Adverse weather risks in time and costs: How to take control as a project owner?
Adverse weather can have a large impact on wind turbine installation in unforeseeable additional time and costs, consuming your contingency budget. How does Ventolines minimize the associated financial and time exceedance risks for it’s customers?
What are the adverse weather risks of your wind farm?
Adverse weather refers to all site related weather conditions that prevent a wind turbine supplier from installing components in a safe manner. The main risks include delays in installation works and ongoing costs due to standstill of the rented cranes and installation crew. If wind turbines are installed offshore or in a lake, these risks even increase due to a generally higher probability of high wind speeds and significantly more expensive equipment (and personnel). It is therefore of high importance to manage adverse weather risk in your wind project thoroughly. The costs and time delays will be there, the question is how to take control of them.
How to include adverse weather risk in your contract?
Generally, there are two approaches for dealing with adverse weather risks in your contract with a wind turbine supplier for your project:
- 1. Take the risks for time and costs into your contingency and deal with it as variation order.
- 2. Delegate all weather risk in time and costs to the wind turbine supplier in your contract, minimizing your own exposure to these risks. However, delegating these risks will significantly increase your wind turbine contract price. Moreover, some turbine suppliers are not even willing to take these risks at all.
To have the most suitable solution to your project, you have to evaluate the risks and your own risk appetite during contracting negotiations. The second option seems to be more suitable for project finance and risk adverse project owners. However, we have learned that making the risks foreseeable and controllable generally results in a more profitable situation.
If you do so, you should make sure that you specifically define in your contract:
- what this adverse risk entails with clear specifications;
- what the associated costs are in clear rates;
- what documentation and data is required for substantiation.
If defined properly, you can avoid never-ending negotiations with the turbine supplier on his claims and take control as project owner during the construction phase.
How does Ventolines control risks during the construction phase of your windfarm?
Ventolines has created a toolset for monitoring the adverse weather days during the construction of your wind farm. Using forecasting data, we can continuously forecast the probability of adverse weather days on a 3 day basis to evaluate the probability of adverse weather occurance. The on-site team of site representatives will receive an automated heads-up to document circumstances such as crane, installations teams and component readiness for lifting. Also an on-site LIDAR unit will gather continuously real-time data to Ventolines databases.
With the gathered on-site information and data we can constructively discuss the to be allocated adverse weather days with the turbine supplier. We keep track in an open web-based information portal to the Contractor and will share the results and progress during execution transparently to you as owner and the lender(s) (or lender’s technical advisors). Closing discussions early for the owners and with well documented particulars results in a fair determination on adverse weather claims, for both you (the project owner) and the wind turbines supplier.
In short: For this to work properly, it is of utmost importance to include the necessary requirements for monitoring these risks in your wind turbine contract and to have an adequate site team with toolset (including forecasting software and LIDAR). Using this methodology and systems we have already created excellent results for our clients on managing their adverse weather cost and time exceedance risks. Using this, we have reduced the use of the reserved contingency budget for adverse weather at projects by half.
As the WindEurope Electric City Conference is approaching, Ventolines will share insights on it’s approach to contracting and construction of wind farms. Interested in our services? We would like to meet you at the WindEurope Electric City Conference! Use the form below to schedule an appointment at our booth C3-B29.