Feed Endorsement - A Challenge to Epc Contractor's Engineering Team
Authors: Srivastava Satish K. , Takeidinne Ousama 
Published: November 2012

Majority of Oil & Gas projects pass through phases such as Concept, Front-End Engineering and Design [FEED], Detailed Engineering, Procurement, Construction, Commissioning and Start-up. FEED phase scope generally covers the basic design and engineering of the facilities, development of the layout, vendor inputs for major packages, HSE impact assessment and refines the cost estimates of the conceptual design. The FEED cost estimates are used to obtain required management approvals and also serve as basis to review the proposal of the Engineering, Procurement & Construction [EPC] contractors. The FEED dossier, which is a compilation of basic design and engineering documents, is provided to the EPC contractor to serve as input data for further detailing during the EPC phase and forms a part of contract documentation.

Historically, the EPC contractor scope included performing the detailed design and engineering based on the FEED documents and in case of any conflicts or changes in design philosophy, the issues were referred to FEED contractor for resolution. FEED Contractor's scope encompassed providing process guarantees on the system design and corrective engineering wherever applicable.

More recently, with the emergence of the FEED endorsement concept, a single point responsibility is passed on to the EPC Contractor to be fully responsible for the delivery of the project, meeting all requirements and without any involvement of the FEED contractor. EPC contractors are required to endorse the FEED at the time of bidding and take full responsibility of the project including process guarantees, in addition to the normal warranties / guarantees associated with usual EPC project scope. This concept is quite advantageous in terms of Owner's project execution strategy, however, brings additional challenges and responsibilities to the EPC Contractors.

In essence, the FEED Endorsement requires understanding of the complete design concept and complete verification of design without any face to face interaction with Owner or the FEED contractor. It is worth noting that FEED endorsement requires significant efforts for design verification and includes redoing many basic design activities such as process simulations, system hydraulics and other calculations within a short period. Often, additional requirements get added to the project scope during tender clarifications / FEED endorsement phase enlarging the original scope. Such requirements added through the tender bulletins are generally not engineered and sometimes are not even aligned with FEED documents. Resolution of such issues during tendering stage often remains inconclusive. Since Owners do not generally entertain "exceptions" to the scope of works during bidding stage, contractors have no option except to take an appropriate risk and accordingly price the project.

Owner project teams including Project Management Consultant [PMC] involved during FEED phase do not essentially continue to the bidding / EPC phase. Due to this, the responses to the clarifications raised by EPC contractors are sometimes not consistent with FEED philosophy and are influenced by the new PMC team approach.

Experience further indicates that sometimes the FEED is not complete and many vital design issues resulting from material and corrosion studies, pipeline design studies, critical safety studies etc, are not closed during the FEED stage. Even equipment layouts are without adequate project specific inputs particularly from safety and vendors. The specifications for long lead items which are vital for ever demanding schedules are not well defined to a stage where these can be ready for ordering. The utility packages are found often undersized and require significant re-work during EPC phase. It is impractical for EPC Contractors to fully verify and allow for such short falls during the brief EPC bidding period.

National Petroleum Construction Company (NPCC) is a large EPC contracting company in the region, engaged in executing mega Oil & Gas projects, both onshore and offshore. NPCC have handled many onshore / offshore oil and gas projects and experienced a variety of challenges during FEED verification / endorsement stage.

Based on these experiences, this paper attempts to discuss some of the challenges EPC Contractors face during the FEED verification process and proposes a way forward for effectively handling the same. The paper discusses these issues in detail with some typical examples from the projects executed in the recent past.