Comparison of variations in EPC/turnkey oil and gas projects depending on tender methods

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Megaron, vol.18, no.2, pp.263-273, 2023 (Peer-Reviewed Journal) identifier

  • Publication Type: Article / Article
  • Volume: 18 Issue: 2
  • Publication Date: 2023
  • Doi Number: 10.14744/megaron.2023.45077
  • Journal Name: Megaron
  • Journal Indexes: TR DİZİN (ULAKBİM)
  • Page Numbers: pp.263-273
  • Kocaeli University Affiliated: Yes


Variations are inevitable in construction projects. Therefore, owners try to predict potential variations in the project preparation phase and try to adopt the most appropriate project strategies and contract provisions that can help to mitigate variation-related risks. In general, turnkey lump sum contracts are preferred when undertaking large or medium-sized oil and gas projects. These contracts cover the Engineering, Procurement, and Construction (EPC) phases of the project. Once the conceptualisation is completed and the basic engineering design package has been prepared, owners may prefer to award the EPC/Turnkey contract directly (i), or have a front-end engineering design (FEED) study done first, and award the EPC/Turnkey contract afterward (ii), or set up a convertible contract and convert it to EPC/Turnkey after an open book cost estimate (OBCE) process (iii). In this study, after a general overview of the variation concept, the common tendering methods used in EPC/Turnkey oil and gas projects are reviewed. In order to analyse the effects of the tender methods on potential variations, four EPC Lump Sum Turnkey (LSTK) projects which were awarded using different tendering methods, namely single-stage tender (direct EPC) and two-stage tender (OBCE+EPC), are compared. Finally, the frequency and content of the variations are studied according to their tendering methods. The primary findings reveal that the variation ratio experienced in the two-stage tender case is comparatively less than the variation ratio in single-stage tender cases.