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Aait, School of Civil & Environmental Engineering ADDIS ABABA UNIVERSITY ADDIS ABABA INSTITUTE OF TECHNOLOGY SCHOOL OF GRADUATE STUDIES Assessing Challenges of EPC Contract delivery system for Railway Projects in Ethiopia A thesis submitted to the School of Graduate Studies In the partial fulfillment of the requirements for Degree of Master of Science (M.Sc.) in Civil Engineering (Railway Engineering) By Biruk Yemane Advisor Wubshet Jekale (Dr.-Ing.) December 2015 AAiT, School of Civil & Environmental Engineering ADDIS ABABA UNIVERSITY ADDIS ABABA INSTITUTE OF TECHNOLOGY SCHOOL OF GRADUATE STUDIES “ “Assessing Challenges of EPC Contract delivery system for Railway Projects in Ethiopia” M.Sc. Thesis By Biruk Yemane Approved by Board of Examiners Wubshet Jekale (Dr.-Ing.) Advisor Signature Fasil Tebeje Internal Examiner Signature Dr. Girmay Kahssay External Examiner Signature ____ Chair Person Signature Assessing Challenges of EPC contract delivery for Railway projects in Ethiopia Page a AAiT, School of Civil & Environmental Engineering DECLARATION I, the undersigned, declare that this thesis represents my ideas in my own word and where others ideas or words have been included, I have adequately acknowledged, cited and referenced the original sources. I have also declared that this thesis has not been presented for a degree in any other university. Name: Biruk Yemane Girma Signature: __________________________ Place: Addis Ababa, Ethiopia Date of Submission: October 05th, 2015 GC Addis Ababa University Addis Ababa Institute of Technology, School of Graduate Studies, School of Civil & Environmental Engineering Railway Engineering Center Title of the Thesis: “Assessing Challenges of EPC Contract delivery system for Railway Projects in Ethiopia” Assessing Challenges of EPC contract delivery for Railway projects in Ethiopia Page b AAiT, School of Civil & Environmental Engineering Acknowledgements I would like to express my deep sense of gratitude to my advisor Dr. Ing. Wubshet Jekale, for his inexorable support, guidance, provides me insight & direction from the beginning of this research in all aspects. This thesis would not have been possible without his extended valuable assistance, energizing motivation, excellent advice and also spending his precious time. I would like to express my appreciation to all questionnaire respondents from contractors, Employer’s Representative and Employer staffs who sacrificed their time in filling the questionnaires and all organizations and individuals who provided the necessary materials and support for realization of this thesis. Especial thanks are forwarded particularly to Kassahun, Shalom Ashuro & Neway for their help while collecting data. I would like to place on record my gratitude to Henon Endale who gave me constant encouragement, without her care and love this thesis would not have been realized. I am indebted to my family, my classmates and friends who supported me. I am also very much thankful to my work cliques & my Company Afro-Tsion Construction P.L.C. for the positive attitude they have towards education and made me felt like the company asset. Finally, I humbly thank the almightily GOD, Good Angels and Saints for giving me good health, wellbeing and strength that enabled me to complete this thesis. Assessing Challenges of EPC contract delivery for Railway projects in Ethiopia Page i AAiT, School of Civil & Environmental Engineering Table of contents Acknowledgements .................................................................................................................... I List of tables ............................................................................................................................ IV Acronyms .................................................................................................................................. V Abstract………….................................................................................................................... VI 1. Introduction .........................................................................................................................1 1.1. Statement of problem ......................................................................................................2 1.2. Research objective ...........................................................................................................2 2. Literature review ..................................................................................................................3 2.1. Introduction .....................................................................................................................3 2.1.1. Delivery system ...............................................................................................................3 2.1.2. Design build vs. EPC vs. Turnkey ....................................................................................4 2.2. Features of EPC contract delivery system .......................................................................8 2.2.1. Common feature with other types of delivery systems but with some modifications ....9 2.2.1.1. Fixed contract price .....................................................................................................9 2.2.1.2. Fixed completion date ............................................................................................... 10 2.2.1.3. Security/ guarantee from the contractor and/or its parent companies ...................... 10 2.2.2. Special features of epc contract delivery system............................................................ 12 2.2.2.1. Single point responsibility ......................................................................................... 12 2.2.2.2. Performance specification & performance guarantees .............................................. 13 2.2.2.3. Caps on liability and design liability on contractor................................................... 14 2.2.3. Higher liquidated damages for both delay & performance and longer coverage period ......................................................................................................................... 15 2.2.4. Restrictions on the ability of the contractor to claim extensions of time and additional costs due to risk transfer ........................................................................... 17 2.3. Challenges of EPC contract delivery system ................................................................. 18 2.3.1. Cost related challenges .................................................................................................. 18 2.3.2. Time related challenges ................................................................................................. 25 2.3.3. Quality related challenges ............................................................................................. 29 2.3.4. Risk ................................................................................................................................ 31 3. Research methodology ....................................................................................................... 35 3.1. The study approach ........................................................................................................ 35 3.2. Data sources ................................................................................................................... 36 3.3. Data collection ............................................................................................................... 36 3.3.1. Primary data .................................................................................................................. 36 3.3.2. Secondary data for case study ........................................................................................ 39 3.4. Data analysis method ..................................................................................................... 40 3.5. Outline of research writing ........................................................................................... 43 Assessing Challenges of EPC contract delivery for Railway projects in Ethiopia Page ii AAiT, School of Civil & Environmental Engineering 4. Analysis of findings and discussion .................................................................................... 45 4.1. General overview ........................................................................................................... 45 4.1.1. Questionnaire response rate .......................................................................................... 46 4.1.2. Informants profile .......................................................................................................... 47 4.1.3. Interview response rate ................................................................................................. 48 4.2. Challenges of EPC contract delivery system for railway projects from questionnaire analysis ...................................................................................................................... 50 4.2.1. Challenges in terms of probability of occurrence .......................................................... 51 4.2.2. Challenges in terms of impact ....................................................................................... 58 4.2.2.1. Impacts of cost related challenges ............................................................................. 58 4.2.2.2. Impacts of time related challenges ............................................................................ 65 4.2.2.3.
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