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Master of Business Administration (MBA) Assignment

Name: Sandeep Shivram Kadav

Registration Number:521153282

Learning Center Name: 1976-Halo Technologies & Training Pvt. Ltd.

Learning Center Code:1976



Subject:Contracts Management in Projects

Set No: PM0018

Date of Submission at the Learning Center: 15 May 2013.

Marks Awarded:

Directorate of Distance Learning
Sikkim Manipal University
II Floor, Syndicate Building
Manipal – 576 104

Signature of the Coordinator Signature of the LC Signature of Evaluator

Halo Technologies and Training Pvt. Ltd. || 65260303 || 9870050750 || academics@halo.co.in

Q1. Enumerate the characteristics and legal issues of LSTK EPC Turnkey contracts
Ans: Lump-sum turnkey (LSTK) EPC contracting is now popular world-wide as a project delivery system for large process and power facilities. Examples are steel mills, LNG facilities, petroleum and petrochemical facilities and power plants. It is also being adopted for large infrastructure developments such as airports, water treatment facilities and telecommunication systems. While the term LSTK implies a fixed price for the whole contract, you must understand that several variations of the EPC mode of contracting are in vogue. The contract price issue can however vary from „fixed price‟ to a „hybrid price‟. LSTK EPC contracts offer the following benefits:

• It fulfills the primary expectation of a single point of responsibility (SPR) for all facets of project. You (owner) can transfer more risk to the EPC contractor, understanding that this risk allocation carries a higher price tag. Examples of some risks that can transferred to contractor in a EPC contract are: • Contractor should account for existing site conditions (including sub-surface conditions). • Even risk for some force-majeure conditions can be transferred to...
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