MATEC Web Conf.
Volume 312, 20209th International Conference on Engineering, Project, and Production Management (EPPM2018)
|Number of page(s)||11|
|Section||Theories and Applications of Project Management|
|Published online||03 April 2020|
Evaluation of an OBCE Conversion Contract in a Large-scale Oil and Gas Project
1 Department of Architecture, Kocaeli University, Kocaeli, Turkey
2 TUPRAS General Management, Kocaeli, Turkey
* Corresponding author: firstname.lastname@example.org
Billion-dollar investments are quite common in oil and gas industry and owners generally prefer engineering, procurement, construction (EPC) contracts since they would like to minimize their risks and guarantee the most consistent project cost and shortest timeline scheme. Considering the size of contracts, owners are unsurprisingly seeking an ideal tender awarding method to avoid deviation from project schedule or budget and get the maximum benefit for them. They may prefer to award the EPC contract directly (i), have a front-end engineering design (FEED) study done first and award the EPC contract afterwards (ii), or set up a convertible contract and convert it to EPC after an open book cost estimate (OBCE) process (iii). It is a question of concern which option for large-scale oil and gas projects is the most favourable. As a case study, outcomes of a project which was administrated with a conversion type of contract will be reviewed in detail, and a number of principles based on lessons learned will be listed. Thus, the authors aim to provide a verifying approach for the interpretation of EPC conversion type contract management based on analysis of the distinguishing features of large-scale oil and gas projects.
Key words: convertible contracts / FEED study / EPC contracts / OBCE (open book cost estimate) / oil and gas projects
© The Authors, published by EDP Sciences, 2020
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