As part of an ambitious capital investment programme, New Zealand power company Meridian Energy aims to add 400 GWh of new renewable generation a year. With a growing project portfolio, however, the company was faced with requiring a more streamlined project management tool.

Heather Johnstone, Senior Editor

When asked to picture New Zealand, images of lush, green pastures dotted with sheep, death-defying snow-capped peaks, crystal clear glacial rivers and expansive blue skies all spring to mind. Upon visiting, albeit at the right time of year, this image of an environmental utopia is not far from reality.

New Zealand has been very careful and successful in promoting itself as a country that values its environment above all else, and without doubt its ‘green’ credentials are solid. If we focus on its power sector, despite having significant coal and offshore gas resources, over 60 per cent of its electricity generation comes from hydropower.

Te Apiti, which comprises 55 turbines, was Meridian Energy’s first large-scale wind farm
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Last year, the Labour government took a bold stance by announcing that it did not believe there would be “any need for new fossil fuel plants to be built for baseload generation for at least ten years”. However, the government did not stop there and subsequently David Parker, New Zealand’s Minister of Energy, announced the intention to commit the country to generating 90 per cent of its electricity from renewable sources by 2025.

With the majority of its electricity being generated by hydropower New Zealand clearly has a good base upon which to build, compared to many other countries. One renewable energy source, however, that is still relatively under exploited is wind power.

However, that is beginning to change as people realize that New Zealand’s location in the ‘roaring 40s’ – the name given to the latitudes between 40 °S and 50 °S where the westerly winds are especially strong in the southern hemisphere – means that wind power has the potential to make a major contribution to its generation mix, especially with electricity demand growing at an annual rate of two per cent.

Investment in Renewables

One company that is embracing wind power is Meridian Energy, which is the country’s largest state-owned generator-retailer and produces all its electricity from either hydropower or wind. It currently owns and operates nine hydropower stations and two large wind farms. Meridian clearly prides itself on being a fully renewable electricity generator, and feels that it can make an important contribution to New Zealand reaching its 90 per cent by 2025 target. As part of this, the company is funding a NZ$2.5 billion ($1.7 billion) capital investment programme that will enable it to further develop both its wind and hydropower portfolios.

Resource Planning

Meridian’s growth and development team, which is responsible for developing and constructing all new capital projects, has a target to add 400 GWh of new renewable generation per annum – about half of New Zealand’s annual demand growth. This is no easy feat and means that the team needs to be able to review the company’s prospective investment portfolio and prioritize opportunities based on available funding, strategic objectives and predicted ability to deliver within required timeframes.

According to Craig Tibbitts, programme manager of the growth and development team, Meridian was keen to improve its portfolio resource planning, so it turned to Primavera and its software solutions for its development and construction projects.

White Hill remains the only wind farm in the South Island
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Previously, the growth and development team had used a desktop tool to create consolidated resource views, but this was very time consuming. In contrast, loading the information into the Primavera’s project portfolio management software proved to be relatively quick and simple.

Prior to uploading the data to Primavera, Tibbitts gathered all the information available, including spreadsheets and Microsoft project schedules, and cleaned them up so that they made sense. Once uploaded onto the database, it provided a listing of all the company’s projects, along with their current status. Meridian was then able to put resources at a reasonable high level onto the projects, which let it see the current loadings of key personnel and external consultants, as well as future requirements.

According to Tibbitts, Primavera helps Meridian optimize its development investment portfolio. “In presenting the business case for a new project, we can [now] include resource availability graphs, giving management the data they need to make informed business decisions” he said.

Tibbitts has also found the Primavera software solutions invaluable in the planning, managing and executing of specific projects.

Old ways are not always the best

Prior to the implementation of the Primavera project portfolio management solutions, projects were primarily managed through a mixture of spreadsheets and scheduling tools, such as Microsoft Project, none of which were integrated. This meant that it was not easy to see how schedules from the civil, electrical installation and turbine installation contractors, for example, all fitted together within a project as a whole.

Furthermore, being able to track an accurate timeline was difficult because schedules were rarely kept up-to-date. Essentially a schedule was created at the beginning of a project, but was never actually tracked to see how things were progressing. If someone wanted to know what was going on with one particular area of a project they would create yet another spreadsheet.

All this had the potential to create a situation where different phases or work streams could do things that might impede other areas of the work. Thus, overall it made it hard to coordinate a project effectively.

However, not only were the schedules not tied together within all the different phases of the project, but the costs and risk were also run in separate spreadsheets. Thus, at no point did all the information come together, despite being strongly inter-dependent. Tibbitts could clearly see that to keep the company moving forward it was essential to streamline the way projects were managed.

Again using Primavera, Tibbitts and the project team were able to set up master schedules for each project, which is essentially a milestone schedule for reporting to management, and under each create a main project schedule that allowed each project to be properly tracked.

South Island’s first wind farm

One of the first projects to benefit from the streamlining of the project management process was the White Hill wind farm. This NZ$130 million wind farm was Meridian’s second New Zealand wind farm development and the first in the South Island. It was fully commissioned in October 2007, and generates sufficient electricity to power 30 000 average homes.

At the start of the project, the schedules from shipping, equipment, services and other suppliers were all consolidated into a Primavera master schedule, although the costs and risk analysis were still run separately.

An important development was the capability to easily integrate information from external consultants; regardless of the format the schedules were supplied in, i.e. Microsoft Project or Excel, into Primavera, and linking all to the master schedule.

A key benefit of having all the information in a single place and inked together was the ability to identify key bottlenecks in the project and to see the effect of extended procurement times. If a piece of equipment, such as a transformer, was overdue it was possible to see how that would affect the downstream flow of work

Primavera Pertmaster, which is a full lifecycle risk analysis system, was also used to perform Monte Carlo simulations on the schedule, which allowed contingencies to be built into the duration of some of the project activities. Other analysis in Primavera Pertmaster enabled the identification of ‘risk hotspots’, which could not have been previously identified. This gave a pre-warning that enabled things to be addressed before they became a major problem. One example was alerting the company of the need to order several crucial high demand components early. Although a time contingency had already been allowed risks and uncertainty around lead times could have easily consumed this float causing the items to hit the critical path.

According to Tibbitts, using Primavera’s solutions on White Hill, proved Meridian’s schedules to be very realistic. “Construction was completed under budget and first power generation was achieved within four days of the baseline date we had forecast one year earlier.”

Greater information integration

Meridian’s West Wind is another wind development benefiting from Primavera’s project portfolio management tools. This is a NZ$400 million, 62 turbine wind farm under construction near Wellington in the North Island. The first tower sections are due to begin arriving in October, with installation of the first towers in February 2009. West Wind’s installation is on schedule to be completed by the end of next year, with first power on the grid April 2009.

For the West Wind project Primavera P6, which is the latest version of the Primavera project portfolio management software, was used for scheduling, while Pertmaster was used for the risk analysis.

Unlike White Hill, a risk register was brought into Pertmaster and linked to activities in the schedule. This means of that when simulations are run it is possible to model risks against activities to see how they affect the cost and time outcomes of those activities, which provides a lot of useful information.

In this project, costs were also brought into Primavera P6, which provided more accurate cash flow forecasts and allowed ‘earned value analysis’ to be performed. A striking outcome of this analysis was it highlighted the essential need to ensure all contractors provide both cash flows and schedules that are as accurate as possible.

Weather Modelling

The weather, such as heavy rainfall or high winds can impact on the smooth running of any project, resulting in unscheduled downtime. This is particularly true for wind farm projects, where it is not possible to erect the turbine blades when the wind speed is over 11 metres/second – an irony if ever there was one. Thus, such weather conditions need to be taken into account in a project schedule.

The foundation installation for the turbines on the West Wind project in the lower North Island
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Meridian used Pertmaster to model both rain and wind using ‘probabilistic calendars’ that incorporated data such as median rainfall and wind speeds from the country’s National Institute of Weather and Atmosphere. The probabilistic calendar then modelled rainy and windy days into the simulation, removing days randomly throughout the project.

According to Tibbitts, he now is not keen to run a schedule analysis without risk being linked and without using the probabilistic calendars because “it’s not real”.

Weather modelling simulations in Pertmaster proved to be particularly useful in the West Wind project. The wind farm is located near to a suburb of Wellington but the access roads to the site are difficult to navigate because of their twists and turns. Thus, it was clear that the tower sections and blades would have to be brought in by barge, so a temporary wharf was built at Oteranga Bay.

The plan is to deliver the turbines from the manufacturer to the port at Picton at the top of the South Island and then barged across the Cook Strait, a notorious body of water between New Zealand’s two main islands. However, the situation is further complicated by the fact that it is not possible to unload the barges if the swell is more than 750 mm. This essentially means that any time there is a southerly swell it would not be possible to barge anything to site.

After gathering as much information as possible of the Cook Strait swells, Tibbitts used Pertmaster to work out the availability of Oteranga Bay to barge components to the West Wind site. The outcome of the modelling helped to give confidence to the project team in the planned delivery schedule of the turbines by barge, where any delays would easily incur NZ$25 000 per day in extra costs.

The use of Primavera’s portfolio and project management tools has clearly proved very successful for Meridian as it continues to develop its project portfolios. At a project level, in particular, it has enabled Tibbitts and the growth and development team to improve the accuracy of their schedules and forecasts, which allow better use of resources and enable delivery to expectations. Tibbitts nicely summed up what is key about Primavera’s project management solutions, and that is they “help to create greater reality around scheduling”.