Chapter II – Defining the ideal EPC firm before going out with an RFP

The Step Most Developers Skip

There is a deeply embedded habit in energy project development: when it is time to procure an EPC contractor, someone pulls the last contract off the shelf, updates it with new plant specs, and sends it out. Or calls one of the contractors they worked with in the past that went well. The logic is understandable. Something worked well enough before, so why reinvent the wheel?

The problem is that each project is unique, with different risk profiles that require a purpose-built contractor profile and contract structure. So, what does the ideal EPC firm for this project actually look like? It requires a deliberate exercise where you define the capabilities, experience profile, organizational depth, and local market knowledge that this project demands. The answers will shape everything that follows: how you structure the solicitation, how you evaluate proposals, and ultimately, how you negotiate the contract and manage the relationship.

The Cookie-Cutter Fallacy

Early in my career, I worked on two 500 MW combined-cycle power plants located just twenty miles apart. Same OEM. Same EPC contractor. The power train was an elegant engineering solution: a single-shaft design with the gas turbine and steam turbine flanking the generator, feeding a custom HRSG. The logic was sound: you need 250 MW, install one train. You need 500? Get two, and so forth. Build one plant, then replicate it for the other.

Then steel hit the ground and reality set in.

The two plants sat on different nodes of the grid, which meant different substation designs and different protection schemes. One site received transmission-pressure gas and needed no compression; the other required a full compressor station. One was next to an active quarry in an industrial setting; the other was nestled in an ex-urban setting next to a golf course. The local fire chiefs had different fire protection requirements. The craft labor came from different unions with different agreements. The list went on and on.

The lesson is not that you cannot streamline your process, or that you should not use the same EPC contractor on successive projects. The lesson is that the unique characteristics of each project must be explicitly considered before you define what you are looking for in a contractor. A firm with unmatched experience on large, self-perform projects in the South is not automatically the right choice for a union labor project in the Northeast. A firm you worked very well with on your Gulf of Mexico project may not be the best choice for your Ivy League campus project.

Firms like Bechtel, Kiewit, and Black & Veatch bring genuine scale, deep technical bench strength, and the organizational maturity that lenders and partners often require. They also bring the overhead structures and internal processes that come with that scale. Whether that is an asset or a liability depends entirely on the project in front of you.

RFP or Bilateral Negotiation — Choosing the Right Path

Once you know what you are looking for, you face a structural decision: do you run a competitive RFP, or do you negotiate bilaterally with a preferred contractor?

Both approaches have merit. RFPs create price tension, produce a documented competitive record that satisfies lenders and governance requirements, and can surface contractors you might not have considered. They are often the right choice when the project scope is well-defined, the owner has the bandwidth to run a real process, and the market has credible competitors who will price seriously.

Bilateral negotiations, on the other hand, can be faster, more collaborative, and better suited to complex or highly specialized projects where the pool of qualified contractors is genuinely small. They also allow for earlier contractor involvement in shaping the scope — which, as discussed in Chapter I, has real value in avoiding downstream constructability problems. The tradeoff is that you sacrifice price tension and, in some financing or governance structures, create a documentation burden that lenders will want addressed.

The mistake is treating the RFP as the default and the bilateral as the exception. Neither is inherently superior. What matters is that the choice is made deliberately, with a clear-eyed view of the project’s complexity, the state of the market, and the owner’s own capacity to run a rigorous process.

The Relationship You Are Actually Starting

There is an axiom that circulates among experienced owners in this industry: the worst EPC contractor you ever worked with was the last one. I have been on both sides of the owner/EPC relationship, and the dynamic is remarkably consistent. When I was on the owner’s side, the EPC was the problem. When I was on the EPC side, the owner was the problem. The other party was always the one who did not understand, did not cooperate, did not perform.

Any rational observer would see the fallacy. Constructing anything, let alone an industrial facility, is difficult. Getting thousands of parts, tons of material, and hundreds of people from across the country (and sometimes the globe) together to build something with permits, deadlines, and budget constraints on an open greenfield is daunting. Doing it in a brownfield is more daunting. Doing it in an urban setting with ongoing operations nearby, such as a university or medical campus, borders on impossible. The reality is, the people on the other side do understand, and are trying to cooperate, and are working just as hard as you are. The nature of the business is inherently difficult. It becomes nearly impossible without the right owner-contractor match, and the right contract to go with it.

Choosing the contractor is not just a procurement decision. It is the first act of project execution.

Setting Up Chapter III

Selecting the right firm gets you to the starting line. What happens next — negotiating the EPC contract — is where the hidden costs begin to surface. That is where we are headed.