Requisite EPC(M)
Engineering, Procurement and Construction (Management)
Requisite EPC(M) focuses on enhancing project benefits by ensuring people feasibility of Engineering, Procurement and Construction Management contracts at various stages of EPC(M) from contract definition to contract handover using the principles of Requisite Organization.
Identify
benefits
Contract Definition
Enable organizations to identify expected benefits of EPC(M) contract and prepare for their implementation, including contractor definition
execute
benefits
Contract Execution
Enable organizations to deliver the expected benefits of EPC(M) contract within the budget, time, and with the quality required
sustain
benefits
Contract Operationalization
Enable organizations to sustain benefits of EPC(M) contract and achieve strategic objectives after the project’s completion
accept
benefits
Contract Relationship management
Ensure an acceptance of EPC(M) contract’s benefits by all the stakeholders
People Feasibility of EPC(M) Contract is the probability for non-achievement of EPC(M) contract’s KPIs (time, budget, expected return) as a result of ineffective decision making by the people accountable for the EPC(M) contract delivery, its stages and critical path tasks due to a mismatch between their decision making capability and EPC(M) contract complexity.
Level of decision making capability of a EPC(M) contract manager EQUALS the level of EPC(M) contract complexity.
- Effective scoping, scheduling and resourcing decisions.
- Effective contract execution.
- High probability of achieving contract’s KPIs.
- Positive return on investment.
- High level of engagement and job satisfaction.
Level of decision making capability of a EPC(M) contract manager BELOW the level of EPC(M) contract complexity.
- Ineffective under-scoping, scheduling and under-resourcing decisions.
- Ineffective execution of the EPC(M) contract.
- Low probability of achieving contract’s KPIs.
- Negative return on investment.
- Low level of engagement and job satisfaction.
Level of decision making capability of a EPC(M) contract manager is HIGHER THAN the level of EPC(M) contract complexity.
- Ineffective under-scoping, scheduling and under-resourcing decisions.
- Low involvement and control from a manager.
- Ineffective contract execution.
- Average probability of achieving contract’s KPIs.
- Minimal return on investment.
Level of decision making capability of a EPC(M) contract manager is HIGHER THAN the level of EPC(M) contract complexity.
- Ineffective under-scoping, scheduling and under-resourcing decisions.
- Low involvement and control from a manager.
- Ineffective contract execution.
- Average probability of achieving contract’s KPIs.
- Minimal return on investment.
EPC(M) Contract DEFINITION
Objective: ensure that the employees with right level of capability are accountable for identifying the EPC(M) contract benefits and planning their realisation.
The largest (32%) contributor to project failures is poor estimation during the planning phase.
EPC(M) Contract Work Complexity.
- Identify the contract benefits to be achieved.
- Describe the contract work / tasks required to deliver the benefits.
- Measure the complexity level of the contract.
- Identify the tasks required to define the contract definition plan.
- Measure the complexity of the contract definition tasks.
EPC(M) Contract Definition Team.
- Form the team capable of defining the EPC(M) contract effectively. Key team members: contract leader, contract owner, contract sponsor.
- The capability of the contract leader matches the complexity level of the contract.
- The capability of the contract owner is one level higher than the contract complexity.
- The capability of the contract sponsor is two levels higher than the contract complexity.
- The capability of the contract definition team members must match the complexity of the contract definition tasks assigned to them.
- Assign some of the critical contract definition accountabilities and authorities:
- Decide on contract benefits, contract scope, contract outputs, contract resources, contract cost, contract schedule, contract leader, contract team, etc.).
EPC(M) Contract Definition Risk.
- Contract Definition risk is the probability of poor EPC(M) Contract definition decisions (benefits identification, scoping, resourcing, scheduling) as a result of mismatch between the complexity of the contract definition work and the capability of the contract definition team.
- Contract Definition risk can cause poor contract benefits identification (over-optimistic or over-pessimistic on the benefits).
- Contract Definition risk can cause the contract to be under-scoped (scope risk), under-resourced (resource risk), or to have an inadequate completion time (schedule risk).
EPC(M) CONTRACTOR MANAGEMENT
Objective: ensure that the company that owns the contract work (contractee), mitigates the loss of the contract value from the work allocated to a contractor.
Contractor Work Complexity by Contractee Company.
- Contractee decides on the scope of the contract to be contracted out.
- Contractee measures the complexity level of the work contracted out.
Contract Owner by Contractee Company.
- Contractee assigns accountability to a capable internal contract owner to manage the contract with full contract-management authority.
- Contract owner in the contractee company must have applied capability level that is one level higher than the complexity of the contract.
Contract Manager by Contractor Company.
- Contractor appoints the contract manager to manage and deliver the contract.
- The capability level of the contract manager must match the complexity level of the work contracted.
- Contract owner from the contractee company may veto the selection of contract manager (CM) when the CM’s capability does not match the level of complexity of the contract.
Contract Team by Contractor Company.
- The Contractee Company needs to ensure that:
- The contractor company has practices in place to ensure the people feasibility of the contract.
- The contract team assembled by the contractor company passed the contract people feasibility assessment.
- Contract People Feasibility key requirements are:
- Contract organisational structure does not have gaps and compressions in the levels of managerial accountability for the contract work performed.
- Complexity of contract tasks is matched with the capability of contract team members accountable for them.
- Contract managers have full managerial accountabilities and authorities.
Contact Management by Contractor Company.
- The Contract Owner in the contractee company needs to ensure that the Contract Relationship Management between the Contractee and EPC(M) Contractor’s ContractTeam are set up.
- There are 7 types of Contract Relationship Management that must be set by the Contract Owner:
- Contract Advisory relationship, Contract Coordinative relationship, Contract Collateral relationship, Contract Monitoring relationship, Contract Service Getting / Giving relationship, Contract Auditing relationship, Contract Prescribing relationship.
EXECUTE BENEFITS – EPC(M) Contract EXECUTION
Objective: ensure that the employees with right level of capability are accountable for executing EPC(M) Contract tasks and delivering the contract outputs.
Average Project Success Rates:
- 39% of all projects succeed (delivered on time, on budget, and with required features and functions).
- 43% are challenged (late, over budget, and/or with fewer than the required features and functions).
- 18% fail (either cancelled prior to completion or delivered and never used).
- 2.5% of companies successfully complete 100% of their projects.
- 70% of companies report having at least one failed project in the last year.
Contract Roles.
- Number of levels in the contract organisational structure matches the level of contract complexity.
- Complexity levels are measured for contract stages and contract tasks.
- Critical contract tasks are identified.
- Contract tasks are assigned to contract roles.
- The complexity level of contract roles is measured.
Contract Capability.
- Capability profiles are developed for contract roles (decision making capability, skilled knowledge, required behaviours, etc.).
- The capability level of the contract members matches the complexity level of the contract roles they are accountable for.
Contract Compensation.
- Different levels of contract work complexity have different compensation levels (levels, grades, bands, steps).
- Contract roles at the same level of work complexity have the same level of contract compensation.
Contract Leadership.
- Managerial contract roles (with subordinates) have full contract managerial authority and accountability.
- Managerial contract roles deliver 10 contract managerial leadership practices.
- Managerial contract roles add value to their subordinates (one level higher in capability and complexity than their subordinates).
Contract Teamwork
- Every contract role has clear authorities and accountabilities within cross-contract Task Initiating Role Relationships.
- 7 possible types of cross-contract Task Initiating Role Relationships (internally) with 6 types applicable between Contractee and Contractor.
SUSTAIN BENEFITS – EPC(M) Contract OPERATIONALIZATION
Objective: ensure that the changes delivered by the contract (contract team) are handed over to the employees of the right capability in the operations to sustain the benefits and realise contract ROI and all the planned benefits.
Only a fifth of projects are consistently delivering on their ROI and planned benefits.
EPC(M) Contract Handover Complexity.
- There are 8 levels of contract handover complexity.
- The complexity level of contract handover is measured.
Contract Output Standardization.
- Outputs / changes delivered by the contract (contract team) must be standardized for the operations team of the contractee company to apply and embed the contract’s outputs consistently.
- The outputs must be incorporated in the following elements:
- Policy, procedures, standards, guidelines; Management operating system (Planning, control & monitoring, analysing, reporting); Resourcing (finance, technical, information, labour demand); Training (competency maps, training content); Auditing (risk management, behaviour compliance); Benefits realisation control & monitoring.
Contract Operationalization Team.
- The outputs / change delivered by the contract must be handed over to the operations team effectively organised to sustain the contract outputs and benefits:
- The complexity level of operations team must match the level of handover complexity.
- No gaps and compressions in the team’s structure.
- No gaps and compressions in the team’s managerial authorities and accountabilities.
- Contract outputs are reflected in the change of role accountabilities.
- Contract outputs are reflected in the change in horizontal working accountabilities and authorities.
- Contract outputs are reflected in the change of felt fair pay.
- Contract outputs are reflected in the change of work complexity.
- The capability level of operations team members matches the complexity of the roles.
ACCEPT BENEFITS – EPC(M) Contract RELATIONSHIP MANAGEMENT
Objective: ensure that the outputs and benefits delivered by the EPC(M) contract are accepted by the key stakeholders and sustain or enforce the Contract Relationship Model as positively balanced.
75% of project failures were attributed to poor communication with key project stakeholders.
Contract Relationship Model.
- Contract key stakeholders (unions, employees, communities, government, etc.).
- Defining the support expected from key stakeholders for every contract benefit (Time, Context, Action, Target).
Contract Relationship Assessment.
- Three factors of stakeholder’s acceptance in regard to the contract and benefits are assessed using a specific set of constructs:
- Attitude of a stakeholder toward a contract benefit (advantages, disadvantages, likelihood and desirability).
- Social pressure on a stakeholder to accept a contract benefit (sources of social pressure (individuals or groups), their approval and disapproval of contract benefits, importance of source of social pressure for a stakeholder).
- Motivation to accept contract outputs and comply with them (enablers of acceptance, inhibitors of acceptance, their likelihood and their impact on a stakeholder).
- Development of an assessment tool to measure positive / negative intention of stakeholders to support the contract benefits.
- Intention to support contract benefits ranges from -63 to +63.
- Negative intention to support one or more contract benefits by project stakeholders must be improved by working on three factors of stakeholders’ acceptance.
Contract Relationship Improvement.
- Improvement plan to be developed and approved to change intention to support contract benefits from negative to positive score.
- Improvement plan is monitored and relationship assessment performed on a regular basis to track changes in contract benefits acceptance.
Interested to know more about Requisite EPC(M)©?
Workshop on Requisite EPC(M)©
- For companies who have issues with the current projects and EPC(M) contracts (time & cost overrun, unsatisfactorily quality) and would like to understand the causes of failure and improve.
- For companies who are planning to embark on the EPC(M) contract and would like to do it right from the start.
- For companies who struggle to ensure effective EPC(M) contract and contractor management.
- For EPC(M) contract managers who would like to ensure that the EPC(M) contracts they are accountable for are delivered with the expected results.
- Project managers accountable for the projects and EPC(M) contracts.
- Project teams and EPC(M) contract teams.
- Explain the fundamentals of Requisite EPC(M)©.
- Educate managers on how to ensure EPC(M) contract people feasibility at every stage of EPC(M) contract management and contract benefits management.
- Assess the current approach to EPC(M) contract people feasibility.
- Identify gaps in the people feasibility of current EPC(M) contracts.
- Develop action plans to improve contract people feasibility.
- 3 day workshop.
- EPC(M) Contracts.
- Project & contract plans, if they exist.
- Project & contract organizational structure, if it exists.
- Contract management process / procedures, if they exist.
- ROII’s advisors with experience in RO implementation worldwide.
- Moderators with years of EPC(M) management experience.
- At your premises.
- At our premises or premises of our partners across the globe (UK, Sweden, USA, Australia, Canada, Moscow, etc.).
Interested in improving the people feasibility of your EPC(M) contracts?
Requisite EPC(M)© Assessment
- Select the project for detailed Requisite EPC(M)© assessment.
- Identify the stage of the EPC(M) contract selected for assessment.
- Evaluate the people feasibility of the contract depending on the stage of the contract.
- Identify the gaps in the contract people feasibility.
- Map key contract stakeholders.
- Define the support from contract stakeholders for contract benefits.
- Identify the acceptance of the contract’s benefits by key contract stakeholders.
- Develop the actions to improve the contract people feasibility.
- Up to 3 weeks (depends on the contract scope and contract stage).
- 2 experienced Requisite Advisors (depends on the scope).
- Method to measure contract complexity and contract task complexity.
- Methods to evaluate contract people capability.
- Contract teamwork management.
- Contract compensation system.
- EPCM contract management.
- Contract leadership practices.
- Contract relationship management.