The clarity in roles & responsibility at the top level as well as down the line — key to smooth execution in EPC firms

Usually, EPC firms are family-owned businesses. The owners of these firms are:

  • cost-conscious,

  • excellent connectivity with small scale as well as few large scale equipment companies & service providers

  • useful political and bureaucratic links,

  • have good knowledge of megatrends & microtrends in their industry

Despite having highly experienced CEOs to run EPC organizations, the owners feel that they cannot give up control from day-to-day operations. They keep the finance department’s control with them, which ultimately results in controlling everything happening in the organization every day. The interfering behavior of owners in day-to-day operations leads to a lack of accountability for the outcome of strategic & tactical decisions' outcome by the CEO. It is also seen that many such decisions are suboptimal and are one of the causes of EPC firm’s poor performance.

Another aspect of clash in responsibility occurs between department heads & the CEO. It has been observed many times that CEOs have a team of department heads who need approval from the CEO for all their activities. The CEO is seen to be performing all the activities instead of just focusing on his role of controlling the execution and connecting with present & prospective customers.

Between departments also, it is seen for example that engineering teams are interacting with the vendors as well as subcontractors on the field. Neither the procurement team is aware nor the construction team is aware of the discussions made by the Engineering team with vendors and subcontractors respectively. All this creates confusion and conflict between teams.

The board of directors of contractor firms should make efforts to lay down the governance principles and try to imbibe them in the culture of the organization.

If you have any such experiences with you, please share them in the comment section of the article. In case you are facing such problems in your organization, feel free to reach out to me- we can discuss and find a way forward to solve the issue.