Category: Projects and contracts

Based on my experience working on large scale renewable energy projects, this series of posts on energy contracts looks at some of the key technical considerations that are often overlooked or misunderstood.

If you’re interested in reading more on EPC contracts, Considering Contracts is out and available for purchase. You can buy this here

What could possibly go wrong on a Solar PV project during construction? – Part 3

This post is the last (for now at least) in a three part series looking at some of the things that can go wrong during the construction of a solar PV facility. Part 1 of this topic looked at design, programme, labour and environmental conditions that could impact construction.  Part 2 focused on the importance of effective onsite management, including quality control, equipment management, housekeeping and safety.

External conditions/events

“The best laid plans of mice and men often go awry.”  No matter how carefully planned out a project is, progress will always be at the mercy of external events, outside the control of project teams.  Some events are possible to predict, and contingency plans, or mitigating plans can be created.  Other events come out of the blue, are totally unforeseen.

The contractor should be responsible for completing the project to the extent that they are able to control, or perhaps even influence, what is taking place.  But contracts will have ‘force majeure’ clauses included, to address what happens if something happens which is totally outside of the contractor’s control.

Regardless of who is responsible, works need to get back on track, and repair works or accelerated catch-up works may be required.

Weather conditions, like floods, heavy winds, lightning and hail, can lead to facility and equipment damage.  Material or equipment supply chain hold ups or shortages may occur (by way of example, a project that I worked on had their steel supplier’s factory burn down).  Permission to connect to the electrical grid can be delayed, through no fault of the contractor or employer.  Third party works may need to take place (for instance transmission lines, substations or access roads).  Third party inspections and/or approvals may be required.

Storm water management/drainage

This is closely linked to external events – as heavy rain is clearly a weather event.  And it is linked to the appropriateness of the design (which is discussed in Part 1.  But it’s important enough to merit its own mention.  Solar facilities are covered with impermeable, smooth, titled panels.  They act like a roof, without a gutter.  Rain runs off them easily, and, over time, this leaves little grooves in the ground beneath the bottom edge.  This water accumulates and then runs downhill.  Depending on the ground type (permeability), the facility slope and the amount of rain received, stormwater management can become an issue.  Moving water can erode away at ground, roads and earth surrounding the mounting structure base.  This is clearly an issue over the life of the plant, but the management of stormwater can also be a problem during construction if water rushes into trenches, washes away civil works, or affects other aspects of work.

It’s therefore important that the contractor is aware of rainfall patterns, and considers how stormwater will behave onsite.  Plans should be in place to manage the water, and drainage designs should consider protecting the facility both during construction, and over its operational life.

Access road degradation

For any equipment, people or materials to reach the site, it is naturally important that the facility can be accessed.  There is typically a portion of road, of varying length, linking public roads to the facility’s boundary.  It’s important that the responsibility for building and maintaining this road is clearly defined.  But regardless of who is responsible, this road will take quite a beating over the course of construction.  Trucks carrying modules, mounting structures, inverters, switchgear, concrete, and other components and materials will be travelling backwards and forwards for months.

If the road isn’t built properly, it will end up being heavily corrugated and can turn into a swamp with heavy rains.  This then affects the delivery of components and materials, and the accessibility of the site for people working there.  Because it’s outside of the site boundary, it can be overlooked, but can result in a logistical nightmare if it’s not built properly.

Connection quality

A problem for a number of projects in South Africa was in the power quality at the point of export.  Different countries have different connection requirements, which will be set out in the relevant codes, regulations and standards.  Equipment may be brought in from other countries, and designs carried out by foreign engineering professionals.  This can result in the facility not complying with the specified requirements.  Design adjustments, equipment tweaking or reprogramming and/or possible additional equipment may be required, and these may end up delaying the project.

It’s therefore clearly important that the designers are aware of local conditions and requirements, and design the facility appropriately.  Sufficient time for testing is also required, in case there are hiccups along the way.

Ground risk

The contract should define whether or not the contractor is liable for any sneaky surprises that may be lurking underground.  They will be develop their design according to the conditions that they have observed onsite.  The mounting structures, electrical equipment housing units and cable routing designs will all have been selected and developed accordingly.  If the actual conditions are different from than what was expected it can have an impact on the suitability of the design.  It’s therefore incredibly important that a thorough geotechnical assessment is carried out.

What could possibly go wrong on a Solar PV project during construction? – Part 2

Solar PV facilities should be fairly easy to build; the technology is not overly complicated, and the installation process should be a series of lego-like assembly.  So why does so much go wrong?  Part 1 of this topic looked at design, programme, labour and environmental conditions that could impact construction.  This post will look at the importance of effective onsite management.

Quality inspections / quality control

What should be included in the contractor’s contract is that all works are to be done to an acceptable level of quality, and that the contractor should be implementing a comprehensive quality assurance plan.  But PV facilities are made up of millions of components being installed, in addition to vast stretches of trenching being dug and filled, and other civil works taking place.  LV, MV and HV electrical works are on the go, and multiple teams are all working simultaneously, often within the same zone.  If the contractor doesn’t have their proverbial ducks in a row, construction works can be done sloppily, and without due care.

Step one is to ensure that before an activity begins the contractor makes sure that everyone has the right information.  Documentation control is incredibly important.  Have drawings and method statements been reviewed?  Is the document register updated?  Do all sub-contractors have the right plans?  Does everyone know what they’re supposed to do and how they’re supposed to do it?

If this important control is not in place, and people are working to the wrong plans or designs, trenches can go in the wrong place, concrete pours may need to be redone, modules may need to be removed and replaced, and so on.  An entire site can spiral into chaos if people don’t know what they’re meant to be doing.

But let’s assume that people have the right information.  There should then be detailed inspections and checks by the contractor’s quality team to make sure that the works delivered match the design.  Have cables been securely fastened?  Are bolts tightened?  Have all components been installed in accordance with the original equipment manufacturers’ requirements?  Are the pyranometers facing the right direction?

All of these tiny checks add up to two big important questions – is the facility safe to operate and can it operate as intended?

There should be a whole room full of files containing evidence of inspections.  Well, not quite, but the evidence should be there.  If the contractor isn’t recording their inspections and test results, it’s very difficult to be confident that they’re really in control of the facility’s overall quality.

If the employer is dissatisfied with the facility presented to them it can impact on whether milestone payments are made to the contractor, or whether the contractor can achieve practical completion (or whatever completion milestone is defined in the contract.)

This impacts on the project’s completion date, and if quality issues are not identified and then resolved, it can affect the facility’s operational efficiency and safety.  Not good.

Storage and handling of equipment

Some components, of the millions of components being used, will have requirements relating to the handling of equipment that could impact their warranties or how they perform in operation.  The importance of complying with these requirements cannot be overstated.

Equipment should be transported correctly, unloaded and then stored correctly.  It should be packaged suitably, and then, when the time comes to install it, it should be installed properly.  The facility design should ensure that the operational or environmental conditions will be within a range considered acceptable by the manufacturer.

If the contractor isn’t aware of these requirements, they won’t handle the equipment correctly and they run the risk of voiding warranties and affecting facility operation.  They also run the risk of damaging equipment so that replacements need to be ordered.  Some of the components on a PV site, especially made-to-order items, can have a very long lead time.

This can throw the project schedule off course.

General housekeeping

The condition of the site in general can be a good indicator of the contractor’s overall control of onsite activities.  Rubbish and litter lying around, concrete splatters, broken glass and piles of sand and rocks all provide an indication that small, but important, controls are not in place.  Inadequate housekeeping can also raise flags for the environmental officer or manager, who should be monitoring construction activities in accordance with the relevant environmental authorisation and/or environmental management plan.  Non-compliance with the EMP can result in onsite activities being stopped until the issue is corrected.

Safety

The contractor’s level of control of onsite activities will also have an impact on the safety of all persons working there.  There are multiple ways in which someone could really hurt themselves, or others.

  • PV modules sitting in the sun will be live.  Any person fiddling with the module, or with connectors, who may not know what they are doing could really injure themselves.
  • The same risk exists with other electrical equipment being used throughout the facility.
  • Heavy drilling and trenching machines may be operating and these naturally have the potential to injure someone quite seriously.
  • Anyone working near loud machinery should be wearing ear protection.
  • Fire is a concern on any PV facility.  Electrical fires or bush fires (particularly in drier climates) can occur.
  • Then there is a risk of other accidents happening.  People dropping equipment or material, or falling in holes, or misusing a tool, or even sunburn or heatstroke.

Injury or even death is a real risk, and it is up to the contractor to ensure that

  • safety considerations are emphasised during toolbox talks,
  • emergency procedures are in place and emergency equipment (like fire extinguishers) are available,
  • access controls are in place to prevent unauthorised persons from entering electrically active zones and
  • all workers are adequately trained before carrying out any activities.

There should be an appointed health and safety control officer, who is tasked with developing and implementing H&S procedures.  Any incidents or non-compliances should be taken seriously, and it’s important that safety is instilled within the site culture from the start of construction activities.

What could possibly go wrong on a Solar PV project during construction?

I gave a talk on EPC contracts at the All-Energy conference in Melbourne earlier this month.  The other speakers talked on the role of the lender’s independent engineer, the commercial & industrial solar PV sector and the transition from fossil fuels to renewables from an environmental management perspective.

One of the questions that was asked of us all right at the end was to do with large scale solar PV installations.  If solar PV facilities are effectively like large assemblies of lego pieces, what could possibly go wrong during construction?

It’s true, they should be fairly straight forward to construct, so why is it that some facilities are completed so much later than planned?

Design suitability

Solar PV facilities aren’t complicated to design for, but if the design is inappropriate, there are a myriad of issues that can result.  For example:

  • Overcomplicated mounting structures can be difficult to assemble, and may not handle slopes or undulations in the ground very well
  • Lightning may be more frequent and more severe than the electrical design allowed for
  • Geological conditions may make trenching and piling activities more difficult than expected
  • Electrical equipment selection may not comply with grid connection/code requirements

Programme of works – sequencing of activities

Constructing a PV facility means tracking and controlling the movement of millions of components, and managing the activity of hundreds of workers.  If the programme of works, or project schedule, is not well thought out, logical and comprehensive, the project risks onsite activities descending into chaos.

The project schedule should result in the efficient flow of components and equipment; be that the delivery of goods and machinery to site, the order and layout of any storage or laydown areas, and the timing of movement of components from storage to installation zones.

Installation activities should also be carried out efficiently, and in the right order.  Modules cannot be installed by the module installation teams if the mounting structure assembly teams have not completed their works.  If the mounting assembly teams are not working efficiently, the module installation teams will be sitting on their hands.  Modules (or other sensitive equipment) should not be installed if there are heavy duty civil works still to be done (like trenching) in the nearby areas.

Trenching activities can only be done if the trenching machines are available.  The availability of machinery becomes very important in sticking with the project programme.  And if there are lots of projects going on at the same time, in fairly remote areas, the availability of such equipment is not necessarily a given.

Labour management

Where is your contractor from?  Are they originally a foreign organisation who ran out of work in their home country so came to your shores seeking more opportunity?  And if so, have they hired local people to work on your project?

Each country, and indeed each region within each country, has its own labour environment, bringing its own set of issues and challenges.  If the contractor doesn’t have local capacity, they may not have a good understanding of what these issues and challenges are, or how to overcome disputes if they arise.

Strikes, go-slows or the downing of tools has an enormous impact on project execution, and the contractor needs to know how to find a resolution to labour issues as soon as possible.

Also, there may be expectations as to local working conditions, or assumptions around working practices that may not necessarily be written anywhere, but which the contractor may be expected to know.  The contractor could very well go through nasty culture shock on site, and throwing hands up in the air and stomping away from the workforce won’t really get things done.

Local knowledge and capacity is critical.

Compliance with environmental authorisations/management plan

Depending on the size of the facility, there is likely to be some form of environmental permit or authorisation, which is the result of an environmental impact assessment.  This permit may outline constraints that apply to the project (such as no-go areas around wetlands or areas of heritage significance) and it will likely require the project to have an environmental management plan that is implemented as the project progresses.

Compliance with the permit and the associated EMP is very important.  Non-compliance may result in delays, or perhaps even the withdrawal of granted permits.

Any new site findings can throw a real spanner in the project works.  Unearthing a burial site, for instance, can close down an entire section of a facility.

Watch this space – Part 2 coming soon.

Project planning within the energy sector (part 3 of 3)

This post is part three of a three part series on project planning within the energy sector.  Part one provides an introduction and some context, and bit on why project planning is important.  Part two looks at some of the considerations when planning a project within the public sector; mostly about how to go about procuring consultants to carry out the works.  This post looks at project planning within the private sector; from the perspective of an energy consultant.  Similar principles apply for contractors or suppliers responding to a request for proposals, but I typically wear a consultant’s hat.

Private sector project planning

While there are overlaps between project planning principles in the public and private sector, the focus of a consultancy (in particular) is very different from that of a project manager procuring the services of a contractor.  In general, a consultant is responding to the specifications developed by the client – outlined in a request for quotations, tenders, proposals etc.  They sit on the other side of the fence, and are now looking at the statement of works that someone else has developed, with a critical eye.

Deciding to go ahead with a project

Depending on how much work is out there, projects will typically be pursued if they are deemed to be sufficiently low risk with a good probability of making a profit.  The organisation should be capable of carrying out the stated statement of works, they should have resources available to do the works, be familiar with working in the project location (particularly if the project is to be carried out somewhere remote and/or in a different country) and the overall project focus should align with their corporate strategy.  The client should have a decent reputation, and should be likely to be able to pay invoices.

Responding to tender or proposal requests, or even short quotation requests, can be incredibly time consuming and therefore costly for a consultancy, and so this initial assessment of the call for submissions is very important.  How long will it take to prepare a bid submission?  Who is going to prepare the bid and how much does their time cost?  Does the overall project revenue potential merit preparing and submitting a bid?  And is the consultancy likely to win the bid?  Are there likely to be loads of competing bids?  All of these factors should be considered, and if the result of this go/no-go assessment comes out with an answer of ‘go’, you then move on into the preparation of bid submission.

Preparing the scope of works and associated quotation and schedules

Projects differ; there’s no getting around that, and this post would be infinitely long if I tried to cover all project types and permutations.  So I assume here that the client requires the services of a consultant, and that the consultant is required to provide a scope of works, for a fairly fixed or predictable price.  Other projects may allow the consultant to work on a time basis, which moves a lot of the scope risk onto the client, but for the purposes of this post, we’ll assume that the consultant is expected to give some sort of assurance as to how much the services for a piece of work will cost.

With that in mind, a client’s request for quotations/tenders etc will typically include a required statement of works, that may or may not be at a fairly high level of detail.  They will generally ask for the consultant to provide a methodology that will be followed, with the associated price, and expecting completion date(s).

Some clients may not have prepared this at all or (unfortunately) don’t really know what they are asking for, and will request the consultant to develop this on their own scope of works, based on their experience in the sector, their understanding of the overall project requirements and intended project outcomes.  There should have been some discussion with the client at least, to inform this understanding.

Regardless of how much information is forthcoming from the client, this means is that the consultant is typically required to drill down into the detail of what tasks and activities need to be completed during the project’s execution, when this should be done by and by whom, and how much this will cost.

The 75MW solar PV facility I worked on in De Aar, South Africa.  This was a big scope of works, with loads of assumptions and exclusions.
The 75MW solar PV facility I worked on in De Aar, South Africa. This was a big scope of works, with loads of assumptions and exclusions.

Defining the assumptions and exclusions

If the required statement of works has been thoroughly thought out by the client and is fleshed out in the procurement documents then developing the scope and methodology in the bid can be fairly straight forward.  Each task is included and costed accordingly, and laid out in a proposed project schedule.  If there is no statement of works provided, the consultant will need to give more time to developing the tasks and activities that need to be carried out, and costing these.

Regardless, the scope of work provided to the client should be clear, unambiguous and logical.  And what becomes increasingly important, particularly in bids that have a fixed price attached, or penalties associated with missed deadlines, are the associated assumptions and constraints.  This is where I’ve ended up spending a lot of my time on bid submissions, and they can make all the difference.

Spelling out your assumptions helps the client to understand how you have interpreted what they require, what kind of information or input you’ll require from the during project execution, how much information or documentation you’ll be required to review, what other external dependencies exist (e.g. receiving consents or comments from project stakeholders), how much time has been allocated to tasks outside of the consultant’s control, etc.  The consultant’s contract price and project schedule is developed accordingly, and any change in the assumptions may lead to a change in the price or completion date.  These assumptions are not necessarily fixed, they can be discussed further or negotiated with the client, but they give a basis of understanding for the tasks and activities listed in the scope of work, and protect the consultant from disputes arising from a lack of information or clarity.

Similarly, the consultant should also be explicit in what activities or functions are not included in their scope of works.  For example, the consultant may state that they are not responsible for any activities relating to the preparation or submission of any applications for project licences or consents.  This means that this activity has not been included in the overall project price, and if the client requires that the consultant carry out this work, it will be in addition to the stated scope of works.  There should also be a blanket statement somewhere saying that if it’s not in the scope of works, it’s considered to be an exclusion.

Exclusions, as with assumptions, protect the consultant from the client misunderstanding the intention of the stated scope of works, and protect the consultant from the dreaded scope creep.

A good amount of time should be given to thinking about what is not included.  If the consultant has a good understanding of the sector, and of the tasks and activities that are required for the type of project, they will have a good idea of what type of additional activities could be required that may not be listed in the statement of works, but may be expected by the client regardless.

Besides the above, other important project planning activities would apply.  Who will work on the project, and what kind of rate are they on?  What type of quality control activities will be in place to ensure the work is carried out properly?  What risks exist in the project and how will they be avoided or mitigated?

project planning upon appointment

If the bid is successful, and you are appointed, the next stage of project planning begins.  A kick off meeting with the client is always a good idea.  You contact your team to let everyone know how much of their time will be required and when.  You may receive project documentation and information from the client and you’ll probably set up the system for managing and filing said documentation and communications.

A pause here, before you set off on actually carrying out the project work, to confirm with the client as to the overall methodology, project tasks, communication strategies, reporting expectations etc, is recommended.  Particularly if all communication to date been limited to the content of your bid submission.  Any questions before we kick off?  Anything unclear in our scope?  Anything unreasonable in our assumptions?  Do you need any activities listed in our exclusions put back in (with an associated price adjustment)?  Have we misunderstood anything you’ve expected of our us in your statement of works?

Right, let’s get going then.