental level.


While this blog is not about global warming, there are those who believe that radical reductions in the world’s carbon footprint are imperative if we are to avoid a gigantic creeping disaster that will flood most of the world’s coastal cities, which means, more or less, many of the world’s cultural and political capitals. Oh, and by the way, millions will die prematurely. Although I do not happen to agree with this premise, let’s grant it for the sake of argument. Given an immediate need to reduce energy consumption by a large fraction, what should we do? Make everything that uses energy more efficient? Jevons’ idea says this simply won’t work. In the broad definition of efficiency we’ve been using, improving efficiency often leads to more energy use, not less.


The unpleasant alternative to what looked like a win-win solution—improved energy efficiency and less energy usage—is some form of rationing: either energy taxes, or simple flat-out restrictions on energy use. Many countries practice this already: it’s called power outages. Power is on only at night, or three hours a day, or not for weeks at a time. It’s arbitrary, unfair, and hits the poorest hardest, but it works. The tax alternative has the advantage that it provides some economic incentive for improving efficiency—but if technology really improves to the point that the tax is compensated for, you’re right back where you started. The only sure-fire way to keep people from using energy as much as they want is to put them under the government’s thumb somehow. Cuba, I understand, has raised this process to an art form—if you consider old cars towed by mules artistic.


Don’t get the idea I think efficiency is bad. If I did, I couldn’t very well call myself an engineer. However, Jevons reminds us that, like many other things in life, energy efficiency can be helpful in limited circumstances. But expecting it to solve all the world’s energy problems is not only unrealistic, but probably counterproductive as well.

Sources: David Owen’s article “The Efficiency Dilemma” appeared in the Dec. 20 & 27, 2010 issue of The New Yorker, pp. 78-85.

source: engineeringethicsblog

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