HPRM11615 – SA2 JM MOKOPANELE STU NO: 61003684

SUMMATIVE ASSESSMENT 2: HPRM11615

NAME: JOHANNES MOKOPANELE

STUDENT NO: 61003684

ID NO: 890218 5652 087

E-MAIL: mokopanele.j@mmtmtech.net

SUPPORT CENTRE: RUSTENBURG

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HPRM11615 – SA2 JM MOKOPANELE STU NO: 61003684

Failed Eskom’s Mega Projects (Medupi and Kusile)

1. Introduction

Project management remains a critical practice that applies knowledge of process,

skills, tools, techniques and deliverables to ensure success in a project lifecycle.
(Harned, B., n.d.). This study researches the failed Eskom’s mega projects (Medupi
and Kusile), as well as to find possible solutions to ensure success of future projects.
KEYWORDS: Feasibility study, project constraints, risk mitigation, scope planning,
Project life cycle.
2. Project constraints
Project constraints such as Time, Scope, Cost and Quality are critical factors that
needs to be effectively managed for any project to succeed. Limitations and risks that
contributed to Eskom’s Projects failures are:

Time management- Eskom was both the designer and the project manager, this
resulted in lack of a proper work breakdown leading to time delays and cost overruns.
Scope management - They had neither the resources nor the skills to initiate the two
mega projects, hence they were unable to handle scope changes. Quality
compromise- It had been over 20 years since Eskom had built a power station when
it decided to initiate the projects, by then most of the skilled staff had already left the
employ. Due to inefficient Cost benefit analysis –Estimated costs were R208-billion
for Medupi and R239-billion for Kusile. Design faults had cost an additional R8-billion
to rectify. (news24wire, 2013)
3. Effective planning

Eskom failed to conduct a proper scope and feasibility study hence that ultimately lead
to numerous challenges in terms of sustaining the project life-cycle.

The Moosgas offshore project was an unrivalled success. A feasibility study was
conducted to determine the suitability, cost and constructability. This ultimately paid
off as it was completed on time and within budget. The success of the project was
attributed to the classical and methodical approach to scope, time, cost, quality and
the work breakdown structure of the project. (Hrabar, S.Z., 1991).

A project is deemed economically viable if the economic benefits of the project exceed
its economic costs, when analysed for society as a whole (The World Bank Group,
2017). Lack of a proper needs assessment had proven to be a serious oversight, the
use of traditional coal for electricity generation carries a heavy cost for social and
ecological systems that goes far beyond the price we pay for electricity. An
independent study for plant Kusile, further indicates that costs focused on the
externalities of mining coal and transporting it were very high and approximated to
range between 4c/kWh and 26c/kWh. (Nkambule, N.P, Blignaut, J.N. , 2017).

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4. Challenges and recommendations

Because Eskom had failed to setup a project steering committee and to outsource
skilled professionals, they were unable to effectively manage scope changes and
ultimately failed to identify and mitigate unforeseen risks (e.g. technical issues,
corruption and maladministration). Lack of communication, transparency and
stakeholder relations was also a costly omission.

Poor planning in the early stage from Eskom’s management paved a way for
corruption and when the problems around lack of transparency became systemic,
National Planning Commissioner Anton Eberhard had recommended a probe, but this
too was disregarded. (news24wire, 2013).

In their recent study, (Nkambule, N.P, Blignaut, J.N. , 2017) developed a model based
on a system dynamics approach for understanding the measurable and quantifiable
coal-fuel cycle burdens and costs over the lifespan of Kusile Power Station. The model
showed that due to life-cycle externalities of coal-derived electricity, the price of
electricity vastly increased making renewable energy sources such as wind and solar
more attractive options.

Although research had shown that the most cost effective option for South Africa’s
electricity expansion was an extensive and flexible renewable energy programme. The
(Council for Scientific and Industrial Research (CSIR), 2016) indicates that Eskom
needs to keep its ageing infrastructure operational for the foreseeable future so as to
meet the energy requirements of the country. CSIR aided Eskom to avoid replacement
costs and shut-down time through the sealing of cracks using laser technology to
refurbish stainless steel water tanks at its Koeberg Power Plant.

5. Conclusion

This study concludes that due to poor planning, lack of a proper needs assessment
and a feasibility study, Eskom failed to manage the project constraints nor identify and
effectively mitigate underlying risks. It is evident that this lead to a negative impact on
the project execution, hence it adversely affected the project lifecycle and delayed its
conclusion and handover process.

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References
Council for Scientific and Industrial Research (CSIR), 2016. Working with Eskom to better the lives of
South Africans - energy. CSIR Science Scope, 9(1), pp. 26 - 29.

Harned, B., n.d. project management defined: what does a project. [Online]
Available at: https://www.teamgantt.com/guide-to-project-management/what-is-project-
management
[Accessed 21 April 2020].

Hrabar, S.Z., 1991. Feasibility study, conceptual design and project management. The civil engineer in
South Africa , 33(9), pp. 113-118.

news24wire, 2013. Eskom and the multi-billion rand mega projects that could have saved SA.
[Online]
Available at: https://m.engineeringnews.co.za/article/eskom-and-the-multi-billion-rand-mega-
projects-that-could-have-saved-sa-2019-02-13
[Accessed 21 April 2020].

Nkambule, N.P, Blignaut, J.N. , 2017. Externality costs of the coal-fuel cycle: The case of Kusile Power
Station. South African Journal of Science, 113 (9/10), pp. 72 - 80.

The World Bank Group, 2017. Assessing Project Feasibility and Economic Viability. [Online]
Available at: https://pppknowledgelab.org/guide/sections/50-assessing-project-feasibility-and-
economic-viability
[Accessed 22 April 2020].

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