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BoT Application

The document discusses various project delivery methods for infrastructure projects including Build-Operate-Transfer (BOT), Engineering-Procurement-Construction (EPC), Private Public Partnership (PPP), design-build, and turnkey contracts. It provides details on what each method entails, the associated risks, and advantages and disadvantages. The document recommends that BOT/EPC/PPP contracts not be used by employers who are ignorant of the basic parameters of a project and that conventional contracting methods are often the best option.

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Prabudh Bansal
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250 views14 pages

BoT Application

The document discusses various project delivery methods for infrastructure projects including Build-Operate-Transfer (BOT), Engineering-Procurement-Construction (EPC), Private Public Partnership (PPP), design-build, and turnkey contracts. It provides details on what each method entails, the associated risks, and advantages and disadvantages. The document recommends that BOT/EPC/PPP contracts not be used by employers who are ignorant of the basic parameters of a project and that conventional contracting methods are often the best option.

Uploaded by

Prabudh Bansal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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APPLICATION OF

EPC/BOT/PPP CONTRACTS

By
Engr. M. Mazhar-ul-Islam
Convener
PEC Act & Byelaws Committee
 Build Operate and Transfer (BOT )
 Engineering Procurement and Construction
(EPC)
 Turn Key
 Private Public Partnership (PPP)
 Design and Build
 Acronym BOT stands for Build Operate and
Transfer; and includes the family:
 BOO-Build Own and Operate
 BOOT-Build Own Operate and Transfer
 BLT-Build Lease and Transfer
 BTO-Build Transfer and Operate
 ROO-Re-habilate Own and Operate
 Generally apply for infrastructure projects
 Financing arranged by Project Company
 Concession Agreement is special feature
 A mode of investment
 Transfer to owner after Concession period
 Project Company Build Risks
 Detailed design, specifications by Company
 Mainly by public sector but also by private sector
 Entails higher cost
Risks:
Political Risk:
The possibility of dramatic over night political change in the developing countries
Technical Risk:
Construction problems, like unforeseen soil conditions
Financing Risk:
Foreign exchange rate risk, interest rate fluctuation, market risk (change in the
price of raw materials), income risk (Cash flow forecasts are overoptimistically) ,
cost overrun risk
 EPC stands for Engineering, Procurement and Construction
 EPC contractor design the project, procure materials & services and construct
as a total responsibility
 Price is fixed except for variations or other stated conditions, if any
 Turnkey completion is associated with EPC contract
 The EPC contractor may hire several sub-contractors/ sub-vendors to
complete different portions of the project
 Suitable for technically advanced financially strong nations-EU model
 Consortium of contractors and consultants can jointly undertake EPC contact
 Owner’s supervision skill require
 Entails higher cost
 Good understanding of EPC model by contractor
 Multiple skills and broad range of experience
 Strong design development capability
 Clear performance specification
 Well established standards for facilities
 Fairly standardized design
 Reliable costing with reference to verify
 Facilitate less experienced employer with limited supervision capability
 EPC gives the owner one point contact
 Easy to monitor & coordinate
 Ensure efficiency in design and construction process
 Reduces project completion time
 Owner is not affected by the market rise
 Deliver a complete facility on the Turn of Key
 Often put the reasons for delay
 Contractor made specification becomes rigid
 Contractor compromise quality for fixed price
 Involve high risks
 Generally cost higher
 Design option limited with contractor
 Public–Private Partnership (PPP), P3 or P3 is partnership between public
sector entity and private entity
 A mode of investment dependent of Internal Rate of Return (IRR)
 PPP is fundamentally a BOT mode and also with EPC mode
 PPP keep employer’s involvement with private resources
 Section 8 of PPP Act is a source of manipulation (If valid comparative bids
are not received, the Government Agency shall negotiate the PPP agreement
with the person who made the unsolicited proposal)
 It is newest slogan with less success stories to mislead transparent
procurement
 In ‘design-build’, one entity performs both design and construction under a
single contract.
 It consists of a procedure to deliver a project where, in contrast to "design-
bid-build" (or "design-tender"), the design and construction aspects are
contracted by a single entity known as the design-builder or design-build
contractor
 Often the ‘design-build’ contract is awarded by some process other than
competitive bidding, it differs from traditional ‘design-bid-build’ in two ways:
1. The design and construction components are packaged into a single
contract
2. The single contract is not necessarily awarded to the lowest bidder after
competitive bidding.
Benefits
 It minimizes the project risks for the employer particularly for complex project
 It reduces the delivery schedule by overlapping the design phase and construction
phase of a project
Drawbacks
 Design-Build does not make use of competitive bidding where prospective builders
bid on the same design
 Criteria to select contractor is

 subjective

 difficult to evaluate

 difficult to justify later

 The design and price selected arouses public suspicion, true or not

 This can lead to loss of public confidence


 BOT/EPC/PPP shall not be contracted by to
employer in ignorance
 Basic parameters of project such as concept
design, design criteria, cost estimate be made
 Project to be planned on time
 Single package large projects to be avoided
 Consultants role to be enhanced for medium and
small packages and integrated supervision
 Conventional method of contracting is best
option

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