Global Journal of Human Social Science, E: Economics, Volume 22 Issue 7

Designing an Optimal Model to Implement and Increase the Profitability of EPC Projects Mehdi Khazaei Abstract- The purpose of this study is to identify the factors affecting on increasing of contractors 'profits of EPC projects and also to estimate the impact of each factor on the increase of contractors' profits. For this purpose, a questionnaire based on the components extracted from previous studies was prepared and sent to EPC project experts. At this stage, the factors affecting on profitability of EPC projects were identified according to the PMBOK standard. Then, the opinion of experts on the importance of each of the factors affecting on increasing EPC contractors’ profits was obtained based on the Likert five-choice range and analyzed using SPSS software. The results show that the timely supply of equipment, avoiding of complex administrative bureaucracy, innovation and use of new technologies, adequate expertise and timely financing have the greatest impact on increasing the profits of EPC contractors, respectively. Keywords: profit; EPC project; innovation; expertise; PMBOK. I. I ntroduction n industrial projects such as the oil industry, power plants and infrastructure projects that are significantly affected by technological developments, the use of new management methods and structures is inevitable. Using the latest scientific achievements in this field, project managers should avoid using inefficient traditional methods so that they can use new methods to carry out their executive projects within a certain time and budget with the desired quality. Choosing the method of doing the project and choosing the most suitable contract is one of the important decisions of the project. Project implementation system refers to a set of processes in which the type of contract, payment method, the scope of responsibility of each party to the contract, how to resolve disputes between project stakeholders and how to distribute and allocate risk over a lifetime are explained. Due to the importance of choosing the right system, in recent years, several methods have been proposed to select the right system. Choosing the right project implementation method can reduce project costs by an average of 5% and project implementation time by up to 30%, and choosing the wrong system to advance projects can lead to problems such as delays, cost increases, disputes and claims in projects. This choice, which is made in the earliest stages of the project, affects all project implementation processes as well as the efficiency of the project implementation stages. The most common contract methods of project implementation are ln-House system, construction management method, Design-Bid- Build system and Design-Build system. From the early twentieth century to the early 1950s, major projects were carried out by architects and engineers involved in the project and managed on their own initiative. In fact, it was in the post-1950s that systematic methods and tools for project management were developed and used (Young, 2005). Along with these changes, the methods of project implementation also changed, partly due to the complexity of projects in the years after World War and the specialization of areas such as design and execution, and part of this was due to the employer's need to exercise more precise controls over the performance of the actors involved in the project. The year 1950 marks the beginning of a new era of project management (Cleland, 2006). Gradually, issues such as cost and time management of the project received special attention, and systems such as the three-factor and four-factor methods for project implementation were formed. Given that the three main actions of the project are financing, design and construction; the five main methods of project implementation are as follows: 1. In-House system: Perform all three main actions within the employer organization. 2. Design-Build system: Financing by the employer and design and construction separately by external unit resources. 3. Design-Bid-Build system: financing by the employer and performing design and construction separately by external separate sources. 4. Construction Management system: financing by the employer, design and construction by separate external sources, coordination between design and construction by another external source. 5. Build-Operate-Tran: Provides all three main actions from a single external source. One of the new methods in project implementation is Engineering, Procurement and Construction (EPC) method, which is also called turnkey method. In this type of contract, the contractor company undertakes and performs the engineering, procurement and supply of all equipment and construction of the project independently or with persons who are on the side of the company (William and Johnson, 2004). In Turnkey or EPC contracts, the contractor is responsible I © 2022 Global Journals Volume XXII Issue VII Version I 59 ( ) Global Journal of Human Social Science - Year 2022 E Author: Sharif University of Technology, Tehran, IRAN. e-mail: mehdi.khazaei1165@gmail.com