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EPC Consortiums: What You Need To Know To Get Started

I am in the midst of preparing for my an upcoming EPC Project Management Course, and what makes this one different from those that I have conducted in the past is that I will be adding a segment where we cover Program Management in a consortium setup.  By consortium I mean one of those projects where two or more companies/organizations come together to complete a project.  Believe it or not, there are common and best practices for EPC projects that are executed in a consortium setup where strong program management skills are required.

But first we need to answer the question, why do companies go into a consortium setup to execute an EPC project?

Mainly because EPC projects are technically challenging and typically have a substantial financial burden which can be too heavy to bear by just one company.  Especially if this one company has only a specific expertise or smaller financial background. There are many possible ways for setting up a consortium. It can be a loose network based on a Memorandum of Understanding (MOU) or it can be a standard FIDIC contract as a joint venture agreement. Oftentimes, an organization’s bank can come in and request specific agreements or guarantees based on what they feel would be a lower risk.  After all, banks are all about risk-assessment.  Regardless which route you take to set up your EPC Project Consortium and have signed all the contracts, the next phase can be initiated, here is where program management skill can come in handy.

Program management can start even before the contracts are signed for the consortium.  This is to ensure the project is set up correctly and with the necessary program risk management, stakeholder management and scope management to ensure each party is clear where the risks are and what scope they need to deliver and execute. Of significant importance in this kind of project setup are the technical, operational and commercial interfaces which needs to be clarified as soon as possible.  After all, you don’t want a company within your consortium who suddenly doesn’t want to fulfill their job scope that they agreed upon verbally (boy that’s a headache).  These job scopes will need to be managed very well throughout the project.

In such a multidimensional project setup, it becomes a program which needs to be coordinated and managed from the beginning to the very end of the project closing. It is advisable to have a project manager for each party/organization and major component, depending on the size of the project. Throughout the duration of the project, the program manager, which is appointed by the consortium to lead the entire program and coordinate each project within the consortium, has the overall responsibility for the system integration and overall coordination which often includes leading the consortium committee.

To lead such a program, it takes an experienced project director who has the necessary skills. What do you think the requirements of the project director would be in order to run a large-scale EPC Consortium?  How would you elect this person to be the program manager of the whole project?  While normally I would give my own thoughts, here I am going to ask for yours.  After all, different backgrounds and experiences provide different benefits for everyone.  What is your experience in running an EPC Consortium?

Please leave your creative responses in the comment section below!


Peter Wyss