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Thursday, 5 May 2011

Not the Only ones

  Scira Offshore Energy Limited have been set back many months as a consequence of selecting the wrong   equipment for the construction of Sheringham Shoal wind farm, what their losses are is anybody's guess.  It would seem however, that they are not the only ones to catch a cold in this mad rush for easy money.
Learns costly EPC lessons
from Greater Gabbard
Long delays and heavy cost overruns at the 504MW Greater Gabbard offshore wind project have taught an “expensive lesson” to engineering, procurement and construction (EPC) giant Fluor, and developers Scottish and Southern Energy (SSE) and RWE Npower Renewables.

US engineering giant Fluor Corporation says third quarter results will take a hit of $163m, or $0.90 a share, because of estimated cost increases on the Greater Gabbard Offshore Wind Project in the UK.
In a statement, Fluor says its full-year earnings will now be between $2.20 and $2.50 a share, versus an earlier estimate of $2.90 to $3.20 a share. It expects to release Q3 results by 4 November.

“During the third quarter, the project experienced a variety of execution challenges, including material and equipment delivery issues, primarily relating to the installation of wind turbine generators and subsea cabling,” the company says in a statement.
Fluor says it revised estimates to include substantial costs for additional marine vessels and other subcontractor costs associated with equipment installation, equipment repairs and the estimated schedule impact which has been exacerbated by weather-related delays.
“The company has taken a number of remedial actions to mitigate further cost escalation and delays to the schedule,” it adds.

Fluor is the main contractor for the 504MW Greater Gabbard scheme located 23km off the Suffolk coast. Developer Scottish and Southern Energy is the developer in the 50-50 joint venture with RWE.
In 2008, Fluor was awarded a $1.8bn fixed price contract to construct the wind farm. To date, all 140 monopiles and tower transition pieces have been installed and 53 of 140 wind turbine generators are in place.

Installation and commissioning of the remaining wind turbine generators, subsea inter-array cabling and grid substations are expected to continue through the latter part of 2011. The overall project is expected to be completed in early 2012, according to Fluor.
The project has experienced a number of challenges since construction began in late 2008. Through the second quarter of 2010, the company had recorded $202m in claim revenue relating to costs incurred on a dispute with the joint venture regarding specifications for monopiles and transition pieces required under the contract, says Fluor.

Additional costs arising from this dispute are expected to be incurred in future quarters. Fluor continues to pursue claims for costs recoverable under the contract, it says.
Richard A. Kessler ( 

Godfrey Sayers  05/05/2011

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