Excellence in project management complements technical expertise
Project Management is a reliable and professional partner in delivering Wärtsilä power plant solutions. Wärtsilä’s offering packages provide wide scope flexibility for the specific needs of customers. The best solution and scope split can be found through close collaboration between the customer and Wärtsilä.
Investment project decisions are becoming more demanding in our fast changing world. Project requirements in a changing project environment bring a degree of uncertainty to project schedule, scope and other objectives. Project Management has the competences, methods and systems to deliver the power plant solution and manage these risks for the benefit of the customer.
Over the past 30 years, Wärtsilä has delivered 45 GW of power plants to customers in more than 160 countries. The scope of offerings and services has evolved from equipment supply contracts to total solution EPC contracts. Currently the majority of our business comprises total solution EPC contracts.
In order to efficiently meet different customer needs, and to provide most value to the customer, Wärtsilä Power Plants has developed four main scope packages Basic EEQ, Extended EEQ, Process EPC and EPC. In addition Wärtsilä can offer a new service EPCM, as well as a fast track project concept in form of collaborative contract for customers who have real time pressures requiring fast delivery.
Different customer segments have different requirements, as well as different capabilities and resources to manage the various project tasks and risks. Wärtsilä’s offering packages have been structured to provide a wide range of solutions to meet varying customer needs, and to assist the customer in handling constraints, such as cost and time. The packages also provide a structure and offer alternatives for appropriate risk sharing between the parties.
Each package is a solution comprising an integration of both equipment and services. This scope packaging follows a similar way of thinking as for Wärtsilä’s power plant physical products, which are also highly modularised. Long-term service agreements (O&M) are offered in connection with all these scope packages.
Structured scope packages provide several benefits for the customer:
- There are clear options available for achieving the best solution for the project.
- Contractual interfaces are well defined.
- Cost and time saving benefits.
- Well defined and proven solutions.
- Reduced risks (performance, cost and functional risks) with appropriate risk sharing.
- Faster and smoother purchasing and contracting for the customer.
- Performance guarantees for each package.
Each scope package can be further adjusted based on project needs, or supplemented by various scope options, such as emission control or combined cycle equipment. The packages are defined in detail in Wärtsilä’s power plant configuration with a costing tool that enables quick response to customer enquiries. Wärtsilä has also developed contractual documentation templates for these scope packages, thus enabling a fast and safe contracting phase.
Basic EEQ is a scope of supply whereby the main equipment and related auxiliary and process equipment and materials are engineered and supplied. This service includes these main items:
- Engineering for the equipment and systems supplied by Wärtsilä, expediting and QA/QC (quality assurance/quality control) for the supplied equipmentLogistics and transport, as per the agreed delivery terms.
- On-site technical advice for site works.
- Start-up and commissioning of all Wärtsilä supplied systems.
- Performance guarantees.
Since this represents the basic supply, the customer needs to use his own resources or contract other parties for overall project management, detailed engineering, the purchase and supply of the balance of plant (BOP) equipment, and for construction and installation. The main options for performing the BOP work are:
a) To split the project into many contracts and purchase orders, and then perform the purchasing and project supervision, as well as the management,
b) to hire a project management consultant or EPCM contractor, or
c) to contract the EPC or a general contractor on a lump sum basis.
In order to provide performance guarantees for the power plant, Wärtsilä’s supply includes all equipment which is critical for performance of the power plant. Naturally, the detailed engineering and installation of the power plant need to be performed properly by other parties using prudent practices. Wärtsilä provides, of course, installation instructions and advice for installing equipment it has provided. This scope is successfully used in many different types of projects.
Extended EEQ is a complete supply solution. Whilst Basic EEQ includes the main process and electrical equipment, Extended EEQ also contains detailed engineering for a total solution, and all the materials and equipment needed for power generation, including the main buildings and related equipment, piping and cabling materials, tanks, steel structures, and so on.
The customer does not need to take responsibility for the detailed design and purchasing of BOP materials, or to contract separate EPC contractors. The customer scope is to contract, manage, and supervise the construction and installation of the project. This can be done using either the customer’s in-house or hired resources. Alternatively, the customer may hire an outside consultancy firm or contractor for this. Wärtsilä’s EPCM model can also be a good alternative for the customer (see EPCM).
Process EPC includes the same features as the full EPC, except that it relates only to installations above floor level. Subsoil and foundation works, the supply of underground materials, and site area works are not included.
Wärtsilä Power Plants and its customers have executed, and are currently executing, many projects successfully using this scope split. This model offers the customer many of the same benefits as the full EPC. The customer gets the advantage and comfort of guarantees, and a fixed lump sum EPC price for the major part of the project, while Wärtsilä adds to its reservoir of experience and know-how. At the same time, the customer gains possible cost benefits and control by performing the local civil works itself, maybe using a local civil contractor. Wärtsilä designs and supplies the required main buildings superstructures. The contractual interface in the site works is clear and simple, namely the floor level (“0- level”) of the power plant. The aim is for the risk level to remain at an acceptable level for both parties, with less uncertainty and a lower cost level for the overall plant.
Wärtsilä can also take responsibility for the civil/foundation design of the equipment and buildings it supplies. This further reduces the project complexity for the customer, reduces the need and resources for design co-ordination, and speeds up the design process.
In this model, the customer needs to have his own or hired resources to contract and supervise the site’s civil works. However, it is also possible for Wärtsilä to assist the customer with the local civil works, either by using the construction management service model (see EPCM), or just by providing civil supervision services.
EPC is a familiar contract model in which one contractor takes responsibility for all aspects of the work, including engineering, procurement, installation and construction. The Wärtsilä EPC provides the customer with full package and performance guarantees, and provides many customer advantages:
- The EPC contractor takes responsibility for the cost of completion, the time of completion, as well as the quality of the design and work carried out.
- The customer has only one contract and one point of contact.
- The need for and use of the customer’s own resources are reduced.
- Wärtsilä Power Plants Project Management is a proven and experienced EPC Contractor with an extensive track record of successfully executed projects.
- Financial backers may require/prefer a single proven EPC contractor to reduce the degree of uncertainty.
- All this minimises the customer’s risks, and the potential for multiple disputes is also avoided.
A Wärtsilä EPC contract typically covers the project management, site management and supervision, engineering, materials and equipment, civil works, foundation and site infrastructure works, transport and installation, and commissioning, as well as schedule and performance guarantees for the entire solution. The customer typically takes care of the plant permitting, electrical interconnections, and fuel supply arrangements. Site preparation (site clearing, levelling, etc) is often part of the customer’s scope, but Wärtsilä offers the option of also carrying that responsibility.
EPCM is a professional service contract providing the customer with construction management services. A confusion that occasionally arises is that while the “C” in EPCM stands for “construction”, it is intended to be used in the context of “CM” i.e. “construction management”. The main difference between this and the EPC is that under the EPCM model, Wärtsilä does not perform the actual installation and construction, but manages the process on the customer’s behalf.
The construction management service can include a variety of services:
- Sub-contracting services, and assisting the customer to contract local sub-contracting work
- Site management services
- Time management (project scheduling)
- Site supervision
- Information management and documentation services for site works and sub-contracts
- Monitoring and reporting of sub-contractors’ performance
- Site quality assurance
- Cost estimating, cost control and reporting for local works.
In the EPCM concept, Wärtsilä prepares the bidding and contract documentation, evaluates the sub-contractors, provides recommendations regarding the selection of sub-contractors, assists the customer in the contract negotiations, and finally manages the site works and administers the sub-contracts on behalf of the customer. The customer signs the sub-contracts and pays them.
The construction management service contract is implemented in connection with Wärtsilä’s equipment supply contract.
The main benefits to the customer in using the Wärtsilä EPCM model are:
- The installation/construction is managed by the same party that engineers and supplies the equipment.
- The opportunity to utilize Wärtsilä’s EPC experience and competent resources.
- The overall plant cost is normally lower compared to the EPC because of different risk allocations, and the absence of mark-up on the local works cost.
- The customer has more control over sub-contractor selection and the local works process, as compared to the EPC.
It must be noted that with the EPCM, risk allocations and legal consequences are different than with the EPC. In the EPCM Wärtsilä does not provide overall project completion schedule guarantees, but makes sure that the construction sub-contractors provide schedule guarantees for their portion of the project. Furthermore, Wärtsilä’s equipment supply contract provides schedule guarantees for deliverables under that supply contract.
The customer may require a short delivery time for the power plant due to various reasons: There may be a need for emergency power. Power purchase agreements can have tight deadlines. Customers and their project backers require certain returns for their investments, which can be improved by shortening the project throughput time.
The Wärtsilä fast track concept has been developed to meet this customer need, and is used in combination with Wärtsilä’s highly modularised, easy-to-install power plant solution. This concept splits the project delivery process into two phases:
1. Front end work
2. Fast track execution after the ‘notice to proceed’.
The front end work stage usually includes site and soil investigations, setting design parameters, basic engineering, site preparation design, and project planning. Often it includes also at least part of the detailed engineering, and sometimes also, procurement of long lead items of equipment and site preparation works on site. The customer contracts for the front end work either by using a preliminary notice to proceed (“PNTP”) concept in the main contract, or via a separate agreement.
The second stage is the fast tracking of the project execution following the notice to proceed. Fast tracking typically means that construction on site is started before the engineering is completed. Activities progress in parallel, thereby speeding up completion.
Focus on project management competences
Wärtsilä’s professional Project Management Training and Certification Path ensures continuous development of our project management competence. PMP®certified project managers and Wärtsilä project management methodology secure a reliable and predictable project performance.
Wärtsilä’s project teams are leading projects globally from our key locations, in collaboration with customers and key stakeholders supporting project delivery. Power plant construction sites are staffed through centrally coordinated global resource pools of experienced and proven site management and supervision personnel.
The basic design of power plant solutions is based on Wärtsilä modularised concepts. Engineering partners, led by Wärtsilä project teams, develop the project solution by using modern design tools and information systems.
Wärtsilä Supply Management develops Wärtsilä’s supplier network and negotiates supply contract frame agreements. The Project Purchasing and Logistics function executes project-specific purchases and coordinates the transportation of supplies to the agreed destination.
Within agreed scope of services, the assigned site management mobilises the construction site management activities and supervises the prequalified subcontractors in the execution of the works. The power plant delivery is verified by a project-specific QA/QC (quality assurance/quality control) program, and validated during the test and commissioning phase managed by an experienced commissioning team.
- Customer focus (including a Customer Relation On-Line CROL® process)
- Certified project management professionals
- Productised service scope packages for solution delivery
- Projectised business model
- Proactive and collaborative project approach
- Proven track record of more than 4500 power plants delivered worldwide
- Access to all Wärtsilä expertise
- Reduced project complexity by clear contractual interfaces
- Reduced risks and predictable, reliable project deliveries
- Economical overall project life-cycle solution
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