EPC vs HAM – Key Factors

Parameter EPC model HAM model

Capital Expenditure Funding

  • 100 per cent funded by Government Authority during initial construction period
  • Only 40 per cent of capex to be funded by Government Authority during construction period;
  • Remaining 60 per cent is the private financing by private developer during the construction period

Capital Expenditure Optimisation

  • EPC model focus only on the construction phase with limited Defect Liability Period;
  • However, there is no incentive for capital expenditure optimisation as limited focus and visibility on replacement cost during life of the project – leading to high rework percentages during operations period
  • Lifetime project cost is the underline principle in HAM – to achieve overall project efficiency with integrated network/ hydraulic modelling;
  • HAM model also provides for incentives for early construction milestones leading to early revenue streams and benefits to the society

Operating Expense Optimisation

  • There is no focus/incentive on “Energy Efficiency” and “System Optimisation” in EPC model
  • HAM brings in an “Integrated” view on the project delivery with greater focus on operational expense optimisation

Risk Allocation

  • In EPC model, complete funding risk and operating and technology risk is with the Government
  • HAM provides a “Single-point accountability” of private developer to deliver “Pre-defined Performance Indicators” with guaranteed higher efficiency