Risk Analysis on the Equipment and Material Procurement Process of Engineering, Procurement, and Construction (EPC) Projects

Abstract

Equipment and material non-compliance with the project requirements is one of the issues causing delay in large EPC projects as rework actions are inevitable. Detecting and controlling the potential risks at the procurement process of equipment and material can be done to anticipate this issue. This study aims to identify the major risks and recommend the response strategies to the equipment and material non-compliance by adopting a quantitative method through expert validation using Delphi method, questionnaire surveys, and risk analysis, as well as qualitative method through benchmarking study and interview with experts. The result of this study shows that lacking in the inspection of requirement, complete Request for Quotation (RFQ) information, contract term verification, fixed design requirements, attention to Purchase Order (PO) review, supervision to engineering design and drawing, and proper fabrication procedure are major risks that can potentially cause non-compliance. Improvement in communication between stakeholders and supervision to ensure the conformity with specifications are considered as the key elements in mitigating the identified major risks.