The importance of original equipment manufacturer’s guidelines in EPC Contracts

Your EPC Contractor should be very good at carrying out the facility’s E, the P and the C.  They should be able to design the facility, procure the equipment necessary and then manage the construction thereof.  They are not necessarily experts in the the manufacture, storage, handling, installation and operation of complex electronic equipment.  Or even of basic structural steels.  They will be procuring from the experts (or they should be at least).

What this means is that someone else, the original equipment manufacturer (OEM) has gone to the trouble of thinking about how the equipment should be handled, and what some things should and shouldn’t be done around or to this equipment.  They should have written this up very nicely in an installation manual or something similarly named.  There are often links between the requirements set out in these manuals and the warranties that the OEM provides on the equipment.

If the equipment malfunctions and the OEM can point to a requirement in the manuals and say “you didn’t do what we listed” they may be well within their rights to say that the warranty is no longer valid.

If the warranty is voided, the EPC may be required, under the warranty obligations in the Contract, to pick this warranty up themselves, but OEM’s should have a bunch of money set aside for warranty claims, or they may be able to make good on the equipment using their skill and knowledge of how to remediate malfunctioning equipment.  Again, the Contractor is unlikely to be an expert in this, and may approach a rectification task like a cat with a welding torch.  i.e. not well.  They may also not have the kind of money to replace the equipment if there is a facility-wide malfunction.

So how do you avoid burnt fur and angry felines?  Make sure that the Contractor is required to source all of the relevant manuals from the OEM’s and that they are obliged to comply with these.  This should be set out in the Contract, but it is very much recommended that the Employer is aware of the content of these manuals, and that they can spot any non-compliance.  If this is observed, the Contractor will be violating the requirements of the contract, and perhaps this can be avoided going forward, before any damage is done and some paws have been scorched.

Things that are in these manuals:

• How should the equipment be packaged for transportation?
• How should the equipment be hoisted and moved?
• What are the suitable environmental conditions for transportation, storage and operation?
• Are the Contractor’s choices, in terms of the method of transportation, the layout of the laydown facility and the overall facility’s design in compliance with these environmental considerations?
• How should the equipment be installed – are there any specific checks that need to be done, or should any activities take place in a specific sequence?
• Is there any specific action that should be avoided? (such as making onsite modifications to the equipment, like cutting through a galvanising layer on structural steel)
• How should the equipment be commissioned and tested?

They seem pretty obvious when you read them in the manuals, but keep in mind that not everyone will be aware of the requirements, and time constraints may lead people to cut corners.  These cut corners can have an enormous impact if an OEM says that the latest corner cut was cut too fine.