With the development of economy and the continuous progress of society, the operation mode of government departments and relevant social units participating in enterprise projects has gradually developed. This PPP+EPC operation mode has advantages and risks, and enterprises need to find a feasible way through analysis.
PPP and EPC mode
(I) PPP mode PPP mode is an economic operation mode of cooperation between government and social capital in my country. It is the most common financing method at present. Its essence is that government departments participate in it on the basis of social capital investment in a project. This is a win-win operation mode for public and private sectors. Its advantage is that in the process of capital operation, with the support of government departments, it can effectively reduce the debt risk of financing platforms and seek stability for capital enterprises.
(II) EPC mode EPC mode is now a construction general contracting mode that is highly respected in my country’s construction contracting industry. It is mainly responsible for technical support and construction material supply for large projects. However, large-scale infrastructure projects such as photovoltaic power generation projects require not only strong financial support, but also construction companies with technical guarantees to participate in them. PPP+EPC provides an operating mode that unifies project investors and engineering general contractors into a consortium. This operating mode has many advantages, but it also has risks. It requires relevant companies to think carefully and apply it reasonably.
(III) PPP+EPC operating mode The PPP+EPC operating mode is mainly composed of the government’s public sector and private enterprises as the owner. This mode is different from the PPP mode and the EPC mode. It is not a single operating mode, but an organic combination of government departments and private enterprises: the government’s public sector and private enterprises are partners. For the entire photovoltaic power generation project, the government is the initiator and is responsible for the project’s structure; the private enterprise is the investor and is responsible for the overall financial planning of the project; and the two will work together to contract the entire photovoltaic power generation project to a unit, which will carry out the design, procurement and construction of the project. In general, the PPP+EPC operating mode combines the advantages of two single modes. It has both the policy advantages and effective supervision and management service guarantees provided by government departments, and the private enterprise’s sufficient financial planning and technical advantages. With the dual assistance of these two major departments, the photovoltaic power generation project is sufficient to be carried out effectively.
Advantages of PPP+EPC model in photovoltaic power generation project management
(I) The PPP+EPC model for photovoltaic power generation project management has certain adaptability and effectiveness. At present, the common problem of photovoltaic power generation projects is that its construction period is relatively short, but the capital investment required is very large. At the same time, the photovoltaic power generation project has a huge amount of engineering and equipment to be installed. The existence of these construction characteristics has led to some irreconcilable contradictions. For example, photovoltaic power generation projects require huge investments, so companies investing in this project will face huge financial risks; not only that, photovoltaic power generation projects also require a large amount of engineering equipment to be installed. If the material supplier cannot guarantee the quality, the entire photovoltaic power generation project will become a “tofu dregs project”. In order to prevent the above phenomena from happening, the PPP+EPC model has certain adaptability and effectiveness. The reason is that the PPP model is a new investment model of public-private win-win. The “public” here refers to government departments. The participation of government departments in photovoltaic power generation projects means sharing risks and jointly coping with and avoiding unfavorable factors in the project. In other words, the private enterprises participating in the investment have the state’s logistical support, and the financing risk is greatly reduced; at the same time, the EPC model guarantees the engineering contracting link, that is, the engineering contracting department with technology and quality will participate in the photovoltaic power generation project, and the project will have strong technical support; not only that, the government’s participation in the PPP model will increase the supervision of the contracting enterprises in the EPC model, so the quality of equipment and raw materials will be guaranteed. In this way, the efficient and reasonable management of photovoltaic power generation projects becomes a matter of course.
(II) The PPP+EPC model can effectively control the engineering cost. The application of the PPP+EPC model in photovoltaic power generation projects can control the engineering cost to the greatest extent and avoid the waste of resources. Specifically, the investment unit under the PPP+EPC model has a dual identity, which is both an investment unit and a design unit. This means that the investment unit not only has to output funds, but also has to be responsible for the planning and design of photovoltaic power generation projects. In the past, for a project, the investor and the design unit were independent units. The investor invested and the design unit designed. Under this model, the design unit would ignore the investment of funds in pursuit of perfect design, and the investor would face huge financial pressure. Now, the functions of investors and design units are unified, and the investor will consider two aspects: one is to save money, and the other is to ensure the quality of design. Under this dual restriction, the investor will save costs to the greatest extent while meeting the needs of the project, and strive not to waste any resources. Therefore, the PPP+EPC model improves the economic benefits of the enterprise while avoiding the risk of resource waste, and realizes the maximization of benefits based on effective cost control.
Risk Overview of PPP+EPC Model
As a project operation model in the exploratory stage, PPP+EPC still has many problems in actual operation. First, the relevant enterprises cannot sort out their responsibilities, the target content is unclear, and the project content overlaps. This is actually related to the lack of a system of construction management for construction enterprises. Generally speaking, the management model under the PPP model is project establishment-financing-construction-operation-transfer, while the management model of the EPC model is design-procurement-construction; that is to say, there is a big gap between the two operation models. Now we have introduced the PPP+EPC model, which means that the previous two operation models are no longer adapted to the risk requirements under the new model, and a new management system needs to be found. At present, we are still lacking in this stage, and there will be three operating modes coexisting. Although these three modes are different, they also overlap, which will lead to unclear responsibilities of relevant staff and overlapping content. Secondly, the company’s resource integration ability is insufficient, and there are problems in seeking financial support and technical contracting. For general traditional construction enterprise projects, the collaborative resources required are often the two collaborative teams of professional subcontracting and labor subcontracting, so there is no need for too complex resource integration capabilities. However, the EPC+PPP model is different. It not only requires two teams of professional subcontracting and labor subcontracting, but also requires relevant social resources such as survey, design, equipment supply, supervision and management, and cooperative units. However, the current EPC+PPP model is still in a transition period, and most companies have not yet separated themselves from the previous traditional resources. Therefore, there are still many deficiencies in integrating high-quality and stable social resources, which to some extent hinders the smooth implementation of the project. Finally, as an emerging innovative operation model, PPP+EPC lacks a large number of professional talents. The PPP+EPC model is a full life cycle management of engineering construction projects. The so-called full life cycle management actually involves investment, planning, design, procurement, legal affairs, operations and other aspects, all of which require experienced talents. But it is obvious that today’s corporate talent reserves are obviously insufficient. Not only that, for traditional general contracting projects, design and project construction are often separated, but under PPP+EPC, companies need to integrate design, construction, and operation, but companies often ignore this point.
Application of PPP+EPC model in photovoltaic power generation project management.
(I) Firmly grasp the management responsibilities of PPP+EPC and create a new management system. The primary problem in applying the PPP+EPC model in photovoltaic power generation project management is that the content of each department’s responsibilities cannot be sorted out during the project management process. For example, a photovoltaic power generation project must first start with a research and development project plan, and gradually transition to the investment and financing part of the project, the exploration and analysis of the project engineering, the cost budget of the project engineering, and the procurement, operation, and industrial chain resource management during the project. These links are closely linked, and each part must be strictly managed and properly controlled to complete the basic management under the PPP+EPC model. However, at present, there are endless cases of overlapping corporate management and unclear responsibilities, and project management is sluggish. Therefore, photovoltaic power generation related companies must fully analyze the PPP+EPC management model, and on this basis, make a reasonable division of labor, clarify the management content of each department, especially clarify the investment and financing work, engineering budget and engineering operation department. The work responsibilities must be clarified, and the phenomenon of overlapping tasks and management faults must be avoided. Only in this way can the enterprise create a matrix management system based on the PPP+EPC management model, so that management and efficiency can go hand in hand.
(II) Strengthen collaboration, integrate resources, and promote the development of projects For an enterprise, the application of the PPP+EPC model requires super strong resource integration and collaborative management capabilities. As for the current photovoltaic power generation companies, they have insufficient management strength in seeking project partners, finding investment and financing channels, project planning, on-site investigation and analysis, engineering budget and procurement, and comprehensive project operation. The existence of this problem directly leads to the fault of each link in the photovoltaic power generation project. The various departments cannot reach a strong consensus, so they cannot work together to integrate all resources to contribute to the photovoltaic power generation project, so the work progress of the entire project is very slow. In order to solve this embarrassing situation, enterprises need to integrate various resources and use them effectively, so as to complete the effective operation of the PPP+EPC model. Integrating resources is a very macro level. What enterprises need to do is not only to integrate internal resources, but also to integrate external resources. For example, electricity, heat, water, fire protection, communications and other resources required in photovoltaic power generation projects; funds are always indispensable in project operation and management, so enterprises also need to integrate social resources such as banks, trusts, and funds; in addition, enterprises also need to purchase various engineering materials, so various material suppliers are also an indispensable part. Only when these external resources cooperate with internal resources of enterprises can they truly escort photovoltaic power generation projects
(III) Cultivate a team of professional talents suitable for the PPP+EPC model. The most important factor for an enterprise is always “people”. Only with “people” can an enterprise operate normally. If there are only cold machines, the enterprise can only be an “empty frame”. Therefore, “people” are the fundamental driving force for enterprises to maintain vitality and healthy development. The application of the PPP+EPC model in photovoltaic power generation is a relatively new and innovative way. If you want to develop this road better, then professional talents are indispensable. After all, “there are specialties in every profession”. Only talents who clearly understand the PPP+EPC model can know how to “prescribe the right medicine” and how to integrate resources in photovoltaic power generation projects to serve engineering projects. Therefore, it is urgent to cultivate a team of professional talents suitable for the PPP+EPC model. What enterprises need to do is to combine their development strategies and plan to build a PPP+EPC model operation team. There are two methods. The first is to introduce talents who understand the operation of the PPP+EPC model directly. This method saves time and effort, but it costs a lot of financial resources. The second is to cultivate PPP+EPC model talents within the enterprise. This method is conducive to the team running-in of the enterprise, but it is time-consuming and laborious. Therefore, if you want to cultivate a team of professional talents suitable for the PPP+EPC model, the best way is to combine the two. It is necessary to introduce leadership talents suitable for the PPP+EPC model, and then cultivate a team of employees within the enterprise, so as to establish a unified mechanism for the centralized allocation of professionals and give full play to the maximum efficiency of resources.
Conclusion
The PPP+EPC operation model has advantages and disadvantages. Large enterprises represented by photovoltaic power generation projects must learn to seek benefits and avoid harm, integrate resources as much as possible, form a team of talents, cooperate with each other, and ultimately promote the healthy development of the enterprise.
