FEATURE SPONSOR
LEGAL EAGLES
VARIATIONS IN PROJECT SCOPE Construction risk includes variations or changes in project scope include…
• Force majeure • Weather • Delay • Ground or sub-surface conditions • Contractor and design team experience
• Solvency • Familiarity with local conditions and requirements
The incidence and effects of these areas will need to be dealt with in any contract.
LEGISLATION & REGULATION Legislative and regulatory risks will also impact on the project risk profile and can expose owners to delays, fines or additional costs of delay if licences or permits are not available on time. Such risks are generally not insurable and fall to be taken by the owner.
TECHNOLOGY
Construction contracts, whether on or offshore, are simply a vehicle to determine how risk is to be shared between the parties and to consider issues such as risk transfer and risk mitigation.
The areas to be considered include…
• Construction • Environmental • Regulatory • Technological • Operational
SELECTION
The choice of the procurement route is fundamental, as is the contract form, with many renewable energy projects adopting one of the several FIDIC contract forms - the specific form being dependent on the type of project.
The various areas of risk themselves can be subdivided.
The ability to attend to failures, whether from defects in manufacture or construction, or the ability to maintain and service machinery and equipment of projects, is highly compromised due to the location of the asset, accessibility and factors including the weather and quality of service personnel.
OPERATION
In operational terms the asset, once constructed and commissioned, needs to operate with a high degree of reliability and minimal maintenance. Increasingly equipment is being developed to minimise the need for high levels of maintenance visits.
As a result of this, should a failure be found there is a tendency to replace all units to avoid future problems – a stitch in time approach.
Technological risks, which are linked to operations and maintenance work, are high in renewable energy projects because the equipment and machinery is required to perform to a high level of efficiency over a long period of time.
PROJECT DELIVERY
All these areas impact on a project’s ability to deliver power and income and also to secure finance packages.
The correct approach to these risks will assist in the attitudes of investors towards the project.
BALANCE
A careful balance however needs to be struck between the respective parties to determine the party best able to bear the risk.
Martin Collingwood Associate
Andrew Jackson Solicitors Click to view more info
www.windenergynetwork.co.uk
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