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Original scientific paper

https://doi.org/10.2478/otmcj-2020-0020

EPC 4.0: The quest for reducing CAPEX in EPC projects

Reinhard F. Wagner orcid id orcid.org/0000-0003-4821-8423 ; Tiba Managementberatung GmbH, Board of Directors, Munich, Germany


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Abstract

Engineering, procurement and construction
(EPC) business in Europa is increasingly under pressure.
Lack of productivity, low or negative profit margins for
investors, and the lack of adopting necessary innovations
and digitalization—from engineering activities through
operations and maintenance to decommissioning—have
caused significant deprivation of business and competitiveness compared to emerging providers in Asia. The
quest for reducing capital expenditures (CAPEX) in EPC
projects is intensifying. In May 2018, a research project
was started to analyze the situation and key trends
through desk research, to research how the challenges of
the business could be tackled and to derive practical guidance for EPC contractors as well as for investors, owners,
and operators (O/O). The project aimed to propose innovative ways of improving the EPC business model to reach
the next level (“EPC 4.0”). In doing so, lessons learned
from the automotive and aviation industry were considered. A key objective of the research project was to
challenge statements of international EPC experts to cut
CAPEX by 40–50% in EPC projects. With this statement
in mind, the research focused on identifying measures
with potential in six areas: (1) digitalization, (2) partnering, (3) flat supply chains, (4) flexible organizations, (5)
core competences, and (6) the human factor. Summarizing the findings in these areas, the EPC 4.0 project came
to a savings potential of up to 50% of the total budgeted
project costs.

Keywords

EPC; CAPEX; competitiveness; productivity; digitalization; partnering; human factor

Hrčak ID:

243178

URI

https://hrcak.srce.hr/243178

Publication date:

1.2.2020.

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