How difficult is it for “construction general contracting” to transform into “engineering general contracting”?

The government is trying its best to promote the general contracting mode, but the current situation of the general contracting of construction is mostly the general contracting of construction, even the general contracting of civil engineering, which is far from the general contracting of engineering

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Today we mainly discuss six questions: what will be the future market of EPC? What are the general contracting modes? At present, the enterprises engaged in EPC can be roughly divided into the following categories: what is the current situation of construction enterprises engaged in EPC? There is no doubt that the spring of EPC mode is coming

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From the government’s policy context, we can roughly see the trend of EPC

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After 30 years of long-term exploration, China’s construction mode is undergoing profound changes

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However, the understanding of construction enterprises is still in the primary stage, which can be confirmed from several aspects: 1

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There are not many EPC projects in construction enterprises: Although we can not get accurate statistical data to confirm this conclusion, compared with the international market, the separation of the value chain of China’s construction industry has caused the long-term failure of design procurement construction The separation of engineering and construction leads to the lack of understanding of the advantages of general contracting in China’s construction market for a long time

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The owners, design units and construction units do not trust each other and cannot cooperate

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The owners care about the cost of the construction stage and ignore the cost of the whole life cycle of the project

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The design units charge fees according to the cost proportion and do not pay attention to the reasonable cost of the project

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The construction units follow the plan Some people sum up the current situation of China’s construction industry as follows: before winning the bid, the general contractor is forced to sub contract seriously; after winning the bid, the design and construction parties are constantly changing, and the additional investment is serious; the low-level vicious competition is fierce, the market is chaotic, corruption is frequent, and problems are prominent; and the general contractor can achieve “buy it now, turn the key, turn the key.” It is difficult to realize the law of encouraging engineering enterprises to “spend their own money, do their own business, save and stress efficiency” in such a mode with obvious economic and social benefits, which is contrary to the economic law

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2

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There are not many enterprises with engineering general contracting ability: at first, it seems that the development of engineering general contracting business is the problem of chicken or egg first; because there is no general contracting business, it is difficult for engineering enterprises to have the general contracting ability; on the contrary, due to the lack of such ability, it seems that Party A is difficult to trust and adopt such a mode for engineering contracting; There is no doubt that the two promote each other in engineering practice

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However, for China’s construction enterprises, it is not the chicken or the egg that needs to be considered first

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The key is that there are such chickens in foreign countries who can do general engineering contracting

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They already have considerable experience, technical advantages, management ability and mature team, and do not need to wait for the eggs to hatch

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Our reality is very clear Cruel, in the eight central construction enterprises, the subordinate enterprises have design ability, construction ability, and even some enterprises have the manufacturing ability of core equipment, but they still lack the general contracting ability

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Why? Lack of organization coordination, effective internal operation and practical project training of general contracting can not reflect the advantages of general contracting mode

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3

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Few professionals are familiar with the general contracting business: if the survey and design industry gave birth to the earliest general contracting business, they also cultivated the earliest talents in the general contracting industry

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However, most construction enterprises still lack such talents

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Even the domestic construction enterprises with tens of billions of business scale can do the general contracting business It can be predicted that in the future, construction enterprises will need to introduce a large number of talents from survey and design general contracting enterprises to engage in general contracting business, which will certainly promote the integration between design enterprises and construction enterprises

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4

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Few engineering enterprises have the core competence of EPC: in the strategic planning of many construction enterprises, we can see the determination to promote EPC

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On the other hand, it also reflects the weakness of the current enterprise’s EPC capability

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EPC business needs the integration of technical capability, management capability, information system support, matrix organization mode, investment and financing There is a huge difference between having a single ability and a comprehensive ability of multi-faceted integration

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How difficult is it for construction enterprises to transform to EPC? For the domestic construction enterprises, the general contracting mode puts forward higher requirements for the construction enterprises in terms of technology, preliminary planning and comprehensive management

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The traditional construction enterprises are accustomed to follow the plan, and it is not easy to transform to the EPC mode

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So, how difficult is it for traditional construction enterprises to transform to EPC mode? From the perspective of project value chain, under the general contracting mode, the general contractor should complete all the work from design to construction (see Figure 1)

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At present, the strength of construction enterprises in engineering design is still very weak

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Even if there are mature design institutions in some large-scale construction enterprises, due to the influence of many factors such as the centralization degree of enterprise organization and management, internal coordination ability and so on, it is difficult to effectively integrate the internal resources of enterprises and undertake the important task of completing the whole work of engineering construction

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Figure 1: engineering project value chain in foreign countries, the EPC business model of the general contractor, with the ability to match the business, these capabilities are mainly reflected in the following aspects: first, the company’s main source of income is to provide engineering construction services for owners, including general contracting and project management

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With the support of the strong management ability of the general contractor, these engineering contractors have the conditions to subcontract the work of the specific operation level, and can effectively manage the subcontractors

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Second, the company is usually fully functional and can provide the whole process services, including m (Project Management), e (Design), P (Procurement), C (construction), t (start-up service), etc

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Even if there are some tasks that can not be completed by themselves, they can also rely on strategic partners to complete the relevant work

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Third, the company is a technology integrator, whose ability is reflected in the integration and processing of knowledge and technology through efficient management

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These companies not only have a large number of technical personnel, but also have a large number of management personnel

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Fourth, the main business of the company is to provide engineering project construction services, and the organization and operation of the enterprise is centered on project management

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Therefore, the efficient and high-quality management of engineering projects is the guarantee of profitability

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The organization design of the company often adopts the matrix model to meet the needs of project management, and the perfect project management system ensures the efficient operation of the project

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Fifthly, the company’s financing ability is one of the components of its competitiveness in engineering projects

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The financing ability of most companies is mainly manifested in: the ability to assist the owners to obtain financing from the government, banks and other financial institutions; the ability to form a project company alone or jointly with investors to undertake BOT and other projects; the ability to provide working capital for the undertaken projects, and so on.

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