EPCM contract

Investment projects in agroindustry are implemented on the basis of EPCM contract. (EPCM: Engineering, Procurement, Construction, Management).

EPCM contract in agriculture is used to create a high-tech project with a large number of multidirectional business processes with a single responsibility center for the final result.


UNEX Group implements turnkey investment projects in agriculture.

An EPCM contract with the UNEX Group of companies allows you to get:

  • an agribusiness with a guaranteed efficiency of at least 50% and to save at least 50% of the time spent on preparation and realization an investment project;
  • a concessional project financing at a rate of less than 1% per annum for up to 20 years;
  • a state support for innovative projects in the form of irrevocable subsidies up to 50% of the investment project cost;
  • to save at least 50% of time for the investment project implementation


Traditional construction model in the agro-industry – EPC-contract


Direct contact between the customer and the supplier and the contractor requires a large experienced team to manage such projects.


The EPC contract doesn’t remove the following risks:

1.financial and economic risks, the EPC- contractor has no goal to achieve a final result
2. legal security risk, the EPC-contractor doesn’t form the investment project initiator
3. technology process risk, because the EPC- contractor is not a technology supplier.


Traditional model of invest projects implementing in the agro-industry

 


 

Modern (western) model of invest projects implementing in the agriculture


Agricultural construction on EPC-contracts allows the investor to predict the time and financial costs for project implementation due to the performance of the contractor as not only a builder, but also a designer and supplier. It should be noted that the responsibility of the EPC- contractor is limited to the functionality

 

UNEX Group work model in EPCM-projects

 

 


The indicated disadvantages of the EPC-contract removes the EPCM-contract, which is the most preferred option for an investment project in agriculture.


An EPCM contractor is a contractor managing the investment project implementation with a single responsibility center.


An EPCM contract allows an investor to get a functional agribusiness with specified efficiency parameters through integrated management of technology, production, personnel, economics and finance.


UNEX Group provides a wider range of services than an EPCM-contract:
- UNEX participates in the process of forming a business idea;
- UNEX prepares the concept and key parameters of the investment project;
- UNEX creates conditions for receiving the state investment founds

Front-End Engineering and Design


Preparation for an agribusiness creation begins with FEED (Front-End Engineering and Design).

The key task of FEED when investment projects preparing in agriculture is to create basic documentation (basic conceptual engineering)


Basic conceptual engineering includes the substantiation of a business idea (business idea), a project concept and must be worked out to the proper extent for making a decision to invest in the development of a technological project and a financial model of a business plan for an agricultural project.


FEED should be developed by companies with competencies in the following areas:

  • technological design of agricultural facilities;
  • production planning of agro-industry
  • financial modeling and economics of investment projects in the agro-industry;
  • state regulation of the agri-food market;
  • state support for the implementation of investment projects in agriculture.


At UNEX Group a FEED for the basic conceptual engineering usually requires 4 events:


Event 1: At the first meeting the investor shares:
1. ideas on the investment project implementation
2. views on the principles of product value formation
3. the goals pursued by the investment project

An agreement is concluded for FEED Front-End Engineering and Design (FEED = Agreement with UNEX Holding GmbH - stage 1 Technology audit)


Event 2: Discussion and approval of a business idea for a future investment project:

A business idea formation of ​​an investment project (business idea)
UNEX Group advises on the choice of a business idea for a future investment project, for which it makes a full audit of the existing investment site in order to determine the optimal use of the property complex.
In order to make a final decision, ABC analysis is carried out, GIS soil analysis and other types of analysis are carried out, reference material is collected, information on the availability of free resources, etc.
Based on the analysis results, a business idea for a future investment project is formed and agreed upon.


Event 3: Discussion and approval of the implementation concept of the investment project


Development of an investment project concept (project concept)


UNEX Group provides a range of services for the concept development for the implementation of an investment project, taking into account the investment site specifics and existing restrictions.


The project concept defines:

  • nomenclature and volumes of manufactured products;
  • preliminary assessment of needs for raw materials, materials and resources;
  • estimation of the investment project cost;
  • consolidated network schedule of the project in less detail.


Event 4: Discussion and approval of the preliminary investment project


Drawing up an investment plan for the project
The concept of an investment project makes it possible to assess the composition and volume of investments.


The preliminary investment plan consists of three main parts:


1. pre-investment phase - the  costs for preparing of the implementation project t (project management, engineering);
2. investment phase - costs associated with equipment procurement, supply of construction materials and structures (construction procurement), construction costs;
3. operation phase - the cost of commissioning (operation), production of test products, confirmation of properties and reaching a stable production cycle.


UNEX Group provides professional advice on the formation of an investment plan:

 

  • UNEX Group develops the investment costs structure with a high degree of detail;
  • UNEX Group selects financing sources, taking into account a combination of own funds, preferential investment leasing and leasing of irrevocable grants;
  • UNEX Group plans completion schedules of the investment budget in accordance with contract commitments


The quality of FEED (Front-End Engineering and Design) affects directly the depth of basic conceptual engineering.
The quality of basic conceptual engineering affects the speed of management decisions aimed at preparing for the investment project implementation
Basic conceptual engineering from UNEX Group approaches the detailed engineering level and then becomes part of the detailed engineering design.

Project management


After the completion of FEED and agreement of basic conceptual engineering with the customer, a new contract is signed for the implementation of the turnkey project with UNEX Holding GmbH (Germany).

EPCM-plus contract for the creation of an agro-industrial business with UNEX Group.

The EPCM contract with the UNEX group of companies includes:

 

  1. Creation of conditions for obtaining state support by the initiator of the investment project;
  2. Formation of the initiator of the investment project (legal support);
  3. Design of management structure by the initiator of the investment project;
  4. Development of the company's development strategy;
  5. Carrying out a marketing research of the industry development and analysis of retail chains by market segment for planned products;
  6. Development of a process design packages;
  7. Creation a production and financial plan;
  8. Finance modeling of the investment project and business plan;
  9. Collection of initial permits;
  10. Creation of a risk management plan;
  11. Design of construction estimate documentation of the "Project" stage;
  12. Carrying out examination of design and estimate documentation;
  13. Attraction of external financing for project implementation;
  14. Obtaining a permit for the construction;
  15. creation of an architectural and construction project of the stage "Working documentation";
  16. Purchase of building materials and structures, stationary and mobile technological equipment and technical means of mechanization and automation, pedigree livestock;
  17. Performance of construction, installation and commissioning works;
  18. Putting into operation the production facility.


The UNEX Group has overall responsibility for coordination of design and construction work between suppliers and construction contractors, and ensures that their work is performed with a good quality in accordance with the schedule for the individual work and according to the schedule for the entire project.


UNEX Group creates a competitive environment through FEED, creating basic conceptual engineering and process design packages, which are the basis of the terms of reference for the tender.


UNEX Group makes a 3-level analysis of participants and tender offers, develops recommendations regarding the technical and economic advantages and disadvantages of each offers.

If the customer has preferences for the equipment and materials used in the implementation of the investment project, then UNEX Group makes an assessment of compliance with the technological parameters and established requirements. Therefore, the contract with UNEX Group is drawn up in such a way that the customer can use the preferred option for himself.


The most important function of UNEX Group is to synchronize the work of all participants in the implementation of an investment project, to solve the problems of dependence of one contractor on the work of another, and to control the fulfillment of commitments.


Each of these aspects forms the main advantage of the UNEX group as a single responsibility center not only for the development of project documentation, delivery and construction, but also for the technological process, and in general for an effective investment project that has achieved the planned results.