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The earning shock of the Overseas Plant Field

Until a few years ago, the improvement in actual exports of the EPC companies (which means Engineering, Procurement and Construction) like Samsung Engineering, GS Construction corp. DaewooENC corp. and Hyundai Engineering had a beneficial effect on the Overseas Plant field as a whole. Lots of the projects were performed by Korea EPC Company in the Middle East.

For example, Hout Project in Saudi Arabia for DaewooENC.

Designing section of this project is almost done. Completion of the construction will last for 3 years.

Another Project is TGAST Project in Malaysia for Samsung Engineering. They are construct the Gas facility.

 Many students graduated from engineering school wanted to work as an EPC engineer.

But, the companies said the loss from operations was tens of billion dollars. Samsung Engineering and GS Construction experienced a drop in prices last 2 years. We called this “Earning-Shock”.

Why have these companies recorded deficit financing for 2years?

What is the fundamental cause of the drop in stock prices?

Definitely, the recent company’s sales have been much better than past year’s sales. The number of the construction projects is rising in the Middle East, Southeast Asia, and Africa. Many clients, for example ARAMCO corp., are claiming projects to Korea EPC Company. At this point, the main problem arises. Client announces one project like construction of the gas-facility or LNG plant. Then many companies bid on this project. To company, having the construction experiences is very important to be awarded more contracts. So the bidders compete to offer lower prices to gain client’s attention. That’s why the sales decrease although the performances increase. We refer to this situation as ‘low-price booking’.

Then, how can we solve this problem? Are there solutions for this problem? I recommend that EPC Companies have to make a joint contract. A joint contract is a type of agreement in which two or more parties on one side of the agreement consent to be responsible for mega-project as a collective unit, rather than as individuals. It will reduce the risk involved in performing mega-project exclusively and prevent the below-cost tendering driven by cut-throat competition. 5 major EPC Companies made a joint contract on the CFP Project in the Kuwait on Sunday April 13^rd. KNPC divided the CFP Project into 3 packages (MAA, MAB1, MAB2) and ordered. SK Corp. and GS Corp. will conduct a MAA Package, and then Samsung Engineering will perform a MAB1 Package, finally, DaewooENC and Hyundai Corp. will be responsible for MAB2. It is possible to divide the CFP Project because of the large construction project scale ($12 billion).

Another possible solution to solve ‘low-price booking’ is developing original plant-process-technology. For example, DOOSAN HEAVY INDUSTRY has a Seawater Desalination Plant Technology. Because this company has an original technology, they don’t need to be crawling on clients who need that technology. But this is only rare case. Most of the Korea EPC Companies don’t have any original plant process technology especially LNG Liquefaction Technology. They must develop their own design technique.

Conclusion, there are two method to increase company’s sales, joint contract and developing own technique. To improve stature of the Korea EPC Company, they must consider these methods when they compete to win a contract.

If you want to know information of the PLANT MARKET,
Visit http://hvac.hanyang.ac.kr
You can get lots of information there.

Informing you my school club BUFFALO

There is the oldest school club called BUFFALO.

It has been mechanical department club since 1961. For 54 years, lots of students went through BUFFALO. Some of them are CEO of the medium and small firm. Others are an executive at a major company. Beyond that there are professors and lawyers.

Members of the BUFFALO consist of 3 groups : OB(Old Boy), YOB(Young OB), Student

First, Members of the Buffalo from 1st to 12th are in OB group. Most of the OB members are CEO or retired executive. Especially, Mr. Yong-mo Kim is a mechanical engineering professor in Hanyang University.



Second, Members of the Buffalo from 36th to 47th are in YOB group. Historically from 1970s to 1980s, It was a time when the military government wielded undisputed power. The Government didn't approve all of the group activities. So there is a blank peroid from 13th to 35th. OB members felt the significance of keeping the buffalo. So they remade school club Buffalo. All of the YOB members are the employee in their company or graduate student.

Finally, Members of the Buffalo from 48th to 54th are student in HYU. We always met on Thursday at Buffalo's room. We discuss about our start-up ideas and give & take some comments of the ideas. We join the forum about the foundation.
We have a connection between Infinite-Bit in Seoul Woman's University.

For 1 year, we have many activities. For example, we have a talk with our senior twice a year. Last month, 4 senior came to us to do a presentation about company life, graduate school at abroad, and process of the manufacturing automobiles. Next semester, vice president of the company (HVCC Cop.) will come to have a speech to us.

At this time of the year, all of the members of the Buffalo are gathering to have a year's annual year-end party.  We can feel a connection of the Buffalo at that time.

As a leader of the student group, I always feel a pride of the Buffalo member. I'm sure that the Buffalo is the oldest club in HYU.

If you want to join this club, please call me +82-010-3838-1829.

Construction Facilities Abroad

Do you know EPC company? Can you tell me how are the power plants built?
Recently, the construction companies is awarded many abroad contracts to build enormous facilities. For example, Samsung Engineering got project called Peerapong Gas Facility Project. This is a picture of a construction place.

GS construction also got order named Aromatics Plant Project. The cost of the plant is about 12billion dollars. 

Then, how can we build this plant? The EPC company which means Engineering, Procurement and Construction take charge of these project. Because construction process is very difficult and have many treats, EPC company has many department.

First, there is one man who is PM (Project Manager). He have to know overall situation of construction. Especially, he treats the estimates and schedule. It is very important to client and company. If one day is delayed, company have to shoulder the additional cost.

Second, there are many engineering department, Mechanical, Electrical, Architecture, Pipe, Process, Instrument and HVAC. Each department has lead engineer and assist engineer. They always treat drawings about the project and guess the estimates of their parts.

There is another department. It is called DCC (document control center). I had worked as a DCC assistant at DaewooENC. I issued many documents, drawings, and letters to client. 

All of these departments are in charge of their assignment in the project.

When engineer ends up making drawing, construction engineer receives that. Then, they build the buildings refer to drawings. For these projects like HOUT Project which I did, construction engineer are spending 3 or 5 years to build plant.

This is a video showing construction place.

I want to be a mechanical team engineer. To accomplish my dream, I have to study English very hard.