Capital Projects

PowerAdvocate has supported over $22B in energy capital project spend in the past 5 years for generation, environmental, T&D, and renewable projects. PowerAdvocate data and tools have been used to support over 200 large capital projects. We work with Owners on strategic sourcing strategies, execution, contract structure and supply market dynamics to get your projects completed on schedule and within budget.

Contract Management

PowerAdvocate's Contract Management program integrates Contract Managers with Project Management teams to make sure projects stay on schedule without any commercial surprises from Suppliers. When the entire Project Management organization is focused on field construction, the overall project may be at risk with critical, pending administrative requirements and when major performance metrics are delayed.

There are essentially three drivers to PowerAdvocate’s approach to Capital Project Contract Management; each has its own natural pairing with the universal project management tenants of cost, quality and schedule.

 

EPC Selection

One of the essential uncertainties and complexities of undertaking capital projects is that the exact technical scope is not defined. Unfortunately, many energy companies have chosen to award significant contracts to capable suppliers prior to the resolution of these unknowns.

PowerAdvocate works with customers to develop a comprehensive and transparent understanding of project costs to create a fair balance of contingency and margin through and Open Book Pricing Process (OBPP). Although any pricing structure (i.e. T&M, Fixed Price, etc) can be used with an OBPP, the majority of the “owner” contracts lead to some type of incentive-based fee structure.

The OBPP provides additional flexibility towards the work scope and the number of suppliers. That is, an OBPP can be used in a competitive environment for owners as much as it can for a sole-source EPC negotiation.

Planning & Budgeting

PowerAdvocate works with Owners and Program Management Contractors to validate that proposed project budgets are inline with market conditions. Our experts have a disciplined approach to secure the procurement of critical equipment, services and materials. They work with suppliers to identify critical leads times and keep the project moving on schedule.

Our market data provides real-time assessment tools to manage the overall project budget. We create customized models to identify significant project costs and drivers, critical suppliers, and identify any market opportunities in securing the equipment, services or materials. In addition, our customers use these project models to run various planning scenarios to understand the impact of potential project delays or market volatility.

Successfully Kept to Planned Budget on a Major Capital Project

Situation

An energy company faced undertaking the largest capital project for any energy company to date and needed an efficient way to meet project budgets. The client turned to PowerAdvocate to develop a plan for the capital project budget and to ensure cost transparency during construction.

Approach

PowerAdvocate provided planning and budgeting expertise to keep the project on budget.

  • Developed an initial cost estimate and reviewed project budgets

  • Created contracts for project construction including base price and escalation costs

  • Evaluated contractor proposals against industry benchmarks

  • Helped the client to understand contingency needs and potential exposure to volatile pricing

Results

With the help of PowerAdvocate, the client successfully met in-ground dates while managing project costs and keeping to their original estimated budget.

RFx Execution Support

PowerAdvocate works with companies to support go-to-market efforts to procure equipment, services and materials. We develop and approve requirements and specifications, develop RFPs, work across functions to create evaluation criteria and cost baseline, and develop and approve  electronic bid templates.

Our Sourcing Intelligence platform executes and manages the bidding process while maintaining vendor management. Many customers use Sourcing Intelligence as a way to report on prudent decision making to their regulators. Our team of experts support fact- based negotiations with vendors creating Should-Cost models to level-set market conditions and impact.

Reduced Item Lead Time to Keep a Project on Schedule

Situation

An energy company faced multiple tight schedules for two substation upgrade projects. A number of items and services needed to be procured to meet a schedule, but some items had lead times longer than what the schedule would allow.

Approach

PowerAdvocate streamlined the client’s procurement process and provided services that kept the project on schedule.

  • Created RFP templates for faster, easier events

  • Increased the speed and effectiveness of the evaluation process

  • Built out Terms and Conditions that could be modified quickly to meet a specific purpose

  • Performed Opportunity Assessments to identify where the client could negotiate reduced lead times

Results

The client was able to significantly reduce lead times for the items and services they needed to procure, keeping their project on schedule.

Through negotiations on one event, the client was able to reduce the lead time from 19 weeks to 10 weeks. The item was delivered on time and allowed the client to continue with the project as scheduled.

Market Analysis for Negotiation Support

PowerAdvocate supplies capital project owners with critical market information to make investment decision and avoid cost overruns. We work with Owners to break down total project costs and identify major cost drivers. By identifying cost exposure, Owners can make better informed buying decisions to manage their overall budget. In addition, our expertise and insight provides benchmarking analysis to support your go-to-market approaches, investment decisions, or even justify prices for regulatory communications.

Our Market Analysis helps clients to validate project costs, identify alternative investment options for projects, strengthen supplier negotiations and estimate costs of project delays.

 

Supply Market Data Provides Insight to Support Project and Achieve $38M in Savings

Situation

An energy company faced executing a 5 year, $1.5B, 250MW solar facility. The client contacted PowerAdvocate for help in rolling out Phase 1 of the program.

Approach

PowerAdvocate’s supply market data and benchmarking services provided the client with valuable market insight to support Phase 1 of the program execution.

  • Executed and negotiated RFP strategy

  • Provided Should-Cost analysis

  • Benchmarked solar panel prices and EPC services

  • Customized credit risk models to reflect individual supplier schedules and milestone payments

  • Created a supplier scorecard document management system

  • Provided proposal summaries, supplier profiles and data-driven market intelligence

Results

The PowerAdvocate approach helped the client achieve $38 million in first year savings.

$189M Savings Identified on 500kV Transmission Project

Situation

A leading Fortune 500 energy company needed to source all major services and materials for a 220/500kV transmission line project covering approximately 200 miles. The Owner’s supply chain was in the middle of a transformation, and did not have the internal or external procurement resources to adequately identify, execute and deliver savings opportunities in a timely manner.

Approach

PowerAdvocate provided strategic market intelligence and execution assistance to support Owner’s project execution.

  • Developed and executed cost containment approaches
  • Provided detailed pricing benchmark analysis
  • Countered contractor proposals using market data to negotiate price reductions
  • Provided transparency with bidders to expose and remove unnecessary scope
  • Introduced new suppliers with greater capabilities than incumbents
  • Implemented an incentive program to align key project schedule and cost containment, promoting improved performance over time

Results

PowerAdvocate’s services and market data provided transparency to the Owner to identify up to $189M in savings, of which $95M (9.5%) has been attained to date.

  • Open Book Pricing Strategy delivered $30M in savings with clearer targets and incentive based contracts
  • Delivered $19M in negotiated construction savings for the first year and identified $122M of savings over the next 5 years
  • Leveraged Should-Cost analysis to negotiate an additional $5M in equipment savings
  • Realized category savings of $54M on Transmission towers, poles and substations
  • Delivered $95M in savings to date