The Role of the Quantity Surveyor on Windfarm Developments

Neil Quinn MSCSI MRICSESB International

Overview

• Introduction to Windfarms

• Contractual Approach to Windfarm Developments

• The Different Contracts

• The Role the QS can play

• Typical Claim Events

Electricity Generation in Ireland

Combination of all

Coal (1903)

Hydro (1920s)

Peat (1950)

Gas and Steam (1980s)

Wind (Late 1980s)

Biomass (2005)

Tidal (2015?)

Electricity Generation in Ireland

• Current Total Generation Capacity (RoI) of 6,764MW

• 1,700MW of Wind Generation Capacity (25%)

• Maximum Wind Output 1,506MW

• Target for Ireland is to have 40% Renewables by 2020

• ESB Generates 490MW – 331MW in Ireland

• Target Renewables Generation for ESB is 1800MW by 2025

ESB Windfarm Portfolio

• Plus three Windfarms in the UK

Windfarms

Windfarms

Windfarms - Typical Economics

• Average approximate cost of €1.5m per MW• Typical turbine currently generates 2.5MW• 15 turbine site ≈ €55m• Split:

– Turbines: 70%– Civil: 13%– Electrical: 12%– Others: 5%

• Renewable Credits - REFIT (Ire) ROCs (UK)• Target IRRs – Developer Dependent

Contractual Approach

• Either:– EPC– Multi-Contract

• Can be D & B, or Employer Designed, or mixture

• 3 main contracts– Turbines– Electrical BoP– Civil BoP

• FIDIC Silver, Yellow and Red (heavily amended)

Turbine Contract

• 70% of total Development Cost - €2m to €3m per turbine

• Main suppliers in Ireland – Nordex, Vestas, Enercon, Siemens

• Some will offer a full EPC service

• More usually extended to include Foundation Design

• Delivery and Erection are Key Issues

• FIDIC Silver in theory – Supplier’s contract in practice

• Scrutinise the terms and conditions!

Electrical Balance of Plant

• 12 – 14% of total development cost

• Scope includes:– Substation (38kV or 110kV) including Civil Works– Cabling including Civil Works– House Transformers– Energisation / Commissioning

• Usually D & B – FIDIC Yellow

Civil Contract

• Usually 13 – 15% of total Development Cost

• Scope includes:– WTG Foundations (piled if necessary)– Hardstandings– Access Roads & Drainage– Public Road Upgrades / Modifications

• Can be either Employer Designed or D & B

Foundations

Hardstandings & Access Roads

Public Road Modifications

The Role the QS can play

• All skills can be brought to bear

• Cost management traditionally by Engineer

• Civil Contract most obvious– Pre-contract estimates for Financial Models– BoQs / Procurement– Cost control during construction

• Regional Cost Variances

The Role the QS can play

• Guidance for Turbines and EBoP on – procurement and contract terms – contract administration

• Risk Management / Apportionment

• Claims management on other contracts– Civil works on EBoP

– Wind delays on Turbines

– Negotiation skills are invaluable

Typical Issues – Ground Conditions

Typical Issues – Materials Management

Typical Issues – Floating Roads

Typical Issues - Geotechnical

Typical Issues – Road Modifications

Typical Issues – Wind Delays

In conclusion…..

• A growing market

• A growing recognition of what a QS brings to the process

• Need for specialist cost management skills

• QS is best placed to deliver