United Kingdom

United Kingdom

Contract risks include developers' own weaknesses

Few EPCI contractors means supplier interfaces must be managed

Developers of offshore wind farms need to examine the risks they bring to their own projects , argued Luis Salavarria, senior commercial manager with Vattenfall, speaking in London today about contract risk management for offshore wind construction.

Not all risks are the result of inexperienced contractors, bad weather or technology failure, emphasised Salavarria, who works on Vattenfall's Ormonde and Kentish Flats offshore wind farms. If developers are serious about cutting the potential for cost overruns and late project delivery they need to examine the risks they may be bringing to the table and design their procurement strategies to minimise them.

Developers need to ask themselves questions such as whether their own systems are flexible and modern enough to stimulate innovation in the supply chain or whether they have been genuinely thorough in completing essential tasks such as "sweeping the market" to identify all potential suppliers, said Salavarria.

Allocating all risk to suppliers during contract negotiations is unlikely to encourage the collaboration that leads to innovation, he added.

It is important for developers not to expect too much of the offshore wind supply chain, which remains at the "trial and error" phase, noted Salavarria. As an example, there are not many strong EPCI providers active in European offshore wind, so developers must be prepared to manage interfaces between suppliers. Developers hoping to hand over all headaches to an EPCI contractor may be being unrealistic because "the market may not be ready to give that all-inclusive contractual solution". 

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