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Challenges in Procurement and Contracting
Challenges in Procurement and Contracting
Session 1
The Vision of a Consultant
Jean BINQUET , Tractebel Engineering France Coyne et Bellier
Slide 2
Introduction General
Contracting the construction of a large HPP is
always challenging for all stakeholders (the Owner, Lenders, and the Contractors):
- Projects are big with respect to the Assets of the Owner and balance sheets of the stakeholders - Projects are often vital for the national economy - Projects are risky by nature (environment, socio-economy, physical data, etc.)
Challenges in Procurement/Contracting?
- Procurement/Contracting proper, and/or - Steps prior to the Procurement leading to the Projects Implementation
Challenges in Procurement
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Slide 3
Introduction General
What is a successful Contracting?
performance, time and cost as close as possible to the expected values stakeholders and not of one against the others:
- Same boat concept
- Solution Finding using Value Engineering and Open Mind Approach under the contract provisions
- Being lucid when serious difficulties arise and evaluate with fairness
Challenges in Procurement
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Slide 4
Introduction General
Two Points:
- EPC or not EPC - Steps leading to the Procurement: as important or even more important than the Procurement itself to; the Ethiopian Way
Challenges in Procurement
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Slide 5
Linked to the development of the Private Sector Now current practice for hydropower projects
implementation for both Public & Private Sectors around the world: Turkey, Uganda, Gabon, Ghana, Ethiopia, Brazil, Argentine, India, Nigeria, Ecuador, Peru, etc. with a total installed capacity of around 17,000 MW
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Challenges in Procurement
Slide 6
countries by Public Utilities especially in Africa (e.g. Ethiopia, Gabon, Ghana, Senegal, Cameroun, Nigeria, etc.) but also in Latin America (Ecuador, Venezuela), etc.
Challenges in Procurement
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Slide 7
EPC type Contracts where Construction Risks are transferred to the Contractor?
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Challenges in Procurement
Slide 8
- On the contrary there are projects where it is possible to understand the site conditions and to assess the possible unforeseen:
This assessment can be discussed between the Owner and Employer and risks fairly shared. The EPC Contract Price will, as a result, be lower and the construction will be successful
Challenges in Procurement
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Slide 9
Challenges in Procurement
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Slide 10
Reality:
- Graben much wider and deeper than Fossil Valley and filled with silty sand with 400 m of water head above the tunnel; crossing considered as almost not feasible - Geology generally much more complex than anticipated - Loop alignment invented for the tunnel to avoid graben - Serious conflicts between Owner and Contractor led to the change of the Civil Works member - Time for Construction of 15 years and final cost several times the original EPC Contract Price Challenges in Procurement
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Slide 11
Slide 12
Reality:
- Some adverse geological conditions in some areas compensated by better conditions in other areas. No impact on cost and time - 5 years Construction Time
Challenges in Procurement
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Slide 13
Challenges in Procurement
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Slide 14
Challenges in Procurement
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Slide 15
Challenges in Procurement
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Slide 16
- 10 to 20 years are necessary to achieve this process completely and reach the first m3 of excavation when it works; sometimes it doesnt works
- Select a Strategic Partner who prepares the ground (investigations, designs, etc.) leading to an EPC Contract - Engage the EPC Contract with partial financing - Once the Project is engaged, complementary financing is found and project can be completed - Less than one year was required to start Gilgel Gibe II, Beles, Gibe III and Grand Renaissance (9,000 MW in total) - GGII and Beles (1,000 MW) in operation and Gibe III (1,870 MW) should be completed in the next 1.5 year.
Challenges in Procurement
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Slide 17
Concluding Remarks
We have known successes and failures with
EPC Contracts for Hydropower Projects
conditions are simple and/or understood be introduced to limit the risks to be borne by the Contractor in case of encountering specially adverse unforeseen conditions intermediate windows and in very active seismo-tectonic areas are not recommended for EPC Contracts (without risks allocation)
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Challenges in Procurement
Slide 18
Concluding Remarks
Steps prior to the Procurement Process are
tedious and extremely long (not adapted to the present needs of development)
Challenges in Procurement
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Slide 19
Challenges in Procurement
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