Services Delivered:
Contract Strategy Development
Key Outcomes
ConnellGriffin’s detailed report delivered the following key outcomes to GWA:
Phase 1
- An appraisal of the effectiveness of GWA’s procurement, contract strategy and delivery practices.
- Independent verification of the estimated cost for the selected project.
- Development of a number of viable packaging and contracting options for future consideration by GWA, including an assessment of the suitability of each.
Phase 2
- Detailed development and assessment of resourcing, schedule and costs for each shortlisted option provided GWA with the means to inform a robust decision- making framework.
- Identification of other issues and opportunities for cost reduction at portfolio level.
- A fully assessed and tested recommendation regarding a change in contracting strategy to reduce the cost of delivery for GWA.
Phase 3
- The development of a detailed and phased implementation plan for the preferred option to be delivered at both the project and portfolio level across GWA's development pipeline.
The Project
In order to maintain competitiveness 2020 in the wind farm construction and wholesale energy market, Goldwind Australia (GWA) is exploring multiple options for decreasing the levelised cost of energy for its pipeline of development projects.
Construction costs (capital cost) are one of the most significant contributors to the levelised cost of energy - and the civil and electrical balance of plant (BOP) works have a key impact on construction costs.
As part of GWA’s initiative to reduce the levelised cost of energy across its projects, GWA’s pre-contracts team engaged ConnellGriffin to explore how different contracting models can reduce construction expenditure for BOP works and how these changes may affect the overall risk profile for GWA during the pre-contract and delivery phases of its projects.
Our Services
ConnellGriffin’s engagement and methodology was delivered over three phases:
- Phase 1: A Strategic Appraisal of a significant project was undertaken to determine the overall cost effectiveness of GWA’s current contract strategy. This phase sought to assess the adequacy of competitive tension through the procurement phase and also how this project performed commercially through the delivery phase. Variations and other cost drivers were identified to provide an overall end cost for the project. The overall project cost was then broken down into a cost per wind turbine, with cost modifiers then applied specific to the unique risks and site-specific factors of a large upcoming wind farm development selected by GWA. This methodology provided the framework to assess the commercial risks for the selected project and determine the options and values of different packaging and contract delivery options, which were then explored in Phase 2.
- Phase 2: This phase focused on the Contract Strategy Development of shortlisted options identified in Phase 1. This exercise included an assessment of GWA’s viable supply chain and further development of indicative costs, resourcing, schedules, commercial risks and associated contingencies for each shortlisted option. Other options were also identified and considered at portfolio level and presented as additional opportunities to drive down costs. The suitability of the shortlisted options were then assessed against a series of criteria agreed with GWA and a preferred option was selected.
- Phase 3: The team delivered detailed recommendations regarding the selection, verification and implementation of the preferred option, including an implementation plan with associated timeframes.