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Engineering Execution Philosophy in L-EPM Type Contracts

Engineering Execution Philosophy in L-EPM Type Contracts

Anil Seth

Larsen & Toubro Limited

India


Time is a dressmaker specializing in alterations. 

-Faith Baldwin

The lump sum EPC option is the most desired procurement route for clients and contractors, in response to market conditions today the EPC contractors are increasingly proffering alternatives. The contracts types are many, what now a day is gaining popularity is a Licensor-Engineering Procurement Construction (L-EPC) system. In the L-EPC system Licensor is provided by the contractor.

For major projects it is not unusual to split the project delivery process into two phases; in the first, engineers set the design parameters which define the work scope, and break the work down into work packages for budgeting and planning purposes, to a level sufficient to allow the client to go out to the market to tender the work.

This is often referred to as the Front-End Engineering and Design (FEED) stage which generates what is known as the basic engineering. The FEED is usually executed predominately on a schedule of rates basis, although certain definable components can be lump-summed. The FEED stage in general includes basic engineering and design, project schedule and cost estimates for project control, and (sometimes) procurement of certain long-lead items of equipment. The FEED stage results in a basic engineering package or packages, sometimes referred to as process design packages which (ideally) are sufficiently progressed to enable competitive bids to be obtained on a lump sum basis.

The FEED may be produced by specialist engineering firms but increasingly major EPC contractors have the in house capability to do these themselves. It is also important to note that it is not really possible or desirable to define what constitutes basic engineering or FEED in general terms – it will vary from project to project on technology and risk assessment. Across different projects and industries the FEED can be developed to a greater or lesser extent, sometimes getting close to or constituting an element at least of detailed design.

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About the Author

Anil Seth

Author

Mr. Anil Seth is working as Assistant General Manager in Project Engineering Department of Larsen & Toubro Engineering at Faridabad, India and manages the Project Engineering Manager Portfolio for hydrocarbon projects. Before joining Larsen & Toubro Ltd. Engineering and construction division he has worked for Indian Petrochemicals Corporation Limited. He holds B.E. degree with Honors in CHEMICAL Engineering from Panjab University Chandigarh India and has also done Diploma in Environmental Management. He is Certified for Harvard Manage Mentor and specializes in Building High Performance cross functional Task Force as well as Converting Breakeven Projects to Profitable scenario. He can be reached at [email protected]  or [email protected].

Larsen & Toubro (L&T) is a technology-driven USD 11.7 billion company that infuses engineering with imagination. It is one of the largest and most respected companies in India’s private sector. The company a technology, engineering, construction and manufacturing company offering a wide range of advance solutions, services and products. Its Hydrocarbon Mid & Downstream group provides a wide range of EPC solutions for turnkey projects – green fuel / fuel quality up-gradation, residue up gradation; cracker complex, polyolefins & aromatics projects for petrochemical industry; hydrogen, fertilisers, gas processing, reformers & cracking furnaces; cross-country oil & gas pipelines, gas gathering stations and crude oil terminals.