3.16 Large engineering projects in the process plant sector of construction require detailed design and planning before commitment. The contract strategy may involve performance specifications being issued by the client, evidence being required that contractors have successful experience of a similar project, and possibly a condition that the successful tenderer should operate the plant or product after completion. The managing contractor is likely to offer full Engineer-Procure-Construct (EPC) capabilities. The European Construction Institute, which gave evidence to the Review, both directly and through the CIPS, stressed:-
1. Economies at the design phase will be self-defeating. Designers should not be selected on the basis of price. 10-15% of the total cost of a high technology project should be spent in this phase.
2. Where prototype equipment is involved, it must be identified in the initial stage of the project. Detailed programmes for research, design, testing and manufacture must be produced and monitored by the client. This should all be available before work starts on site.
3. Failure of material flow to the site or design changes can lead to unmanageable situations. Designs should be frozen and fully developed before the manufacture and site construction begins.
4. A "key date" procedure for discussing cash flow and resources at a very high level is vital every three months or so, as well as normal project progress meetings. Payments should be made properly and on time, provided that milestones have been achieved. The Project Manager should also be aware of whether the main contractor is paying the subcontractors on time, so as to prevent problems on site.9
3.17 Effective partnering between client and contractor with teamwork and a "win-win" approach helped to bring the Sizewell nuclear power station to completion on time and within budget10 . But that client believes that there is still scope for further improvements in productivity and cost reduction, especially if design and construction teams could be kept together.11
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9 See also "Construction Contract Arrangements in EU Countries", European Construction Institute 1993, which gives valuable case studies ofsuccessful large projects.
10 Speech to the ClPS conference on 30 March 1994 by Mr Brian George, Executive Director, Engineering, Nuclear Electric plc.
11 An interesting study of the UK oil and gas industry was undertaken in 1993 entitled "CRINE" (Cost Reduction Initiative for the New Era). It is concerned with improving performance in oil and gas exploration and production. It makes similar recommendations to those in this Report, such as using standard equipment and simplifying and clarifying contract language and eliminating adversarial clauses. It is claimed in the report that the recommendations will lead to "at least a 30% reduction in capital costs within 2-3 years and to lower operating costs".