Cory Riverside Energy recently attended an energy-from-waste (EfW) conference where one of the central themes covered by keynote speakers and questions from the floor was how the industry can reduce construction and commissioning risks on EfW projects.
Some projects have suffered high-profile failures through impracticable technology, poor designs and contractor failures, with the result that investors rightly exhibit caution when invited to finance new projects.
Meanwhile, following the collapse of Carillion, the UK construction industry is calling for a different business model: one that holds less risk and better rewards but which must be earned through performance and by consent from customers.
So how do we bring about beneficial change? It will not be easy. No customer or investor wants to pay more for the same goods, even though they do need lower risk for successful project finance.
The answers lie in:
- Selecting proven technology.
- Designing out the risk, through the contractual model and the physical design.
- Trading only with contractors you can trust.
- Removing wasted costs.
- Once everybody’s risk in the venture has been dialled down to as low a level as possible, allocating the remaining risks fairly within the contract.
These are all factors that Cory’s Riverside Energy Park team has been working to deliver as part of its proposals for a second EfW facility on the existing site in Belvedere, south-east London.
To cut the construction risks, Cory has chosen to partner with Hitachi Zosen Inova (HZI), the engineering, procurement and construction contractor, which successfully designed and built our first Riverside EfW facility, rather than split the project and put the work out to tender.
The successful delivery and reliable performance of our first EfW demonstrated that HZI could be trusted.
Negotiation as opposed to tender has cut time and cost for both parties. It also brings much greater certainty about the outcome of the scheme, and deploys well-proven technology, resilient to any future changes in waste composition and calorific value.
Cory and HZI are jointly designing the new plant, cutting out the risks of late client changes, and controlling the design together to make it efficient and good value for money.
Working together through the costs and programme for construction and commissioning will ensure that the timings, costs and value for money are all realistic.
By adopting a collaborative approach to projects and bringing the right partner in at an early stage, clients and contracting companies can avoid the misfortunes to which their peers often fall victim.
Nicholas Pollard is Chief executive at Cory Riverside Energy