Topics: Procurement, Arbitration, Request for proposal Pages: 15 (4666 words) Published: May 13, 2013

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 contractor. • If the scope of the contract is well defined, the potential for significant changes is very low. Without the risk of significant changes, the schedule for performing the work is unlikely to change. In this case, a fixed-price contract is usually the best approach.

The drawbacks of the LSTK EPC contract are:
• It provides less incentive for a contractor to minimize schedule duration than in the case for reimbursable contracts. • Fixed-price suppliers and contractors often minimize quality management activities in order to reduce costs. • Renegotiations of the price might delay the schedule as the fixed-price contractors are reluctant to proceed with any work associated with a change request before resolving the cost of the change.

Q2. Explain the steps that you should follow while evaluating the bids document.

Ans: After you close your competitive bidding process, you can evaluate the bids received and choose the bid that is the most cost-effective. You may consider as many factors in your evaluation as you want, but the price of the E-rate eligible products and services must be included as a factor and must be weighted more heavily than any other single factor. Remember that your FCC Form 470 and your Request for Proposals (RFP), if you issued one, must both have been publicly available for the same 28-day period as the FCC Form 470 before you can close your competitive bidding process.  If you received one bid, and that bid is cost-effective, you should memorialize that fact with a memo or email for your records. If you did not receive any bids, you can solicit bids. If you currently receive service from a service provider, you can ask your current provider to submit information in response to your FCC Form 470. Constructing an Evaluation

 To evaluate the bids you receive, you must construct an evaluation. You decide what factors you want to consider in your evaluation and how important each factor is to you. You can...
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