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2017 Maynooth Wave Energy Workshop
Session 4: Practical Aspects
Estimating & Forecasting
For
Wavepower Ireland Limited
Background
• (Wavepower Technologies Limited formed in July 2014)
• ‘Wavepower Ireland Limited’ incorporated in Dublin, December 2016
• Wholly indigenous Irish legal entity managing its own affairs
• Based in Cork
Why Ireland?
• One of the very best places in the world to set up a new business
• IP Exploitation
• Amortisation for ‘acquired for trade purposes’
• Knowledge Development Box
• Economy & Innovation
• One of the fastest growing economies in Europe
• Low underlying industry inflation
• Jobs & Talent
• 54% of working population - less than 35 years old
• Special Assignment Relief Programme (SARP) + access to EU human resources
• Venture Capital Community
• More technology programmes per capita, than anywhere else in Europe
Wavepower Ireland: Programme
Wavepower
1
1st sea trial
2017
J F M A M J J A S O N D
2nd sea trial
2018 2019 2020 2021
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J
No PTO sea trial
1:10 FEED, design & supply
FID
Procure & fabricate
Onshore commission & transport
1:10 FEED & Design
FIDProcure & fabricate
Onshore com & transport
1:4 FEED, design & supply
FID
Procure & fabricate
With PTO sea trial
1:4 BOP design
FID
Procure & fabricate
Onshore com & transport
FEED, design & supply
Geotech survey
PTO sea trial
Full Scale BOP design
FIDProcure & fabricate
Onshore com & transport
FEED, design & supply
Geotech survey
Feasibility & site selection (GIS)
Consultation with lead authority(s)
Marine Licence (permit)
Marine Licence issued
Marine Licence update
Informal consultation (Schools, regulators)
Formal EIA consultation
Feasibility & site selection (GIS)
Consultation with lead authority(s)
Onshore com & transport
Marine Licence (permit)
Marine Licence issued
Consultation with lead authority(s)
Marine Licence (permit)
Marine Licence issued
Feasibility & site selection (GIS)
Scoping report
Start of PDS process
Scoping opinion
Scoping report submitted
EIA process
Seasonal surveys
Project Design Freeze
EIA submitted
Consent awarded
Phased development to Array Scale project
End Feb 17
End May 17
End Jun 17
Beginning Aug 17
Mid Nov 17
Beginning Feb 18
End Mar 18
Mid Jun 18
End Sep 18
End Nov 18
Mid Feb 19
End Nov 17
End Apr 18
End Aug 18
End Jan 19
Beginning Mar 19
End Jan 19 Mar -May Aug -Oct
Beginning Mar 20
Beginning Aug 20
End Oct 20
Deploy & monitor
Activity informs the other
Feed-in tariff or
other revenue
streams
R&D funding
only
Canada – FORCE programme participants
have qualified 17.5MW for the developmental feed-in tariff programme of
37.5-57.5c/kWh
Australia – Grants for
demonstration projects
Belgium – Projects are eligible for
green certificate scheme
France – Capital
support & FiT of €150/MWh
Portugal – FiT halted but
continued support for test centre
USA – Ocean energy is
eligible for Clean Renewable Energy Bonds
and Production Tax
Credits. Rhode Activity on East & West coast
increasing.
China – Specific FiT for
ocean energy
Ireland – FiT for 30MW
Export market potential & exceptional support network.
Chile – FiT under
development
Denmark – Universal FiT
for all renewable technologies
Germany – EEG includes
ocean energy
Japan – Support for
research and development
South Korea –
Ocean energy included within
Renewables Portfolio
Standard and R&D grants for tidal power
Spain – National and state funding
available but FiT halted in 2012
Commercial Reality?
7
What does success look like?
Avoiding
Accidents
and
Environmental
Incidents
Maintaining
Safety
and
Reliability
Delivering
Consents,
Programme
and BudgetsDesigning
and
Programming
Efficient
Delivery
Cashflow
& EBIT
Helping with
the Right
Asset
Solution
Managing
All
Stakeholders
Governance
What
success
looks like
Important stuff….
• Market Share Matters
• Focus on Core Business
• Continuous Improvement
• Innovate or Evaporate
• Growth is Essential
• No substitute for Quality
• Value-added Only
• Data-driven Decisions
• Competitive Cost
• ACCURATE estimating & forecasting is fundamental to our success
Roadmap
Business
plan
OwnerAsset Manager accountable Service Provider accountable
Asset Manager executes Service Provider executes
Approval
Investment
portfolio
Initiative
phase
Approval
Project
development
Feasibility phase
Approval
Investment
proposal
Design
phase
Site
Acceptance
test
Construction phase
End of life
Exploitation phase
Investment
portfolio
DefinitionFeasibility Design Engin-
eering
Build/
construct
Operate/
Maintain
End of
life
Business
plan
OwnerAsset Manager accountable Service Provider accountable
Asset Manager executes Service Provider executes
Approval
Investment
portfolio
Initiative
phase
Approval
Project
development
Feasibility phase
Approval
Investment
proposal
Design
phase
Site
Acceptance
test
Construction phase
End of life
Exploitation phase
Investment
portfolio
DefinitionFeasibility Design Engin-
eering
Build/
construct
Operate/
Maintain
End of
life
Business
plan
SponsorCommercial & Technical Feasibility Delivery
Asset Manager executes Service Provider executes
Approval
Investment
portfolio
Initiative
phase
Approval
Project
development
Feasibility phase
Approval
Investment
proposal
Design
phase
Site
Acceptance
test
Construction phase
End of life
Exploitation phase
Investment
portfolio
DefinitionFeasibility Design Engin-
eering
Build/
construct
Operate/
Maintain
End of
life
Definition Design Engin-
eering
Definition Design Build/
construct
Engin-
eering
Definition Design Operate/
Maintain
Build/
construct
Engin-
eering
Definition Design End of
life
Operate/
Maintain
Build/
construct
Engin-
eering
Definition Design
Approval
Investment
portfolio
Initiative
phase
Approval
Project
development
Feasibility phase
Approval
Investment
proposal
Design
phase
Approval
Investment
portfolio
Initiative
phase
Approval
Project
development
Feasibility phase
Site
Acceptance
test
Construction phase
Approval
Investment
proposal
Design
phase
Approval
Investment
portfolio
Initiative
phase
Approval
Project
development
Feasibility phase
End of life
Exploitation phase
Site
Acceptance
test
Construction phase
Approval
Investment
proposal
Design
phase
Approval
Investment
portfolio
Initiative
phase
Approval
Project
development
Feasibility phase
Approval
Project
development
Feasibility phase
Approval
Investment
portfolio
Initiative
phase
Approval
Investment
proposal
Design
phase
Approval
Project
development
Feasibility phase
Approval
Investment
portfolio
Initiative
phase
Site
Acceptance
test
Construction phase
Approval
Investment
proposal
Design
phase
Approval
Project
development
Feasibility phase
Approval
Investment
portfolio
Initiative
phase
End of life
Exploitation phase
Site
Acceptance
HANDOVER
Construction phase
Approval
Investment
proposal
Design
phase
Approval
Project
development
Feasibility phase
Approval
Investment
portfolio
Initiative
phase
De-commissioning/Disposal
Asset Management
During
De-commissioning &
Disposal
Long Term Asset
Management
Strategy
Asset Management
Target Setting
Asset Management
Input to Business
Case & Sensitivity
PlanningPlanning Front End Engineering/Conceptual Design Detailed Design
Develop Asset
Management Processes
Develop Organisation &
Competencies
Develop Maintenance
Strategies
Develop Information
Management Systems
Construction/Inst/Commissioning
Interfaces
Detailed Job Plans, etc
Implement CMMS,
Technical Documentation
Management
Compliance/
Warranty
In-service
Performance
Management
Performance
Monitoring &
Reporting
Commercial
Requirements Assurance
Wave Energy Asset Management
ISO 55000
• Process to develop ISO standard launched in 2014
• Builds on 10 years of PAS 55 experience
• Expands from physical assets to include all types of assets (except HR and Financial)
• Applicable to all types and sizes of organization
• Forces organizations to define the ‘value’ assets provide, not the cost
• Brings finance into the equation
• Breaks down silos
• Bankable Credibility
12
Enough!
We came here to talk about Estimating & Forecasting.
Prudent Estimating
• If you could save your business millions of dollars would you do it?
• Brand and reputation are increasingly important
• Removing as much uncertainty about the future as possible
• Build stakeholder confidence
• Demonstrate long-term focus and commitment
• Organizations are being driven to do more with what they have<..
However<
• Investors are more risk averse
• There is a growing focus on operational risk
Estimating for Investment Decisions
• Performance;
• Safety;
• Reliability;
• Flexibility;
• Capacity;
• Customer importance;
• Environmental pressure;
• Legal implications;
• Integration;
• Maintainability;
• Quality of supply;
� Importance of plant;
� Risk and consequences;
� Physical condition;
� Return on capital employed;
� Life cycle cost;
� Operational costs;
� Capital costs;
� Obsolescence;
� Corporate image; and
� Sociological impact
� And, so on………..
Risk Estimating Investment Decisions
Risk Identification
Risk Analysis
Cost of Risks
Investment Decision
Risk Resolution
Cost of Resolutions
Risk events and impacts
Drivers, probabilities, and total loss
Actions to prevent risk
Estimating: Decision-Making
Decision Analytical Frameworks• Agency-relevant/Stakeholder-selected
• Currently available software
•Variety of structuring techniques
• Iteration/reflection encouraged
•Identify areas for discussion/compromise
Decision-Maker(s)
Sharing Data,Concepts and Opinions
Economic
modeling
Engineering
constraints
Political/
stakeholder values
Social
factors
Tool Integration
Decision
Integration
‘New’ Estimating Technologies
• Formula 1
• Data Capture Tools & Techniques
• Materials
• Sub-System Testing
• Aerospace
• Efficiency & Longevity Tools & Techniques
• Materials
• Space
• Whole Life & Survivability
• Materials
• Marine & Civil Engineering
• Survivability & Maritime Sochastic Estimating
• Materials
Humans: Complexity Control!
Competing
Objectives
UncertaintyPoor
InformationToo many
Alternatives
Risk
Intangibles
Time
Pressure
Information
Overload
Limited
Resources
Complexity
End Arounds
Politicking
In-fightingFactions
Pet Projects
Dysfunctional Behavior
Top Down
Funding
DictatesSloppy
ThinkingCrisis
Favoritism
Cronyism
Inappropriate Decision Making
Cycle of
Bad Decisions
Lost Money
Dissatisfaction
Wasted
Resources
Failed Projects
Frustration
Bad Choices
Bad Outcomes
Size the Market
• Ocean Energy Europe estimate November 2016
• Prototype/Demonstration/Pre-commercial to industrial roll-out
• Wave: 420 MW and €4.3bn
• Tidal: 400MW and €3bn
• €4.9bn (67%) of total cost (€7.3bn) attributable to distant Pre-Commercial stage involving 600MW (300MW each)
Financial Indicators for Estimators
• LCOE, IRR, ROI, NPV, NPV/MW
23
How do we monitor this?
With an Earned Value Management System
24
Where is the value?
25
Requirements of Earned Value
• Proper WBS Design
• Baseline Budget Control Accounts
• Baseline Schedule
• Work measurement by Control Account
• work-hours, € euros, units, etc.
• Good Project Management Practices
26
Earned Value Analysis
• Relates budget to programme
• Earned value (EV) : added value work to date
• Actual cost: actual expenditure to date (AC)
• budget variance (AV) = EV - AC
• Planned value : what ought to have been spent (PV or Project Performance Baseline)
• programme variance (SV) = EV - PV
• The cost performance index (CPI)
• EV/AC
• productivity
• Programme performance index
• EV/PV
27
Earned Value Analysis
% complete
time0
100PV
SV
EV
time
now, t
AV
progress
to date
AC
spend to date
28
Earned Value Analysis
• Provides an “Early Warning” signal for prompt corrective
action.
• Bad news does not age well.
• Identifies need for remedial plans
• Performance measurement
• Lenders ‘look ahead’ requirement
Commercially, we use;
Future
• Standardisation & Modularity
• Estimating techniques
• We need to build and rebuild confidence in the sector
• Testing
• Move away from ‘guidelines’
• Technology
• Process
• Financial Modelling
• Bankability & Credibility Focus
• It is unlikely that we will deliver multi €Bn portfolio without project finance!
Thank you
