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Project Lifecycle And Risk In Project Stages Construction Essay

To understand the risk inherent at each stage of the project, we need to identify the various tasks involved during each phase. Once we know the tasks then we can establish the risks (no ref needed). Use to display where the risks fit and where the greatest risk exposure exists.

A generic sequence of events tends to apply across the main phases of marine renewable device development, namely research & development, construction & commissioning, instillation, operation & maintenance and decommissioning.

According to the Scottish Enterprise Marine Renewable (Wave and Tidal) Opportunity Review (2005) “The project life-cycles for wave and tidal projects share many steps in common with offshore wind projects” They identify eight main steps that make up the lifecycle of a project.

Use the same format to list risks by ranking, using phase of development to show level of risk exposure during each phase.

PROJECT DEVELOPMENT PHASE

1. Feasibility Study / Surveying

This stage involves a study of the location of the proposed project to verify its feasibility (e.g. suitable wave/tidal energy source) and to assess its impact on the local environment. Some national governments have performed initial assessments of their resources, but developers will need to perform additional studies to verify the suitability of a site for a specific device. Resource assessments.

2. Planning and Permits

Applications for planning permission and permits are prepared at this stage, building on the studies performed during the surveying stage. The complexity of this stage varies according to the size and duration of the project in question. However, even prototype projects can be required to obtain approval from a wide range of authorities (the highest noted is 12 government bodies) which can introduce delays.

3. Contracting

Preparation of contracts with various suppliers for goods and services. Arrangements for power purchase agreements with electricity suppliers.

4. Engineering Design

This stage sees the generation of a detailed design a specific location. Whilst the main energy conversion system may be standard, modifications may be required for each location’s environment and offshore/ onshore infrastructure (e.g. subsea cables, grid connection).

Risks involved during this phase:

Legal Risks

Regulatory Risks

Policy Risks

Contractual Risks

Planning/Grid Risks

Consenting Risk

Access Risk

Cleijne, H, (2004) highlights that “the risk of a renewable energy project depends strongly on the stage of its development”. This is certainly true of wave and tidal developments that require huge initial capital investment in projects that are surrounded by uncertainty. The risks are substantially greater at the project development stage when planning licenses and consenting permits have not been obtained. The developer will be unsure if the project will be possible at this stage. This point is stressed by Cleijne, H (2004) when describing the risk of failure during the initial stages of a renewable energy development project, where the planning and consents process, and financial, site and technological conditions could force the abandonment of the project. As time moves on with a project and the relevant permits and licenses are granted, then the risk of project failure decreases.

CONSTRUCTION PHASE

5. Manufacture

During the manufacturing stage, all the equipment needed for the project is produced. This not only includes the wave/tidal energy device and its associated offshore equipment, but also the onshore infrastructure that will be needed to support the project (e.g. switch gear for grid connection).

6. Testing and Certification

This stage sees the equipment tested and certified as fit for purpose. Tests can range from materials testing to ensure quality standards have been met, to demonstrate that the components and the complete system meet the necessary standards for use. Independent certification authorities may be involved at this stage.

Risks involved during this phase:

Construction Risks

Contractual Risks

H&S Risks

As a project moves into the construction phase a new set of risks appear, primarily related to the supply chain, contractors, engineering and safety aspects. Contractual risks are critical at this stage, with developers needing to secure reliable procurement and construction contracts. Get some contractual refs

INSTILLATION PHASE

7. Assembly and Installation

This stage covers the onshore assembly of equipment on-site and the installation of all onshore and offshore equipment. This includes the installation of offshore foundations, mooring systems, subsea electrical cables, the energy conversion system and all associated onshore equipment, including the connection to the grid (if applicable).

Risks involved during this phase:

Instillation Risks

Contractual Risks

3rd Party Risks

OPERATION & MAINTENANCE PHASE

8. Operation and Maintenance

The operation of the system includes activities such as performance monitoring, reliability management, structural monitoring and repair. Periodically, offshore systems may need to be returned to shore for maintenance or replacement.

Risks involved during this phase:

O&M Risks

Regulatory Risks

Market Risks

Resource Risks

Performance Risks

3rd Party Risks

Contractual Risks

DECOMMISSIONING PHASE

9. Decommissioning

As a result of planning regulations, rather than resource depletion, decommissioning (either complete or as part of the upgrading of a commercial project) will need to occur at some point in a project’s life.

As in the offshore wind and oil and gas sectors, decommissioning will require the removal of all equipment and the return of the site to a natural state. Before decommissioning, it will be necessary to consider what effects the removal of structures and equipment will have on the environment and wildlife (e.g. surface devices may be used by sea birds as a nesting site11) in order to minimise disruption in the area.

Risks involved during this phase:

Regulatory Risks

Contractual Risks

3rd Party Risks

Supply Chain Structure

A wide range of companies are involved in the marine renewable sector. Figure 17 below shows the key segments of the sector. Services that are needed for the successful completion of a project range from insurance and finance, resource assessments, environmental surveys, design, manufacture, offshore construction, operation and decommissioning.

Figure 17 - Segmentation of the Marine Renewable Sector

Different members of the supply chain are responsible for different parts of projects depending on the type of project and its stage of development. Key classes of firms that are involved in the supply chain include Legal firms, Financial firms, Insurance firms, Marine Service firms, Technology Developers, Manufacturers, Test Facilities, Project Developers, Installation Contractors, and Energy Majors/Utilities.

http://www.oceanrenewable.com/wp-content/uploads/2007/03/oregreport.pdf

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