Innovative Approach to Risk Analysis and Management of Oil and Gas Sector EPC Contracts from a Contractor’s Perspective

Abstract

Engineering, Procurement and Construction (EPC) is an advanced
contracting method in which a single party is responsible to complete all the
components of the project and further commission it and handover to the
client within a predefined cost and agreed timeline. Failure to which, EPC
contractor has to pay heavy penalties. There are many risks for both the
parties in this arrangement. Proper risk analysis and management is very
important for this type of contract which dominates a project’s success or
failure. In this research an effort has been made to identify, analyse and
quantify rationally risks of oil and gas sector EPC projects. For this purpose
a model has been proposed to assess and quantify risks involved in the
process. Proper mitigation measures have also been proposed for all the
critical risks to successfully complete a project from the contractor’s
prospective in the oil and gas sector.