The general contracting management system generally sets up a business contract department, and its basic work content is business negotiation, contract management, cost management, change management, and claim management.
Figure 1 Business management system of EPC
1. Business negotiations
Business negotiation is a mutually negotiated business activity for the purpose of contracting engineering tasks, and the main work of business negotiation occurs before the general contracting project is awarded, and the company's business contract department is responsible for it.
The direct reason for business negotiation is that the employer and the bidder involved in the business negotiation have their own needs, and the satisfaction of the needs of one party may affect the satisfaction of the needs of the other party, and neither party can ignore the needs of the other party.
Business negotiations
Business negotiation involves standards, construction periods, unit or total price, rates, performance and other contents, and is generally carried out in accordance with the procedures of "conducting project evaluation, formulating business negotiation plans, establishing trust between the two parties, reaching an agreement (or bidding stage)", and implementing and maintaining the agreement.
There are two outcomes of negotiation: zero-sum game is the result of negotiation with loss and win, and creation of added value is the result of win-win. In the EPC model, we advocate the use of value-added creation methods, which is to create value through cooperation, when one party gets more, the other party does not need to lose its interests, which can better reflect the superiority of the EPC model and establish long-term partnerships.
2. Contract management
Contract management is the main work of the project business contract department, including performance management and contract management of subcontracting teams.
Joint management
First, it is necessary to analyze and fill in the gaps in the general contract. The analysis and study of contract terms is not only before the bid is awarded, but also after the bid is awarded. Through the analysis of the contract execution stage, we can find out the possibility of expected disputes, take measures in advance, and make up for them through negotiation and change.
The second is to decompose and disclose the general contract. According to the general contract, sort out the key terms and professional terms in the performance, and make the contract disclosure to the main personnel and departments of project management; At the same time, the performance time node plan is formulated, the professional work plan of design, procurement and construction is clarified, and the key nodes are pre-controlled.
The third is to formulate various professional contracts according to the general contract and enterprise management system. The subcontracting team is screened, subcontracted bidding, and excellent design, civil engineering, mechanical and electrical, decoration, materials, equipment and other subcontractors are selected.
3. Cost management
Project cost management is directly linked to the economic benefits of the enterprise, and only continuous cost control can effectively promote the minimization of cost investment, and then promote the sustainable development and progress of the enterprise.
In project management, a responsible cost management system is usually implemented. The responsibility cost management system emphasizes the whole process of project implementation and the management of all employees, integrates and decomposes the total cost of the project, and implements the decomposed cost indicators to each department and each person.
4. Change management
Change management
Frequent changes are one of the distinctive features of EPC projects, including cost changes, schedule changes, and contract terms, all of which ultimately boil down to cost issues. The change will affect the contractor's resource allocation, project plan, cost input, and even disrupt the overall deployment, which is the main cause of disputes between the employer and the winning bidder. Change is also an important opportunity for construction companies to gain benefits.
5. Claims management
Claims management
Claim refers to the situation in which the innocent party requires the at-fault party to bear the actual loss caused during the performance of the contract, which is divided into three types: construction period claim, expense claim and profit claim. Claims are a common occurrence of large-scale projects, and both the owner and the contractor should be mentally prepared and prepared, and it is also one of the sensitive points of the EPC project, and the claims include in-contract claims and out-of-contract claims. The claim must be reasonable, substantiated and well-founded.
The ultimate purpose of construction enterprises to undertake projects is to obtain benefits and promote the survival and development of the company. The ultimate purpose of business management of EPC projects is to integrate construction and design, and improve efficiency on the basis of optimizing plans and saving costs.
About the author: WeChat public account "Deng Youdong Studio"