Operational variations of EPC delivery approach of power plant projects, comparison of current regional EPC contracts versus FIDIC

Abstract

The governmental electricity generation companies in MENA, rely on the expertise of foreign engineering consultants to draft their own request for proposals, in an EPC project delivery approach, for simple and combined cycle power plant projects. Through different bidding procedures, these Employers will award the project to the best local or international Contractor. The power plant EPC Contracts in MENA do not follow any standard form of Contract such as FIDIC, which represents an international contract template reflecting the best practice principles where the project risks are allocated fairly between Employer and Contractor. Benchmarking the contractual conditions of this international contract standard versus the RFPs becomes essential in judging where the RFPs stand in risk allocation. For this purpose, this research relies on the study of five current combined cycle power plant tender documents from five major countries in MENA, representing five different Employers. The research methodology is first highlighting the practice of a current industry practitioner, a leading Contractor while addressing these tender documents. Second, it reflects a comparative analysis of the RFPs’ instructions to bidders one versus the other. Third it moves to the comparison of the general and particular conditions of the RFPs between each other and versus FIDIC. The research concludes with observations on the RFPs. First, the RFPs do not follow a typical common bidding practice for a similar project. Second, they differ in most of their instructions to bidders. Third, they carry many deviations in general and particular conditions from FIDIC that the research highlights. The outcomes highlight the risks that an EPC Contractor will encounter. Such risks include inaccurate price estimation, offer rejection, securing the bid, bid evaluation transparency, unspecified time of possession to site, stringent delay damages and overloaded milestones. Finally, the research provides guidelines for the industry practitioners t