Transcript Opportunities Relating to EPC Initiatives

Opportunities Related to EPC
Initiatives
Support Services Management - NWC
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Outline
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Rationale for choosing EPC methodology
Objectives and criteria for the selection of EPC contractors
Key success factors for EPC
Ongoing improvement initiatives at NWC
Investment Forecast in RIYADH and JEDDAH (CAPEX)
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Features of EPC Methodology
 EPC methodology is about Lead-Time, Quality and Ability to
Execute
 EPC methodology is Generic, Objective, Transparent and Time
Based
 EPC proven benefits include:
– Streamlined tendering and selection process
– Better integration of design, procurement and construction
– Higher accountability for the success and failure of the project
– More flexibility to contractors
– Lower project costs
 The process is multi-stage to allow for a variety of levels of complexity
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Selection of EPC Vendors – Our Views
• The two most important value
determining factors in any competition
are the quality of the specification and
the bidders who are invited to
participate
Engineer
• Allowing inappropriate
vendors to bid will have a
negative effect on the
competition, is wasteful
to the buyer and the
sellers and causes
increased time delays
Construct
Procure
• Increasing scrutiny of
procurement means
organizations are putting a lot
more emphasis on who is a
vendor
• New issues have risen up the
agenda: health and safety,
environmental care, corporate
responsibility, climate change
• Increased fear amongst buyers of
the impact of using inappropriate
vendors: financial risks, publicity,
reputation damage
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Selection of EPC Vendors – Our Objectives
 To find a range of EPC vendors who wish to provide a
particular service
 To reduce that number to a list of vendors who wish and
are capable of providing the service
 To select people who wish to provide the service and are
capable of doing so and can do so whist being ethical,
credible and stable
 Finally to then choose (if the numbers justify) not only
those who wish to provide, are capable and ethically
suitable but who are the best EPC vendors available
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Selection of EPC Vendors – Our Selection Criteria
 Experience
 Quality and timeliness of past performance
 Reliability and responsibility
 Compliance with equal employment requirements
 Compliance with wage and other fair labor
standards
 Subcontractors used by the Firm
 Integrity of the Firm and its key personnel
 Financial status and operations
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Key Success Factors for EPC Projects
 Higher degree of owner involvement: a move away from comprehensive lump-
sum turnkey projects toward alternate structures
 Better partnering and relationship-building with EPC Contractors: build
longer term, mutually beneficial relationships with their key EPC suppliers
 Front-loading, especially for the engineering and design phase
 Thorough risk identification and clear allocation: such as the use of specified
cost indices to manage volatility and price increases for commodities and labor
 Effective project management, including detailed scheduling, constructability
reviews, progress reporting, and overall performance measurement
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Our Ongoing Improvement Initiatives
 Human Capabilities: recruitment of specialists in asset management/
design/procurement and transfer of knowledge from management
contract operators
 Procurement and Tendering: clear scope of work in RFPs, optimized
prequalification and selection criteria, limited number of bidders,
implementation of FIDIC standards
 Project Management: hiring the best consultants to supervise projects,
developing a competent internal team, and reengineering of project
management processes and systems
 Financial Support: advance payments to cash strapped contractors and
claim resolutions facilitation prior to end of contracts
 Technical Support: supporting contractors in coordination with Ministries
and ensuring that contractor counterparts have a strong engineering
background (design and construction)
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As of Today
• We have 32 qualified international companies and 28
international companies with local JV
• We have awarded over 265 projects worth of SR 3.6
billion
• 15% of projects were awarded directly to international
contractors
• 45% of projects were awarded to international JV
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INVESTMENT FORECAST IN RIYADH AND JEDDAH (CAPEX) in Billion SAR
Projects
2010
2011
2012
2013
2014
TOTAL
Remark
Water
5.8
3.0
2.1
2.0
2.0
14.9
(6.5) plants
(8.4) network
Waste Water
4.5
3.5
2.5
2.3
2.0
14.8
(3.3) Plants
(11.5) network
TOTAL
10.3
6.5
4.6
4.3
4.0
29.7
TOTAL
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