Local labor can yield excellent quality workmanship, fast results

As independent power producers begin to focus on international markets, developing countries and developing power projects converge; The result is a concept brought to reality–a power plant is born

By Dirk Andreas

Indeck Energy Services Inc.

Many times these projects are built with ex-patriot labor brought in from North America. This is done to meet a fast-track schedule. Recently, however, a power plant was completed in which a significant portion of the labor was provided from the local economy. The result was a plant built to US standards that produced power on time and within budget.

Siderurgica de Guatemala S.A. (Sidegua) is the largest producer of steel products in Central America, as well as the largest single power consumer. Four years ago, the Sidegua mill was built among the sugar plantations on the western plains of Guatemala between the volcanoes and the Pacific Ocean. Located near the town of Escuintla, the Sidegua steel mill melts scrap steel in an electric arc furnace (EAF). A smaller ladle furnace further processes the molten steel before it is cast as ingots. Additional processing results in rebar, wire, nails and other construction products. The total electric consumption of the mill is 35 MW at peak load.

Although the steel mill is situated near the majority of the fossil-fueled generation in the country, the addition of the steel mill presented critical problems for the electrical power system of Guatemala. The 35 MW load resulted in a significant strain on the regional system. Total electric generation in the country is approximately 700 MW.

Daily loads peak at 450 MW and drop to 250 MW at night. There are limited interconnections with neighboring countries. A rapidly fluctuating EAF load presented unique problems for system support not only for power, but also for voltage and frequency support. Because of these limitations, the mill was forced to shut down for eight hours a day and to limit operations on weekends.

To solve this problem, Sidegua teamed with Indeck Energy Services Inc. of Buffalo Grove, Ill., USA, to install a nominal 40 MW heavy fuel oil diesel power plant located adjacent to the steel mill. Sidegua was responsible for primary contacts and negotiation of all local issues. This encompassed mainly the importation of equipment and negotiation of a power purchase agreement (PPA) with the utility. Indeck was responsible for the technical direction of the project, including bidding and awarding the turnkey contract, the financial analysis, development support for the PPA, fuels contract negotiations, and management of the overall project.

An Engineer, Procure and Construct contract for the Centro de Energia Escuintla was awarded to Caterpillar Inc. of Lafayette, Ind., USA. Caterpillar teamed with Black & Veatch`s Ann Arbor, Mich., USA, office for the engineering portion of the project and with Century, a division of CNF of Houston, Texas, USA, for the construction. The project was conceived in Illinois and Guatemala City; designed in Michigan; procured from Houston; and constructed near Escuintla. The schedule was aggressive, both to attempt to have equipment delivered and installed before the rainy season began and to expeditiously allow the mill to operate around the clock without interruption due to the energy center construction.

Plant features

Included within the plant are unique features that helping to solve some of the electrical system support problems of the steel mill. One of these features is the The generators which can provide Volt-ampere reactive (Var) support down to a 0.8 power factor when required by the utility. Connection was made to the low side of the utility step-down transformer to provide the optimum amount of voltage support for the furnaces. A 25 M.V.A. static Var compensation system is being installed under a separate contract. A portion of the steel mill load can be run in an “island mode” in the event of an electrical system failure.

Ten 3616 Caterpillar diesel were purchased. They can produce 4.0 MW gross each under normal operating conditions, and up to 4.4 MW for brief “peaking” periods. The plant has black start capabilities and is designed to USA Utility Standards. Redundancy is included in all critical areas of the plant, most notably the fuel treatment area.


The staffing of construction labor presented unique challenges for CNF. There were few alternatives for subcontractors in Guatemala country. The final project structure consisted of Aceros Arquitectonicos de Guatemala S.A., civil and mechanical erection, and Telectro S.A., piping and electrical work. PDM Latin America of Atlanta, Ga., USA, was the only contractor to use predominantly ex-patriot labor. PDM erected all tanks and the support steel for the stacks. On-site Pproject management was provided by CNF ex-patriots on site.

Because of the lower wages paid in Guatemala, it much less expensive for a Guatemalan subcontractor to employ many people at a task, rather than utilize equipment. Therefore, it was not unusual to see 10 people digging a ditch and a backhoe hauling the dirt away. On-site personnel peaked at around 400 people, with the majority being laborers and helpers. The ratio of actual manhours worked ran about 25 hours per Guatemalan for every one hour worked by an ex-patriot. Roughly 450,000 manhours were spent on the project.

There is a lack of first line supervision in developing countries. It is not uncommon to have one supervisor for 40 or 50 employees. For this project, CNF brought in additional, bilingual supervisors from the United States to train and support the local supervisors. Once the local supervisors were trained, however, very good quality work resulted.

The same was true for the workers. In most cases, training was necessary, and constant contact was needed for the start of a task. However, Afafter the quality standard was set, however, the workers were able to reproduce the product to complete the task. Logistics and transportation of materials was very unpredictable. Concrete was initially hauled from plants in Escuintla, or even Guatemala City an hour away. Trucks would arrive late, or not at all. It become quickly evident that a batch plant at the site would be more efficient. It was erected and operated through the duration of the project.

Most countries outside the UnitedSates have many more public holidays. Guatemala is no exception. It is very important to understand when the holidays are and to check them against the critical path schedule. Ex-patriots will work through some of those holidays and events, but locals will not. Unforeseen holidays, such as the Pope`s visit in January, can disrupt construction for two or three days. However, due to the wage structure paid, nominal incentives can be very effective in retaining the work force through holidays.

An affiliate of Indeck Operations Inc., Escuintla Operations Inc. (EOI) is under contract to operate and maintain the plant. EOI made a commitment to run the plant using locally hired personnel. Advertisements were run in Guatemalan newspapers. EOI was pleasantly surprised at the quality of people who applied for the positions. A total of 23 people were hired to run the plant. Only the plant manager and operations manager were directly hired by EOI personnel. The remainder of the staff was hired by the plant manager and his operations manager.

The operators and mechanics spent six weeks in an intensive, customized training program. It was developed specifically for the energy center by General Physics of Amherst, N. Y., USA. It was taught in Spanish at the site. All personnel were cross-trained to provide flexibility in operation and maintenance. There was an abundance of qualified employees to operate and maintain the facility.

The local Caterpillar representative, Mayatrac, provides significant support. Critical spare parts are inventoried in a warehouse at the site. Mayatrac will provide maintenance support to the plant mainly performing the major overhauls on the engines.

These are the “Top 10” lessons learned from the project:

1. Double-check all assumptions. The project staff learned this the hard way. Very simple assumptions can prove to be false. For instance, an assumption was made that heated tanker trucks would deliver the fuel from the port, because that is how it is done in the United States. Unfortunately, there are no heated tankers in Guatemala, and the shore tanks do not have heated suctions. Therefore, the fuel arrived at the site colder than the design team anticipated. This required ordering and installing new unloading pumps and reworking some piping. A temporary pump had to be used to unload the initial shipments of fuel until replacement pumps could be installed. The rule of thumb should be, if no one can say he has checked an assumption, assign someone to check it.

2. Use a flexible design. The civil, mechanical, and electrical designers need to discuss how the project will actually be built. A sequential design, where certain tasks must be done in series, is much tougher to construct than one where the tasks can be done in parallel.

For example, at one point, civil, piping and electrical work was halted in one critical area because the design called for the engines to be installed first. Further complicating the matter was that the generator building floor and foundation were designed to be cast a monolithic slab. This design tied up a large portion of the site and slowed down the work until alternate construction techniques and designs could be worked out.

The engineering team should discuss the process by which the plant will be assembled. After identifying the critical path items, they should be reviewed to see if an alternate design could provide greater flexibility.

The team should also evaluate the use of areas on the site. The logistics of not only when a task is done can be as important as where it is done. Critical path tasks should not be scheduled in the same area.

3. Be conversant in the local language. The oOwners and principals of most local subcontractors were very conversant in English, but The proficiency falls off quickly at the lower grades. however. For instance, the plant manager and operations manager of the plant are very conversant in English. However, the operations supervisors fall in a range from good to very little English comprehension. Very few of the operators and mechanics speak English at all. It is important to remember that the project is built in a foreign country. It is your responsibility to facilitate understanding the local language.

4. Understand the local culture. Again, you must adapt. Do not take it personally if things progress differently than you are accustomed. The most important thing to understand is–what do “yes,” “no” and “maybe” really mean? For instance, in some cultures it is inappropriate to discuss business over a meal. Or, iIn Latin America, guests are expected to arrive one-half hour late for a dinner party. Most local executives have been educated in the UnitedStates and are a very sophisticated. Respect this, understand the differences and show a willingness to blend in with the local culture.

It is equally important to understand the local construction techniques-particularly local materials and parts. The newest connector in a catalog may not be available in a developing country for years. Even if it simplifies installation, it may be very hard for the operator of the plant to readily obtain spare parts. If a replacement part is needed during testing, it could delay the startup of the plant.

In most cases, it is not possible to go to a local supplier for a part. It must be flown in and clear customs. Delays in customs due to paperwork and tax issues are common. Although it was not done for this project, shipment of “test supplies” early in the project could highlight problems with importation procedures. The procedure can be modified before critical supplies are shipped. The use of standard, proven design techniques and materials will in the long run be the safest bet. The newest engineering solution may be too complicated to be understood and the appropriate equipment to install it may not be available in a developing country. Working with parts and techniques that are five years old in the United StatesA is a safe way to provide a more conservative design.

5. Authority must be allocated to the site. Communication will be difficult and costly. Internet providers are beginning to provide services into many developing countries, but many telephone systems are antiquated. Calls originating in these countries are very expensive.

Overnight services can take up to two days to clear customs. Time zone differences can significantly affect project schedule. Guatemala is in Mountain Standard Time, so there was very little lost time due time zone differences, but for projects in the Pacific Rim, for instance, it can take several working days to get a response for even minor engineering questions due to time differences.

6. Train, train and train some more. Review each task with the local supervisor before work begins and follow up as work progresses. Because of this, the front line supervisors must be bilingual. These supervisors must spend the majority of their time in the field, not behind a desk. Assure that all workers understand the task. If a work item is done wrong, a significant amount of rework will result.

7. Evaluate purchasing needed equipment for sub-contractors. Because labor is inexpensive relative to capital, heavy equipment is scarce. If the design review by engineering shows there are critical areas that can be expedited with the addition of critical equipment, investigate whether additional equipment can be purchased by the subcontractors. Providing financing for equipment to shorten a schedule, for instance, can be much less expensive than paying liquidated damages if the project is late.

8. Provide as many preassembled systems as possible. Building a plant to US standards does require qualified welders for American Society of Mechanical Engineers welds, for instance. These types of personnel are in short supply in developing countries. One or two projects can quickly deplete the supply of qualified welders in a country like Guatemala.

For the Escuintla project, all of the fuel and lube oil piping was isometrically drawn by Black & Veatch, and material was cut to size and assembled in the United States before shipment to Guatemala. This significantly reduced the number of qualified welders required at the site. The were only 8,700 field terminations and 4,750 field welds on the project because of preassembly done before shipping.

Components should be assembled into packages and tested before shipment. Starting up a pretested skid is much less expensive than performing a checkout at the site. Startup and testing personnel will almost always be ex-patriots, and after travel, housing and meals are included; ex-patriots are very expensive to use.

9. Expect good quality work. Subcontractors in developing countries are capable of producing work that is comparable to projects here in the United States. Do not lower your standards on what you expect. Many of the subcontractors are willing to learn what it takes to produce such work. As Julio Riveria, Aceros Arquitectonicos president , said, “I learned a lot from this project. I now know what is required to work in the international marketplace.”

10. Expect the unexpected. The project was delayed by a month, because the a road washed out from the Pacific port to the site. Culverts had to be installed, and the road had to be rebuilt twice by the owner and CNF. The rains in August were the worst in 30 years. As previously stated, special events can result in delays at critical times.

The Pope`s visit in January slowed construction by approximately four days during the critical last stage of construction. A lightning strike during a severe storm destroyed the surge arrestors. and Rreplacements had to be located and flown in from the UnitedStatesA. Unusually early spring rains forced curtailments on power production during testing as local hydroelectric plants were used instead. Be flexible, creative and work around the unexpected.

The key lesson to learn from the Centro de Energia Escuintla is that it is possible to build a high quality, reliable power plant in a developing country using local labor on a fast-track schedule. Power was produced in 11 months and would have occurred much sooner except for events beyond anyone`s control.

The experience will not be easy, because many of the basic construction assumptions regarding materials and techniques must be questioned and evaluated. With the proper investment in planning and up-front training , however, a plant can be built which the developing country can call its own, because its people had a significant role in the construction.

To prove this point, you need look no further than the sugar fields of Guatemala, where the Centro de Energia Escuintla keeps a steel mill humming and the local lights burning brightly.

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Sidequa`s 38.5 MW power plant in Escuintla, Guatemala. Photo by Mike McPheeters, courtesy of Black & Veatch.

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Ten 3616 Caterpillar diesel engines fill the power house. Photo by Mike McPheeters, courtesy of Black & Veatch.

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Workers installing rebar for the east stack foundation. Quality of installation was exceptional. Photo courtesy of Indeck Energy Services Inc.

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Abnormally high rains caused a river to overflow its banks and wash out the road from the port, delaying construction. The owner and CNF had to rebuild the road twice. Photo courtesy of Indeck Energy Services Inc.


Dirk E. Andreas, P.E., has more than 14 years experience in electric power generation. At Indeck Energy Services Inc. he is presently responsible for identifying and developing new projects from inception through execution of the major project contracts. He was project manager for the Escuintla Project. He holds a bachelor`s of science in mechanical engineering from the University of Illinois at Champaign, an master`s of business adminstration from the University of Chicago and is a registered professional engineer in Illinois, USA.