Assessing Challenges of EPC Contract delivery system for Railway Projects in Ethiopia
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Date
2015-12
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Addis Ababa University
Abstract
Launching Mega projects, such as railway projects, has many social, environmental,
financial and construction challenges; hence, assessing construction Challenge factors in
the new Ethiopian Railway construction industry is sensitive issues. Therefore, carrying
out a research in this area will have a paramount importance.
For developing countries like Ethiopia with insufficient financial capacity and
inexperience in such Railway projects, Engineering-Procurement and Construction (EPC)
Turnkey contract delivery system is pleasant alternative, where a contractor provides
design/engineering services, procurement for the facility, construction & commissioning
services that also satisfy the lenders requirements for bankability. Even though EPC has
many advantages, there are many challenges encountered.
The research was undertaken to assess the challenges of EPC contract delivery system for
Railway projects in Ethiopia and to recommend possible remedial measures. Accordingly,
intensive literature review was conducted to identify challenge variables from previous
findings, through which numerous challenge variables were identified in global and local
projects with EPC contract delivery system. Consequently, detail analyses were
conducted by collecting relevant data that comprises primary data, through questionnaire
& supportive interview, and secondary data using archival records of the three Railway
projects undergoing.
The Mean Score of each groups of respondents’ response from Employer, Employer’s
representative, Contractors and skilled professionals in the sector were calculated then
Weighted Average of all groups on each variable was calculated to rank them
accordingly. Spearman rank correlation coefficients were used to measure the agreement
and/or difference in ranking between two groups of respondents on each variable.
The most common Challenge variables identified by this research were insufficiently
defined conceptual design & Front End Engineering Design (FEED) by the Employer that
leads to Changes in scope of work and variation orders, Failure of the employer to give
possession of site & to coordinate utility infrastructure authorities for existing and future
planned utilities in the ROW of the project, Incomplete specifications applicable for
Railway projects, and Contractor’s aim to minimize cost by optimizing quality, aesthetics
and design to satisfy the minimum requirement.
Moreover, Construction risk, ROW risk, Design risks of Changes in scope & Variation
orders and Market risks of Price escalation &Exchange rate fluctuation have higher probability of occurrence with highest impact on cost & time. Furthermore, Design not
up to standards, unclear scope of work occasionally occurs but has high Quality impact.
Major recommendations include: The Employer should have to build the capacity of his
technical & managerial staffs for the preparation of conceptual design or Front End
Engineering Design (FEED) and minimize variation orders, well organized and/or well
defined Railway standard specification should be prepared, standard contract award
system and tender evaluation criteria and well organized master plan should be set that
integrates all infrastructures and utilities and clear all obstruction in the Right of Way
(ROW) of the proposed before the contract award.
Finally, I believe that this study will contribute a lot for the successful implementation of
future Railway projects.
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Keywords
Contract delivery System, EPC, Challenge, Risk