EPC Contractors Get Blamed for Decisions They Never Made
- Iwona Wilson
- Aug 20
- 7 min read
This one is for EPC contractors and for everyone in the delivery supply chain who bids against an owner's scope: EPCM, engineering houses, construction and fabrication contractors, specialist packages.
I've spent my career on both sides of this table - with major EPC contractors and with owner organizations in oil and gas. That's the only reason I feel able to say what follows.
Think about the last project that went badly for you.
Not the one where you made a mistake - the one where everyone was competent, the engineering was sound, the site team was strong, procurement performed, and the schedule logic was right.
And it still bled. Change orders from month four that never really stopped, your team was technically correct about every one of them, and it made no difference to the relationship.
Here's the pattern worth sitting with: most of what determined that outcome had already happened before the tender documents ever reached your bid team.
What EPC contractors actually inherit
When a project comes to market, you receive a scope. What you do not receive and what nobody puts a number on - is the quality of thinking that produced it.
Was the problem ever properly defined, or did a solution get named early and everything since has been elaboration?
Were real alternatives compared, or was one option ratified and two straw men attached to make it look like a choice?
Which of the parameters in that scope are genuinely fixed, and which are assumptions somebody wrote down once and nobody has revisited since?
Are the stakeholders who can stop this project actually aligned - the regulator, the community, the operations group who has to run it or have they simply been informed?
As a contractor you price the scope. But you carry the risk of the thinking behind the scope. On a lump-sum contract against an immature front end, that gap is where EPC margin goes to die. Not through incompetence - through inheriting an owner's unresolved questions and being contractually obliged to resolve them at your own cost.
The industry data has been consistent for decades: projects with a well-defined front end significantly outperform those that rushed into execution (source: IPA)The part nobody says out loud
Here is the uncomfortable truth in the EPC business.
Framing and project governance are the owner's responsibility. The blame is not distributed the same way.
I've watched this from the owner's side of the table, and I've watched it from the contractor's side. The view is completely different, and only one of those seats gets to write the history.
When a badly framed project fails, the owner's organization has a hundred explanations available to it - market conditions, regulatory delay, community opposition, scope evolution, and very often, contractor performance. Those explanations get written into lessons-learned and repeated in the next tender's risk section.
You have one thing: your delivery record. And the record does not distinguish between "the contractor executed badly" and "the contractor executed a project that should never have been sanctioned in that form."
So your EPC team can do the work perfectly and still lose the credibility or the follow-on contract. Still find that when that owner's project team moves to another company, they carry a story about your firm that isn't true and that you were never in a position to prevent.
That is why checking the quality of thinking at the start is not the owner's problem to solve on your behalf. For a contractor, it is a commercial and reputational necessity, regardless of who is contractually responsible for it.
The questions your bid team should ask before you tender
EPC qualification processes are usually excellent at what they cover: capability, capacity, risk allocation, contract terms, commercial position, competition.
Notice what's usually absent - an assessment of how well the owner has actually made their decisions. You assess the contract but you rarely assess the decision-making that produced it, even though that's the largest uncontrolled variable in your exposure.
You can close that gap by asking questions in those six areas:
Problem and value. Can they state the problem this project solves without describing the solution? What are the value drivers, and what does success look like in measurable terms? If nobody can answer this, no option can be properly evaluated -including your bid.
Alternatives and decision history. What alternatives were genuinely evaluated? Can they show the options study? When was the concept selected, by whom, and against what criteria?
Givens versus assumptions. Which parameters are decided, and which are assumptions? Is there a live assumptions register, and who owns it? Almost every failed project contains an assumption that was quietly promoted to a fact and written into the basis of design.
Stakeholders and consents. Which stakeholders have formally aligned, and which have merely been briefed? What is the actual status of permits, land, interconnection and community agreement as opposed to the planned status?
Decision authority and readiness. Who can change what, and how quickly? What still has to be decided before / during execution, and is there a mechanism to decide it at the speed your schedule assumes?
Interfaces and boundaries. What's in and what's out and does the sponsor give the same answer as the owner's delivery lead when you ask them separately? They very often don't, and that disagreement costs nothing to surface at tender and a fortune at month fourteen.
You will not always get answers. The quality of the non-answer is the information.
An owner who can produce a decision record, a documented options comparison and a live assumptions register is an owner whose scope will largely hold. An owner who becomes uncomfortable at these questions has just shown your bid team exactly where the change orders will come from and you can price it, allocate it, or decline to bid.
How a contractor covers itself
Asking is half of it.
Put the questions in writing. Formal clarification requests during tender create a dated record of what your contractor team asked and what the owner told you. This costs nothing at the time and is decisive later.
Qualify your bid against the assumptions you had to make. Not buried in an appendix - stated plainly, with the commercial consequence attached. "We have assumed X. If X is not correct, the impact is Y."
Hand over an assumptions register at kickoff and get it jointly owned. The most valuable governance artefact on an EPC contract is a live document both parties have signed up to, showing what each side is relying on.
Ask for the owner's decision record. Criteria, options, rationale, owner, date. Owners with mature systems have one and will share it. Owners without one have told you something important.
Use early warning properly. Flag the decision that hasn't been made, not just the delay it will cause.
None of this makes a contractor adversarial. Done well, it makes you the EPC firm that is visibly trying to protect the project rather than position for a claim. Good owners recognise the difference immediately, and it is one of the fastest ways to earn a seat in the conversation earlier next time.
What the best owners actually do
The industries that could least afford to get this wrong - oil and gas, mining, major infrastructure - spent decades and enormous sums building a front-end operating system. It works, and it has largely stayed inside those organizations. Not secret in any conspiratorial sense; simply internal know-how that rarely leaves the building, and was never packaged for the contractors who have to live with the consequences.
What the disciplined owners do differently is not complicated:
They frame the opportunity before naming a solution. They define value and success measures before comparing options. They keep givens and assumptions explicitly separated, and revisit them. They evaluate genuine alternatives rather than ratifying a preference. They sequence the decisions first and let the work organise around them. They bring stakeholders in during framing rather than at commitment. They treat stop and recycle as legitimate gate outcomes. And they leave a decision trail - criteria, rationale, owner, date.
Knowing what that looks like is what lets an experienced contractor recognise, in a single tender meeting, which kind of owner they're dealing with.
Two ways EPC contractors can use this
Get upstream. Every EPC says it wants to move up the value chain - early contractor involvement, FEED, front-end services, partner rather than vendor. The obstacle is rarely willingness. It's arriving at the owner's table without a language for what you'd contribute before a scope exists. Opportunity framing and the Decision Gate Process are that language: how to have a credible conversation about problem definition, value drivers, boundaries, alternatives and decision sequencing with a client who hasn't finished thinking. The contractor who helps frame the opportunity is not competing on rate and the scope you helped define is a scope you can actually deliver.
Then use it on your own projects. An EPC contractor is an owner too. New fabrication capacity, yard and facility investment, digital and ERP programmes, joint ventures, acquisitions, new service lines. Every one of those is a front-end decision made by your own organization, usually under exactly the pressures you recognise in your clients. It's also the safest place to build the capability - because when your teams have run this discipline on your own capital, the conversation with an owner stops being a sales pitch and starts being experience.
The honest version
There's a version of the contracting business where you become excellent at claims. Many EPC firms have. It works, in the narrow sense that you recover the money. But
the claim you won still lost you the client.
And the reason those claims exist is almost never execution. It's that your contractor team was handed a project that was never properly framed, and the contract made its unresolved questions your problem - while the story afterwards made them your fault.
You can keep pricing that risk quietly. Or your bid teams can learn to read it before you tender, document what they found, and eventually fix it for the owners worth keeping.
I teach this as the Decision Gate Process and Opportunity Framing - the front-end operating system the best owner organizations in oil and gas run on, taught by someone who has worked both sides: major EPC contractors and owner organizations.
It's built for people who want to read a project's framing before they commit to it and eventually to be the ones shaping it.
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