OWNER’S EPC PROJECT MANAGEMENT IN POWER PLANT PROJECT A CASE STUDY OF NHON TRACH 2 POWER PLANT PROJECT (750 MW)

By

Nguyen Nhat Tai

Abstract

             

In recent years, construction industry in Vietnam has been developed dramatically, contributing to national development. Besides civil construction, infrastructure, residential development, there are a large number of Power plant projects are and will be implemented in the next 20 years.

Similar to other types of construction project, power plant project must also deal with risk of quality, time, cost on construction stage. As a large scale project with thousands of activities, power plant project requires a very carefully planning, scheduling and monitoring to avoid these risks.

There is a fact that in reality, implementation of power projects usually goes behind the schedule, causing a huge loss to social economy and obstructs the development of local construction market.

The purpose of this report, by studying a real case in Nhon Trach 2 Power Plant Project, is to analyze EPC management strategies in such power plant projects; from that, to suggest a framework of EPC management strategy for Power Plant Projects in future.

Executive summary

Rationale of research

This research has been conducted to identify project management strategies in EPC contract (Power plant projects).

Objectives of study

To study and propose strategies for EPC power plant project in construction stage for thermal power plant project and develop project management frame work for owner.

Methodology  

The exploratory research method is used to review the literature and journals and understanding phases of power plant projects

Findings and conclusion

Demand of electricity in Vietnam within next 10 years will increase highly, the current Power Plant Projects in Vietnam are meet problems in terms of schedule, cost, quality, and those are results of poor project management in Power Plant Project. The research study summarized and proposed a strategy to manage EPC Power Plant Project in EPC stage by the following activities:

·         Management of Engineering;

·         Management of Procurement;

·         Management of Construction.

The research study showed an overview of a thermal power plant project in terms of characteristics, technology, facilities, contract, process and risks.

Through collecting related documents as well information from interview from experts as well as people participated in Nhon Trach 2 Power Plant Project, problems and risks were anticipated, controlled closely during process of Project.

The problems and risks in terms of quality, schedule and cost did not occurred during process of Project through making a copy of Ca Mau 1 and Ca Mau 2 Projects. However, there was a waste of money in construction by making a copy of Ca Mau 1 and Ca Mau 2 Projects in terms of soil improvement and foundation. Concurrently, according to guideline of Petro Vietnam about proving internal force as well as utilizing manpower of subsidiary, therefore, some unqualified and inexperienced subcontractors were allowed to participate in Project.

Recommendation

·         Optimizing design in Feasibility Study by arranging layout most properly and selecting the most proper technical solution: this stage is one of the most important stages, technology and conceptual design were selected from this stage, then after that, to determine total cost investment as well as EPC Contract price properly;

·         In bidding stage, review/update latest technical specifications and put strict requirement for subcontractors into Bidding document: because Power Plant Project is a complexity project in terms of civil, mechanical and electrical. Therefore, subcontractors assigned to conduct separated packages in scope of EPC package have to have capability as well as experience about construction in Power Plant Project;

·         In engineering stage, conducting value engineering in foundation solution: because the price of EPC Contract is lump sum, therefore, EPC Contractor always wants to conduct engineering according to their standard designs and procedures. However, implementation of value engineering not only avoid waste of money but also reduce schedule of construction;

·         In procurement stage, increasing Owner’s/PMC’s involvement in controlling QA/QC works of procurement: under EPC Contract, volume of electrical and mechanical works makes up more than 60% volume of EPC works, in order to risks in procurement resulting in claim, cost variation, Owner/PMC should participate in inspection of fabrication and manufacture of equipments in foreign.

·         In construction stage, coordinating with EPC Contractor to increase inspection of works conducted by subcontractors and site preparation : suggest EPC Contractor to replace unqualified and non-experience subcontractors if works are delayed and construct temporary drainage system before starting up;

·         In commissioning stage, considering standby alternatives before commissioning: commissioning is one of the most important stage of Power Plant Project, if failure, it will result in delay in completion and handover in order to put into operation.