LS vs LSTK EPC

[ChuckFreeny]

My background is project management for hydrocarbon processing facilities/major oil companies/owner's rep. I am looking for some authoritative documentation which illustrates the differences between a LS contract for Engineer-Procure-Construct phase and a LSTK (turn-key) contract. The terms get thrown around fairly loosely sometimes, but my understanding has always been that true turn key was something not seen all that often with major oil companies, though definitely used by some independent Asian owner companies especially in the realm of chemicals plants.

I am looking for a definition/discussion of the difference in obligations, and responsibilities, and execution requirements. Opinions are welcome, but if someone can point me to a place I can get the written word on these two contract types I would be very appreciative.
Chuck

 

[jbarba]

You might want to try Construction Industry Institute (CII) Austin Texas or the Corps of Engineers/US Govt contracting defintions.

I'd be interested in where you get an official definition. Every company that I worked with have their own detail definition and that LS and LSTK generally imply the extent of involvement in construction and operations.

From my experience, LS contracts are just that - you have total cost responsibility to perform the scope of work. That might include pre commisioning, startup, performance testing etc. in addtion to tradition engineering, procurement and construction.

LSTK is a narrower description that fundamentally follows the LS approach except to clearly indicate that there is a "starup and operational" component for the contract. Ultimately the scope of work will define just exactly what is needed.

If you need someone to assist in responding to an LS or LSTK inquiry, please contact me.

Hope this helps.

Joe

Joe Barba
Grandview Consulting, LLC
973 226 4935
grandviewconsult@aol.com

 

[Ali1966]

Chuck

I hope this could help:

Fixed Price Contracts- A generic category of contracts based on the establishment of firm legal commitments to complete the required work. A performing contractor is legally obligated to finish the job, no matter how much it costs to complete. Risks of all cost growth rest on the performing contractor.

Turnkey- A form of contract in which a facility or equipment is to be designed, built, supplied, or installed complete and ready for operation.

http://www.pmforum.org/library/glossary/

Regards,

Ali