Hedging the Procurement Risks of the EPC Projects

Among several project delivery systems, Design-Build has been introduced as the most effective one. EPC (Engineering, Procurement and Construction) is a specific type of Design Build that the contractor is responsible for design, procurement and construction of the project, herefore must handle the risks that might arise in these fields. Futures and Forward contracts could be utilized in risk management considerations specially to hedge the procurement risk that EPC contractor will be faced with. This application has been investigated in this paper.

Keywords:

EPC , Risk Management , Futures and Forward Contracts