Member Article

Project integration key to Hinkley Point success

All eyes will be on the UK Government after it announced a deal to build the country’s first new nuclear plant in a generation, especially after analysts at stockbroker Liberum Capital have said the tie-up with French company EDF will make Hinkley Point the most expensive power station in the world. The plant in Somerset is set to cost £16 billion and will provide enough power to supply seven per cent of Britain’s homes for the next 60 years.

Although the Hinkley deal is pivotal to Britain’s plans to keep the lights on, while also hitting the UK’s carbon reduction targets and lessening dependence on imported fossil fuels, there are concerns that support for nuclear energy will place further burdens on consumers already hit by rising household bills.

There is already speculation that UK taxpayers could be faced with an annual bill of £1bn to subsidise Hinkley if wholesale electricity prices fall below the price the government has guaranteed EDF. And it’s also worth noting that the nuclear plant EDF is building in northwest France has been plagued by cost overruns and delays – it will be important for these issues to be carefully managed in the UK, given the scepticism that already exists around the project.

Building a nuclear plant involves a huge number of business processes from design, manufacture and build, to maintenance, supply chain management and, somewhere down the line, safe decommissioning. Given the complexity involved in developing a nuclear site or any huge infrastructure project, there are multiple opportunities for delays and cost increases to occur.

Given the hostile environment that EDF, China National Nuclear Corporation and China General Nuclear Power Corporation are operating in, it is crucial that the development process is well managed to minimise additional costs and ensure real-time collaboration with all stakeholders. This industry involves a number of moving parts with projects lasting on average 30-40 years, so changes to scope need to be well defined, risk must be assessed and all knock on effects must be understood and managed.

Central to this is an application that can offer a complete and integrated business solution that manages the entire contract lifecycle - design, procure, manufacture, build, construct and install, commission, maintain and service, spares and supply chain, repair, refurbish, and decommissioning. The ultimate and lasting value of an integrated approach comes from having the information generated from all the assets, partners, contractors and suppliers into a single, transparent application so all business stakeholders have visibility and participate in the process at every stage.

For energy projects, which often have numerous assets scattered over a wide area, huge workforces and a seriously complex supply chain, any minor changes can have serious repercussions all the way down the line. Having visibility over all these different aspects of the project is therefore likely to determine whether the project comes in on time and on budget.

The collaborative nature of projects means that information about a particular activity is useless if it’s kept isolated – but very powerful if integrated with all project data. A great example of this is a repository for multi-discipline engineering data that can be shared by everyone working on the project, ensuring error-free handovers of information from engineering to purchasing, fabrication to installation. In the event of a last minute design change, information may even flow from engineering straight to commissioning.

The same principle should be applied to costs and revenue. It’s not enough to budget, track and compare costs in a general ledger – project managers should also be able to track project-by-project. This ensures real-time follow-up and tracking of incurred and actual costs, with reliable forecasting which supports the periodic review process by enabling the comparison of the latest predicted costs with budget and previous forecasts.

The purpose of the tools mentioned above – and this has been by no means an exhaustive list – can be summed up quite simply. It is to smooth over the increasing complexities that the energy industry faces by providing executives and project managers with visibility into every facet of a project. Only with this information, collated and integrated into a single system, can energy firms gain actionable, real-time insight into the health of their projects, and address potential concerns before they cause serious consequences.

With the Hinkley Point construction project set to create 25,000 new jobs and the cost of fossil fuels predicted to rocket by the time the plant starts operating in 2023, there’s no doubt that this project is critical to the future of the UK’s energy production. It’s important that an integrated approach is taken across the entire lifecycle to reduce the risk of going over budget, as the project’s impact on the UK taxpayer will ultimately decide whether Hinkley has been a success or a failure.

This was posted in Bdaily's Members' News section by Colin Beaney .