In a world where getting power reliably from point A to point B depends on substantial construction and upgrade activities, efficient project delivery is critical to utility success.
As utilities assess methods to execute their transmission and substation projects, some managers and decision-makers feel hesitation over using the popular engineer-procure-construct (EPC) model. That fear may be rooted in the perceived loss of control or putting all the eggs in one basket. But there are many reasons that EPC can be the most efficient option to achieve project goals. We deliver large EPC projects for utilities regularly, giving us insight into some of those advantages.
Schedule compression: Under an EPC contract, all construction and material vendors are assembled during the project proposal stage so that everyone is starting together from day one. This enables cross-discipline discussions and planning, better upfront risk assessment, and the ability to gain efficiencies early on, as opposed to the more drawn-out process involved in traditional design-bid-build projects.
Cost certainty: If time is money, then knowing the firm lump-sum price of projects at the time of EPC contract signing can be far more economical than having to wait through design and bid processes until materials and construction contractors are finally brought on board with firm pricing. Capital planning and forecasting is easier when true costs are established earlier in the project life cycle. Experienced EPC contractors also bring their own efficiencies to bear on projects, which can help alleviate some cost concerns.
Flexible level of involvement: Different utilities — and even different managers within a utility — may have different comfort levels in terms of their team’s level of involvement. Since EPC contracts generally delegate the entire project scope to the prime contractor, owners and their representatives can choose to refocus their internal resources elsewhere or choose to get involved in the day-to-day detail of the project — or anywhere in between those poles.
One contract, one contact: In a related benefit, it’s hard for an owner to be more efficient than by focusing efforts on negotiating a single contract with the EPC prime contractor. Selecting personnel for engineering, surveying, grounding, construction, testing, as well as negotiating with a dozen or more material providers is both time consuming and inefficient. Each of those contracts would have its own schedule, terms and cost. By assigning that responsibility to the EPC provider, who in turn will select a single point of contact to coordinate communications among multiple entities, the owner gets a streamlined project launch. Furthermore, a single client manager can coordinate multiple EPC projects, since the prime contractor handles all downstream details.
Building relationships: It is easy for a utility to become siloed into using the same methods and contractors that it always has. When an EPC contractor is selected, it will naturally bring in some of its own processes and relationships with vendors. This opens opportunities for the utility to learn from best practices in the EPC world and from partners with which it may never have worked before. These relationships will remain with the owner long after the EPC project is completed.
EPC is a project delivery method seeing increasing adoption in the electrical transmission industry. But as a newer approach within the transmission and distribution field, it will take work to establish a comfort level for its potential beneficiaries. When utilities observe the efficiencies and flexibility that EPC can provide, hesitation can turn into anticipation.
EPC efficiencies enabled a recent transmission line rebuild project to reach completion on a tight timeline.