EPC Procurement Documents: RFI, RFQ, PO Guide

Document Flow Summary

EPC procurement follows a standard sequence: RFI (gather information) → RFP/RFQ (request proposals/quotes) → Bid Evaluation → PO (purchase order) → OC (order confirmation) → Delivery & Payment. Each document serves a specific purpose in managing risk and ensuring all parties understand their obligations.

EPC Project Procurement Documents

What Is an EPC Project?

An Engineering, Procurement, and Construction (EPC) project is a turnkey contracting arrangement where a single contractor handles design, procurement, construction, and commissioning. The contractor delivers a completed, operational facility to the client.

EPC Contractors

Aspect	EPC Model
Scope	Engineering, procurement, construction, commissioning
Responsibility	Single point of contact for all project issues
Delivery	Turnkey-ready for immediate operation
Pricing	Often fixed-price (cost overrun risk on contractor)
Performance	Payment tied to achieving specified benchmarks

Advantages	Challenges
Streamlined decision-making	Complex contract negotiation
Cost certainty for client	Risk management burden on contractor
Single-source accountability	Limited flexibility for scope changes
Integrated quality control	Detailed specifications required upfront

EPC Project Lifecycle

Phase	Activities	Key Documents
Early Stages	Feasibility studies, market analysis, environmental impact, regulatory approval	Feasibility reports, RFIs, Tender Package, Bid Bonds
Project Award	Technical/commercial bid evaluation, negotiation, contract signing	Technical/Commercial Offers, EPC Contract, Performance Bond
Engineering	Detailed design, P&IDs, piping isometrics, equipment specs	Engineering drawings, specifications
Procurement	RFQs, vendor selection, PO issuance, expediting	RFI, RFP, RFQ, PO, OC, Bid Tabulations
Construction	Site prep, fabrication, installation, welding	Status reports, NC reports, inspection certificates
Commissioning	System testing, performance verification	Test reports, punch lists
Handover	Documentation transfer, training, final acceptance	As-built drawings, O&M manuals

Documents by Project Stage

Early Stages (Feasibility)

The project owner (e.g., Saudi Aramco, Shell, ADNOC) develops feasibility documentation before issuing a Tender Package to EPC contractors.

Document	Purpose
Project Proposal	Objectives, scope, preliminary feasibility, high-level timeline
Feasibility Study	Technical, economic, market, environmental, and risk analysis
Environmental Impact Assessment	Biodiversity, air/water quality, mitigation strategies
Risk Assessment	Technical, financial, operational risks with mitigation plans
Market Analysis	Demand forecasts, competition, commercial viability
Technical Scope	Preliminary designs, technology options, infrastructure needs
Cost Estimates	Capital investment, operating expenses, financial returns
Regulatory Checklist	Required permits, approvals, compliance requirements

Request for Information (RFI)

An RFI gathers preliminary information from suppliers before formal procurement begins. It’s non-binding and doesn’t commit either party.

Aspect	Details
Purpose	Clarify specifications, understand vendor capabilities, pre-qualify suppliers
Nature	Non-binding, informational only
Questions	Open-ended to gather comprehensive insights
Distribution	Broad-sent to many potential vendors
Outcome	Informs scope definition, budgeting, and vendor shortlisting

RFI Process: Prepare document → Distribute to vendors → Collect responses → Analyze for project planning

Pro Tip

Use RFIs strategically to pre-qualify vendors before the RFQ stage. Ask about production capacity, current backlog, and recent similar projects. Vendors who can’t demonstrate relevant experience now won’t magically develop it during your project timeline.

Tender Package (Project Tender)

A formal invitation to EPC contractors to bid on a project. The tender ensures competitive, transparent contractor selection.

Component	Contents
Invitation to Tender (ITT)	Formal invitation, project scope, submission guidelines
Project Scope	Technical specifications, objectives, expected outcomes
Bid Requirements	Format, templates, submission instructions
Evaluation Criteria	Price, technical capability, past performance
Draft Contract	Legal, commercial, and technical terms
Prequalification Instructions	Requirements for contractors to demonstrate capability

Tender Process: Prepare & issue → Pre-bid meetings → Bid submission → Evaluation → Award to best-value contractor

Bid Bond

A bid bond is a surety bond (issued by a bank or insurer) guaranteeing that the contractor will enter into a contract if awarded the project. It prevents frivolous bids and protects the end user from bid withdrawal.

Aspect	Details
Value	Typically 1-5% of bid amount
Issued by	Bank or insurance company on contractor’s behalf
Validity	Until contract signed or bid rejected
If contractor withdraws	End user compensated for difference to next bid, or re-tendering costs

Bid Bond Risk

Submitting a bid with a bond commits the contractor financially. If you win but cannot proceed, the bond amount is forfeited and your reputation with that client is damaged.

Project Award

Technical and Commercial Offers

EPC contractors submit two separate offers in response to a tender:

Offer Type	Contents
Technical Offer	Project understanding, methodology, engineering solutions, project management approach, compliance demonstration, technology/equipment details
Commercial Offer	Price breakdown, payment terms, validity period, bonds/guarantees, risk contingencies

The end user evaluates both to assess feasibility, cost-effectiveness, and capability. Offers must be comprehensive and aligned with tender requirements-shortlisted contractors (typically 2-3) proceed to final negotiation.

EPC Contract

The contract formalizes the agreement between end-user and EPC contractor. Key sections include:

Section	Contents
Scope of Work	Detailed specifications, exclusions
Price & Payment	Total value, milestones, adjustment mechanisms
Schedule	Start date, milestones, completion, delay penalties
Quality	Standards, testing, warranties, performance guarantees
Risk & Insurance	Liabilities, indemnities, required coverage
Change Orders	Process for scope changes
Disputes	Negotiation, mediation, arbitration procedures
Termination	Conditions, consequences
Governing Law	Jurisdiction, applicable law

For common contract pitfalls, see Hidden Risks in Contracts.

Performance Bond

A performance bond guarantees the contractor will complete the project per contract terms. If the contractor defaults, the end user claims compensation from the bond.

Aspect	Details
Value	Typically 10-20% of contract value
Duration	Until project completion (sometimes through warranty period)
Paid by	Contractor
Claim process	End user notifies bonding company → Investigation → Compensation if valid

Performance bonds serve as both financial protection for the end user and a qualification filter-only financially stable contractors can secure them.

Project Execution Documents

During project execution, procurement departments issue and receive the following documents:

Document	Purpose
RFI	Clarify technical details with potential suppliers
RFP	Request detailed proposals for complex services
RFQ	Request pricing for well-defined materials/equipment
Bid Tabulation	Compare supplier offers side-by-side
PO	Authorize supplier to deliver goods/services
OC	Supplier confirms acceptance of PO terms
Shipping Documents	Invoice, packing list, MTCs
NC Reports	Document non-conformities for resolution

RFP vs. RFQ

Aspect	RFP (Request for Proposal)	RFQ (Request for Quote)
When used	Complex requirements, services	Well-defined specifications
Focus	Technical approach + price	Primarily price
Evaluation	Quality, methodology, capability, cost	Cost (assuming technical equivalence)
Response	Detailed proposal	Price quote with delivery terms

RFP Components: Project overview, scope of work, submission guidelines, evaluation criteria, terms and conditions

RFQ Process:

• Preparation: The EPC contractor or project owner prepares an RFQ document detailing the specific requirements for the goods or services, including technical specifications, quantities, delivery expectations, and any other relevant information. Prepare RFQ → Issue to pre-qualified vendors → Receive quotes → Evaluate → Award

RFQ process for EPC Projects

When to use RFQs: Products with variable pricing (raw materials like nickel, chrome), configurable items, or quantity-dependent pricing.

Common Mistake

Awarding solely on lowest price without verifying delivery capability. The cheapest quote often comes from vendors who underestimate the job or plan to source from unknown sub-suppliers. Request a detailed delivery schedule with manufacturing milestones - vendors who can’t provide one are probably guessing.

RFQ Contents

Section	Information Required
Introduction	Company, project overview
Specifications	Quantities, materials, standards, drawings
Submission	Format, deadline, contact for clarifications
Evaluation	Price, delivery, quality criteria
Pricing	Unit prices, totals, taxes, shipping
Delivery/Payment	Schedule, location, payment terms
Validity	Quote expiration date
T&Cs	Legal terms, compliance requirements

Purchase Order (PO)

A Purchase Order authorizes a supplier to deliver goods or services under specified conditions. Once confirmed by the seller, it becomes legally binding-equivalent to a sales contract.

PO Element	Contents
Identifiers	PO number, vendor/buyer information
Goods/Services	Descriptions, quantities, specifications
Pricing	Agreed prices, Incoterms
Delivery	Schedule, location, logistics
Payment	Terms, schedule, discounts
Quality	Standards, acceptance criteria
Compliance	Legal, safety, regulatory requirements

Key PO Terms

Term	Meaning
UoM	Unit of Measure (meters, each, tons)-ensures quantity agreement
MOQ	Minimum Order Quantity-smallest order a supplier will accept
MOV	Minimum Order Value-lowest order value a supplier will process

RFQ to PO Process: Issue RFQ → Receive quotes → Evaluate/negotiate → Shortlist → Issue PO → Supplier confirms (OC) → Delivery → Invoice → Payment

PO Cancellation

POs can be cancelled, but implications depend on the cancellation terms, fulfillment stage, and whether custom materials were ordered.

Stage	Typical Outcome
Before supplier action	Usually straightforward, minimal cost
Materials ordered	Cancellation fees, restocking costs
Production started	Reimbursement for work completed
Disputed cancellation	Potential legal action

PO Cancellation Risk

Always review cancellation clauses before signing. Once a supplier has committed materials or labor, you may owe significant compensation. Consider modification or delay as alternatives to outright cancellation.

Order Confirmation (OC)

The Order Confirmation (also called Purchase Order Confirmation) is the vendor’s formal acknowledgment of the PO terms. Once issued, the transaction becomes legally binding.

OC Element	Purpose
PO reference	Links to original PO number and date
Terms acceptance	Confirms prices, quantities, specifications
Delivery schedule	Confirms delivery dates
Modifications	Documents any negotiated changes

OC Process: Vendor receives PO → Reviews requirements → Negotiates changes if needed → Issues OC → Transaction is binding

Field Note

Start expediting critical items immediately after OC receipt - don’t wait until delivery is due. Request periodic progress photos from the manufacturer showing materials staged, in-process fabrication, and completed goods. Vendors who resist providing updates are usually the ones running behind schedule.

For Suppliers

Review PO terms carefully before issuing an OC. Professional buyers often include hidden clauses that shift risk to suppliers. Once you confirm, you’re legally committed.

EPC Procurement Software

EPC contractors generate RFIs, RFPs, RFQs, and POs using dedicated procurement software that integrates with project management and financial systems.

Software	Key Features	Best For
SAP Ariba	Global supplier network, RFx management, contract management, PO automation, invoice processing, analytics	Large EPCs needing comprehensive procurement lifecycle management
Oracle Procurement Cloud	Supplier qualification, sourcing, contracts, purchasing, advanced analytics	EPCs seeking deep ERP integration
Coupa	User-friendly interface, spend management, procurement, invoicing	EPCs prioritizing usability and cost savings
Ivalua	Flexible, customizable, risk management, supplier relationship management	Complex oil & gas requirements
JAGGAER	Direct/indirect spend, industry-specific features, advanced analytics	Equipment and materials-heavy projects
Procon	Project cost management, subcontract management	Construction/engineering focus
ProcureWare	Bidding, supplier management, customizable workflows	Simpler procurement needs

Related Articles

• Common Shipping Documents - Bill of lading, invoice, packing list, and other shipping documentation
• Incoterms 2020 Types and Risks - Risk allocation between buyer and seller
• Hidden Risks in Contracts - Contract clauses to review before signing
• Alternative Payment Terms - Letter of credit, cash, and DAP payment options
• Mill Test Certificates - EN 10204 documentation for materials