Publications

We acknowledge three (3) basic contracting strategies of oil and gas projects: Engineering Procurement Construction (EPC), EPC with Long Lead Items (LLIs) and EPC Management (EPCM). The selection of the contracting strategy reflects the business drivers, project objectives and desired risks allocation by project owner. As project owner, ConocoPhillips (Grissik) Ltd. has initiated a major capital project to maintain gas production capacity and maximize raw gas recovery at one of its operational area. This project is driven by an gas production opportunity, involving brown field area, simultaneous operations while the plant remains in operations, access and transportation challenges, and local community issues. The completion of the project requires higher coordination and interfaces with an experienced major national EPC Contractor to manage approximately 1,000 personnel at peak time with total estimated 3.5 million man-hours. A single case study is chosen as method for this paper. This paper assesses and exercises on how the project owner identify, develop, and finalize the contracting strategy to achieve its objectives. The paper also presents key success factors on how project owner manages the contracts involving multiples parties with time constraint. Based on contracting strategy analysis, project owner decided to use contracting strategy of EPC with LLIs. Project owner took out the scope of LLIs engineering and procurement with estimated delivery time more than ten (10) months and scope of early civil works from EPC contractor, to avoid overall project schedule delay. By having those, project owner has successfully managed its risks and control the contracts spend effectively to meet their commitment to SKK Migas with targeting Placed-into-Service (PIS) on schedule and within the allocated budget. Keywords: EPC, time-constrained project, contracting strategy, contract management, LLI