RWE npower is constructing new CCGT power stations at Staythorpe and Pembroke in the UK. The 1650MW Staythorpe facility has begun commercial operations and the 2000 MW power station in Pembroke is under construction. Both gas fired power stations were procured under an EPC contract and are being delivered by Alstom. The value of each EPC contract is approximately £800m. RWE wanted some advice on the project management procedures as they had previously undertaken a Flue Gas Delsulpurisation (FGD) project which had resulted in a cost overrun. In particular, they were seeking advice on internal processes and systems to increase risk resilience and to provide guidance on construction programming, project risk management and data management.
PwC was engaged to undertake an internal review of key project management processes for the projects which were at different stages of construction. Our review comprised interviews with project team members, a review of the project documentation, the project management procedures and the IT systems. Our risk based assessment comprised:
- a review of the EPC contracts to identify the risk allocation and specifically the client’s commercial risks and areas where claims would likely arise from
- mapping the existing framework of project management processes and the extent to which they safeguarded the client against the identified risks was assessed
- the project’s team capability and maturity was assessed against this framework to highlight areas of concern.
The risk resilience review identified a lack of maturity in the project team’s systems which required further development to provide a robust challenge to the type of risks and claims expected. Furthermore, the contract did not provide RWE with the transparency it required to adequately understand the impact of contract changes. There was an overdependence on individuals’ skill and competency rather than formal project management procedures. The key benefits of the review were:
- identification of key contractual and delivery risks that need to be closely managed
- shortfalls in the capability of project management components such as planning and risk management and a lack of integration of IT systems were identified and solutions proposed
- guidance was provided on how claims should be scrutinised and knowledge of delay analysis techniques was transferred to the RWE team
- specific recommendations were made to increase resources allocated to record keeping, project planning and risk management activities.
Our recommendations have been implemented with a resulting increase in risk resilience for RWE npower in the delivery of these two key business projects.