United Kingdom

United Kingdom

Forward view key to reducing project risks

Large scale and complex schedules make offshore wind projects prone to significant risks. Global engineering, procurement and construction company Bechtel explains how to use structured processes to anticipate problems and manage them effectively

Offshore construction involves many elements and thus many risk factors
Offshore construction involves many elements and thus many risk factors
Risk can wreak havoc on an offshore wind power project. Uncertain weather conditions — combined with the challenges of transporting materials in the marine environment — need to be managed effectively in order to mitigate the greater risks involved. As the market matures and the number of planned large-scale projects increases, so do the opportunities for delays, cost overruns and safety issues.

But offshore projects can be delivered successfully, provided the right approach is adopted to bring predictability to their outcome. There are four steps that are essential to the positive outcome of any project:

- detailed assessment of potential future risks
- careful, ongoing examination of changing project conditions
- management of the supply chain to ensure budgets are controlled
- ensuring that manufacturing quality and delivery timelines are maintained

All-inclusive approach
Offshore wind projects are extremely complex and require an all-inclusive approach to their development. They involve turbines up to three times the size of those used onshore, the construction and installation of platforms, and the engineering of transmission lines and substations. An engineering, procurement and construction (EPC) contractor that is able to buy materials globally will generate cost efficiencies and maintain high quality standards. Another crucial element in reducing risks inherent to the marine environment is to shift as much production and as many processes as possible to onshore locations such as nearby ports.

Consistency in plans and processes also plays an important role in ensuring a positive outcome. Because a good EPC contractor will have all personnel trained to use the same processes across every project, it becomes easy to mobilise extra resources on a project when there is a need to meet deadlines or solve problems.

The use of structured databases and scheduling software, alongside effective global supply-chain management, are crucial to monitoring risk and reducing uncertainties, thus helping achieve optimal outcomes.

Structured databases
In the past, managers of major projects such as offshore wind would rely on spreadsheets to track potential risks, their owners and mitigation plans. A web-based structured database project risk-management solution allows all stakeholders to easily gain visibility into risk, assign risk ownership and create advance plans to manage uncertainty.

"Structured thinking" about risk can be recorded and shared with all stakeholders; ownership of risks and response plans can be assigned and tracked in a single solution. This facilitates a future view on project incidents that could affect the overall project outcome and encourages project team accountability for the successful management of those outcomes.

Anticipating problems will reduce their impact. Once an incident has happened, the ability to control the outcome is uncertain at best. EPC contractors such as Bechtel have project managers and teams who are trained in structured thinking about risk and best-practice project risk management: this way of thinking works in tandem with their technology solution.

A simple web browser link gives all stakeholders simultaneous access to an organised and prioritised grid of potential risks, when they might occur, the possible causes and effects, and an estimate of the risks’ impacts on the project — should the risks occur. The scoring portion of the grid yields further details on impact, for instance whether it is derived from cost overruns, delays or safety concerns. As the project approaches periods of risk exposure such as turbine foundation construction delays due to wave height, or delays in construction permits, the relevant risk owners can begin marshalling resources and people to solve the future problems.

With an advance view on risks, project managers can decide whether it makes more sense to address the cause or the effect of a potential problem. Because delays to shipment of large pieces of equipment to offshore sites can have severe schedule impacts, for example, weather conditions at sea are a real source of project execution risk. While weather events cannot be controlled by a project team, response planning can focus on avoiding or reducing the impact of extreme weather on schedule and cost.

Scheduling solutions
Project scheduling should be far more than a list of dates and deliverables: ideally, it should include risk assessment and what-if scenarios, using software that helps assess how risks impact schedules and costs. Modelling allows project managers to see how outcomes can change based on these cost and scheduling issues.

Project managers can determine historical lead times for procurement on past projects. They can also build cost information into schedules by accessing "rule of thumb" cost estimates for similar projects. They can even view pricing data down to the component level.

Once the historical data has been woven into the schedule, managers can conduct simulations based on changes to the variables. And once the project has started, managers continue to perform scheduling and risk assessment to the project, determine how a delay might impact costs and establish a plan to mitigate any anticipated problems. The overall goal of this process is to minimise the impact of problems before they can seriously affect a project’s deadline or budget.

After projects are completed, the project team will report on how the project proceeded against plan, examine why there may have been deviations from the schedule, what was done to accelerate the schedule if possible, and what caused managers to order extra quantities of materials. This information will help when planning future projects.

Careful monitoring
Supply-chain management is also key. The people who manage the supply chain are as important as the process used to manage it. A team with specialised supply-chain management experience ensures that nothing falls through the cracks. At Bechtel, 2,000 professionals worldwide work to ensure quality and schedule performance. Strategies are developed far in advance of a project, revisited throughout the project timeline and revised as needed. The team’s expertise can be leveraged to manage traffic and logistics on a global scale rather than hiring a broker. This provides more control over materials, cost and schedule, ultimately increasing the chances of a positive outcome.

Because of the marine environment challenges inherent in offshore wind projects, supply-chain challenges are multiplied. These projects tend to be highly schedule-sensitive, so supply issues can have a cascading impact on schedules down the line. Also, there is a smaller pool of qualified suppliers, making the management of supply schedules highly critical.

An important first step when working with suppliers is the selection process. At Bechtel, price is typically not the first consideration when selecting suppliers: supply-chain experts review a supplier’s capacity and examine its past performance. Regular onsite inspections prevent faulty products from shipping to project sites, thereby avoiding delays. In addition, project managers continually analyse the progress of suppliers toward delivery of completed goods — for example, whether raw materials have been ordered and are inbound, and whether suppliers have capacity at that moment to complete the work. A supplier’s financial condition is also monitored as the project progresses to react promptly to red flags that could adversely impact deliveries.

Offshore power project success — as measured by predictability of outcome, safety record, and cost and scheduling goals — requires a forward view into managing risks. Once risks materialise and managers respond in the midst of a crisis, their ability to minimise impacts is compromised. An integrated risk-management approach encourages project teams to predict future challenges and resolve them in advance instead of simply addressing day-to-day problems as they arise.

Toby Seay is president of Bechtel’s communications, renewables, and transmission business line. Bechtel has more than 60 years’ experience in engineering, procurement and construction in the power sector

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