Is the EPC (engineering, procurement and construction) sector about to implode? The business exists to provide value for money, fixed-price contracts, and reliable delivery schedules to those buying water infrastructure projects. The problem is that competition has squeezed margins to almost microscopic levels, but the risks involved have suddenly expanded to unmeasur-able proportions. As Michael Bourke of Wigen Water wrote in our sister publication Water Desalination Report earlier this month, thanks to the war in Ukraine, some stainless steel producers are only offering prices with 24-hour validity, and thanks to COVID in China, lead times for some Chinese-made components have stretched from eight weeks to 24 weeks to a realm beyond time. With clients expecting prices to be fixed years in advance and enforcing delivery timetables with aggressive penalty payments, something has to give. Although these conditions present an immediate challenge to market participants, I don't think the problem will be solved by pushing some competitors out of the market and the restoration of normality in the supply chain. We need a much broader rethink of the way larger projects are procured.
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