Contracting model of engineering projects:

1. Engineering general contracting (EPC)

2. Project management contracting (PMC) model

3. Design-build (DB) model

4. Parallel contracting (DBB) model

5. Construction management contracting (CM) model

6. Build-operate-transfer (BOT) model

7. Public sector-private partnership model (PPP)

The advantages and disadvantages of various contracting models:

1. Engineering General Contracting (EPC)

1) Advantages:

The owner entrusts all the design, procurement, construction and start-up services of the project to the general contractor. Organization and implementation, the owner is only responsible for the overall, principled, and targeted management and control. The general contractor can exert more subjective initiative and use its advanced management experience to create more benefits for the owner and the contractor themselves; improving work efficiency. , reducing the coordination workload;

The design is reduced and the construction period is shorter;

Since the lump sum contract is adopted, there is basically no need to pay claims and additional project costs; the project There is a greater degree of certainty about the final price and required duration.

2) Disadvantages:

The owner cannot control the whole process of the project;

The general contractor is responsible for the cost, schedule and quality of the entire project, which increases the overall burden of the project. The risk of the contractor. In order to reduce risks and obtain more profits, the general contractor may adjust the design plan to reduce costs, which may affect the quality in the long term;

Since a lump sum contract is adopted, Contractors have little flexibility to obtain owner change orders and additional fees.

2. Project Management Contracting (PMC) model

1) Advantages: It can give full play to the professional skills of the management contractor in project management, and coordinate and manage the design and construction of the project in a unified manner , reduce conflicts;

It is conducive to saving investment in construction projects;

This model can optimize the design of the project and achieve the lowest cost within the life of the project;

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While ensuring excellent quality, it is helpful for the contractor to obtain shares or income distribution rights in the future of the project, which can shorten the construction period. In high-risk fields, the method of shareholding is usually used to stabilize the team.

2) Disadvantages:

The owner’s participation in the project is low, the right to change is limited, and coordination is difficult;

The owner’s great risk lies in whether he can choose A high level project management company. This model is usually suitable for large-scale projects with a project investment of more than US$100 million. For projects in countries and regions that lack management experience, introducing PMC can ensure the successful completion of the project. At the same time, we help these countries and regions improve their project management levels. Projects constructed using bank or foreign financial institutions, consortium loans or export credits. It is a huge project with many and complex process devices and the owner is not familiar with these processes.

3. Design-Build (DB) model

1) Advantages:

The owner and contractor work closely to complete project planning until acceptance, reducing coordination time and cost;

The contractor can integrate its knowledge and experience of materials, construction methods, structures, prices and markets into the design at the early stage of participation;

It is conducive to cost control, Reduce cost. Foreign experience has proved that the implementation of DB model can reduce the cost by about 10% on average;

It is conducive to progress control and shorten the construction period;

Single risk responsibility. Generally speaking, the contractual relationship of a construction project is the relationship between the owner and the contractor. The owner’s responsibility is to pay according to the method specified in the contract. The general contractor’s responsibility is to provide the products required by the owner on time. The general contractor is responsible for the project. Take full responsibility for the entire construction process.

2) Disadvantages: The owner has low control over the final design and details.

The contractor's design has a great impact on the economics of the project. Under the DB model, the contractor bears greater risks; construction quality control mainly depends on the quality of the owner's functional description when bidding, and the level of the general contractor has an important impact on the design quality. It has a greater impact; it has been around for a short time, lacks specific laws and regulations, and has no specialized insurance; the delivery method is complex and less competitive.

4. Parallel contracting (DBB) model

1) Advantages: The advantages are that the management method is relatively mature, all parties are familiar with the relevant procedures, and the owner can freely choose to consult designers , the design requirements can be controlled, engineers can be freely selected, and standard contract texts familiar to all parties can be adopted, which is conducive to contract management, risk management and investment reduction.

2) Disadvantages:

The project cycle is long, the owner signs contracts with the design and construction parties separately, and manages the project by himself, so the management fee is high;

Designed The constructability is poor, and the engineer's ability to control project goals is not strong;

It is not conducive to the division of responsibilities for engineering accidents, and there are many disputes and claims due to drawing problems. This management model is the most common internationally and is used in projects based on World Bank, ADB loan projects and contract conditions of the International Federation of Consulting Engineers (FIDIC). The "project legal person responsibility system", "tendering system", "construction supervision system" and "contract management system" currently commonly used in China basically refer to the traditional models of the World Bank, ADB and FIDIC.

5. Construction management contracting (CM) model

1) Advantages:

In terms of project progress control, since the CM model adopts decentralized contracting and centralized management, Fully connecting design and construction will help shorten the construction cycle; CM units can strengthen coordination with designers to reduce construction delays caused by design modifications; in terms of investment control, by coordinating design, CM units can also help owners adopt Methods such as value engineering provide rational suggestions to the design to tap the potential for investment savings, and can also greatly reduce design changes during the construction phase. If the CM model with GMP is adopted, the CM unit will assume more direct economic responsibility for the control of project costs, thus greatly reducing the owner's risk in project cost control; in terms of quality control, the combination and mutual coordination of design and construction , when new processes and methods are adopted on projects, it will help improve the quality of project construction; the choice of subcontractors is decided jointly by the owner and the contractor, so it is more sensible.

2) Disadvantages: The requirements for the qualifications and reputation of CM managers and their units are relatively high; sub-tendering may lead to higher contracting fees; CM models generally use "cost plus remuneration" contracts, which is The contract template requirements are relatively high.

6. Build-operate-transfer (BOT) model

1) Advantages: It can reduce the government’s sovereign debt and debt repayment responsibilities; it can transfer the risks of public institutions to Private contractors avoid public institutions from bearing all risks of the project; they can attract foreign investment to support the construction of domestic infrastructure and solve the problem of lack of construction funds in developing countries; BOT projects are usually contracted by foreign companies, which will Bringing advanced technology and management experience to the country where the project is located will not only bring more development opportunities to the domestic contractors, but also promote the integration of the international economy.

2) Disadvantages: During the concession period, the government will lose control of the project ownership and operation rights; there are many participants, the structure is complex, the project front-end is too long and the financing cost is high; it may result in a large amount of taxes loss; it may lead to predatory operation of facilities; after the completion of the project, there will be a large amount of foreign exchange outflow; risk sharing is asymmetric, etc. Although the government has transferred risks such as construction and financing, it has assumed more other responsibilities and risks, such as interest rates and exchange rate risks.

7. Public sector and private enterprise cooperation model (PPP)

1) Advantages: Public sector and private enterprises participate together in the initial stage Demonstration is conducive to determining the feasibility of project financing as early as possible, shortening the preliminary work cycle, and saving government investment; it can realize risk allocation in the early stage of the project. At the same time, because the government shares part of the risk, the risk allocation is more reasonable, reducing the risks of contractors and investors. This reduces the difficulty of financing; private companies participating in project financing are involved in the early stage of the project, which is conducive to the introduction of advanced technology and management experience by private companies from the beginning; public departments and private companies participate in construction and operation simultaneously, Both parties can form mutually beneficial long-term goals and better provide services to society and the public; integrate all parties involved in the project to form a strategic alliance, which plays a key role in coordinating the different interests of all parties; the government has certain control rights.

2) Disadvantages: For the government, how to determine the cooperative company increases the difficulty for the government, and it must bear certain responsibilities in the cooperation, which increases the government’s risk burden; the organizational form is relatively complex and increases This increases the difficulty of management coordination; how to set the rate of return for a project may become a controversial issue.