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Learning Lessons From Past Capex Projects
- 1. © Steve TennantConsultancyLtd2010 1 Asia Nuclear Construction Conference Learning Lessons From Past Capex Projects: Coal Plant & Billion Dollar Infrastructure Case Study By Steve Tennant FRICS, FCInstCES, MAIB
- 2. Learning Lessons FromPast CAPEX Projects Presentation Review § Introduction and non Nuclear Apology § Current challenges that Asia New Build is facing § Lessons I have learnt from past construction projects § Construction management technologies & best practices © Steve TennantConsultancy Ltd2010 2
- 3. Learning Lessons FromPast CAPEX Projects Presentation Review § Control of complex builds in sometimes unpredictable environments § Suggestions to reduce time and risk exposure on your next billion dollar project © Steve TennantConsultancy Ltd2010 3
- 4. Learning Lessons FromPast CAPEX Projects Introduction & Apology § An Apology? § Qualifications to present? © Steve TennantConsultancy Ltd2010 4
- 5. Learning Lessons FromPast CAPEX Projects © Steve TennantConsultancy Ltd2010 5 Power Reclamation Metro Highway Dredging
- 6. Learning Lessons FromPast CAPEX Projects © Steve TennantConsultancy Ltd2010 6 Integrated Gaming Resort BOT Concession Tunnel Harbour Crossing Container Port
- 7. Learning Lessons FromPast CAPEX Projects Current Challenges – Asia New Build § Standard Challenges § Need Political & Project Champions § Finance § Regulatory § NIMBY © Steve TennantConsultancy Ltd2010 7
- 8. Learning Lessons FromPast CAPEX Projects Current Challenges – Asia New Build § Current Challenges § Political Control of Nuclear Technology § Proven Experience in Project Delivery § Selection of Operational Technology § Operational Expertise © Steve TennantConsultancy Ltd2010 8
- 9. Learning Lessons FromPast CAPEX Projects Current Challenges – Asia New Build § Current Situation § “Asia is the main region in the world where electricity generating capacity and specifically nuclear power is growing significantly” - World Nuclear Association © Steve TennantConsultancy Ltd2010 9
- 10. Learning Lessons FromPast CAPEX Projects Current Challenges – Asia New Build § Current Situation § In East and South Asia there are 112 nuclear power reactors in operation, 37 under construction and firm plans to build a further 84 (at April 2010). Many more are proposed.” - World Nuclear Association © Steve TennantConsultancy Ltd2010 10
- 11. Learning Lessons FromPast CAPEX Projects © Steve TennantConsultancy Ltd2001 11
- 12. Learning Lessons FromPast CAPEX Projects Current Challenges – Asia New Build § Current Situation - outside Asia § USA approves 2 new sites after 30 year hiatus § UK approves 8 new sites after 15 year hiatus § Russia domestic & export sites § France domestic & export sites § + others © Steve TennantConsultancy Ltd2010 12
- 13. Learning Lessons FromPast CAPEX Projects Current Challenges – Asia New Build § Where will the Builders come from? § USA? § Canada? § Russia? § France? § Japan? § China? § South Korea? © Steve TennantConsultancy Ltd2010 13 Impact of Nuclear Technology Export Restrictions?
- 14. Learning Lessons FromPast CAPEX Projects Current Challenges – Asia New Build § The Key Challenge § Sourcing experienced human resources you trust and can communicate with • Nuclear boom? • Infrastructure boom in Asia • Competition for human resources between countries and projects • Not just management, but supervisors & tradesmen © Steve TennantConsultancy Ltd2010 14
- 15. Learning Lessons FromPast CAPEX Projects Lessons that I have learnt § Bad news flows upwards very slowly § Collaboration not Confrontation § We expect Problems § We do not like Surprises § The Client wants to change his Mind, but not his Budget or Completion Dates © Steve TennantConsultancy Ltd2010 15
- 16. Learning Lessons FromPast CAPEX Projects Lessons that I have learnt “ I want the World’s best 5 year old railway, delivered to me” Russell Black Projects Director (Retired 2009) MTR Corporation Limited © Steve TennantConsultancy Ltd2010 16
- 17. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of BIM § Use of IPS & Programme Payment Milestones § Owner’s pro-active Project Management Team or Alliance / Construction Management § Use of OCIP © Steve TennantConsultancy Ltd2010 17
- 18. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of a Project Collaboration and online Project Management System § Use of Dispute Resolution Adviser § Use of Risk Management © Steve TennantConsultancy Ltd2010 18
- 19. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of BIM - Building Information Modeling § produces and manages all building-related data for a given project using multi-dimensional, real- time, dynamic building modeling software that generates an integrated, digital representation which can be shared by multiple project partners. § The building information model is a central database of project information for the entire building life cycle, from design and construction to operation. © Steve TennantConsultancy Ltd2010 19
- 20. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of BIM - Building Information Modeling § Streamlines communication and collaboration between project partners § Errors are detected more rapidly and can be corrected prior to fabrication and/or construction, thus avoiding costly modifications § Provides the status of each building component § Estimates, simulations, planning and energy analyses are much more accurate § Pre-construction simulation of building performance § I have used Intelibuild as BIM service provider © Steve TennantConsultancy Ltd2010 20
- 21. Revit Structure –BIM Model
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- 23. MHS B7 ULD Paths vs ARC Walls MHS B7 ULD Paths vs ARC Walls MHS C7 ULD Paths vs ARC Walls MHS C7 ULD Paths vs ARC Walls Clash Detection
- 24. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of IPS & Programme Payment Milestones § Interim Payment System – Contractor proposes his required monthly cash flow with his tender. § Contractor gets paid if he achieves Programme Payment Milestones § Facility for adjustment due to missing Payment Milestones or change to approved Programme § Reduce disputes on interim payment © Steve TennantConsultancy Ltd2010 24
- 25. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Owner’s pro-active Project Management Team or Alliance / Construction Management § Direct Ownership of Project, speed up decision making § Split works into smaller packages, eg City of Dreams US$3b, 700 + works contracts, increased ability to accommodate change. § Transparency of cost and time © Steve TennantConsultancy Ltd2010 25
- 26. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Owner’s pro-active Project Management Team or Alliance / Construction Management § Owner needs to be hands on, he is going to operate Project afterwards § Owner is Contractor or Contractor is part of Owner’s team § Contractor paid fee plus shared gain / pain § Project is managed, not fought over © Steve TennantConsultancy Ltd2010 26
- 27. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of OCIP - Owner Controlled Insurance Programme § Owner insures at least Works & Third Party Liability § Economies of scale by buying directly § Contractors still liable for deductibles, exclusions and risk of policy coverage § Owner can assign benefit of insurance to Lenders and effect DSU, if required © Steve TennantConsultancy Ltd2010 27
- 28. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of OCIP - Owner Controlled Insurance Programme § Policy known to be in place and coverage effective at project commencement § Waiver of cross liabilities between co- insureds § Broadest form of wording generally available § Employer must keep deductibles affordable © Steve TennantConsultancy Ltd2010 28
- 29. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of a Project Collaboration and online Project Management System § secure and easy-to-use system, § accessed by all project participants to capture, manage, track and protect critical information. RFIs, approvals, drawings, tenders § handles all project data and all formal project communication with other parties. © Steve TennantConsultancy Ltd2010 29
- 30. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of a Project Collaboration and online Project Management System § Paid for by Employer § Used free of charge by all project participants in any tier, in any location § Auditable with complete document tracking and history § No excuse for not having current information § Systems I have used;; Aconex, Incite © Steve TennantConsultancy Ltd2010 30
- 31. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of Dispute Resolution Adviser § An individual person, jointly appointed and paid for at beginning of contract § Proactively seeks to avoid disputes with a “D” § A friend to the Project who attends progress meetings, commercial and other meetings. § Contractor, Owner, Consultants or Sub- Contractors can refer matters to him § Can only suggest or recommend, cannot make a contractual decision © Steve TennantConsultancy Ltd2010 31
- 32. Learning Lessons FromPast CAPEX Projects Construction Management & Practices § Use of Risk Management § Use a formal documented Risk Management system that: • Starts with the Design Consultants • Gets handed over to and updated by the Contractor • And is handed over to the Operator § Evaluates the likelihood and consequences of a risk occurring so that you: • Avoid, Mitigate, Transfer or Accept the risk © Steve TennantConsultancy Ltd2010 32
- 33. Learning Lessons FromPast CAPEX Projects Control of complex builds in sometimes unpredictable environments § Flexibility, a must § “…The best-laid schemes o' mice an' men Gang aft agley…” From To a Mouse Robert Burns in 1785 § “… The best laid schemes of mice and men Go often askew…” From To a Mouse Robert Burns in 1785 § Unpredictability creates opportunity for risk or reward • City Hall MRT Collapse © Steve TennantConsultancy Ltd2010 33
- 34. Learning Lessons FromPast CAPEX Projects Suggestions to reduce time and risk exposure on your next billion dollar project § You have seen only some of the things I keep in my tool box § Find out what your Project Manager keeps in his! § Something to think about on the next slide © Steve TennantConsultancy Ltd2010 34
- 35. Learning Lessons FromPast CAPEX Projects © Steve TennantConsultancy Ltd2010 35 Dr. George Jergeas PEng.Professor of Project Management University of Calgary, Alberta. April 2007
- 36. Learning Lessons FromPast CAPEX Projects THE END © Steve TennantConsultancy Ltd2010 36