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This paper attempts to study the reasons for delay in power projects by focussing on
following areas:
1. Prepare a list of projects which have been delayed along with the reasons for their
delay.
2. Power project outline and stages of planning.
3. Prepare a contract chart of project agreements and contracts at various stages.
4. Evaluate the existing contract mechanism for enforcing the contracts
2. Delay in Power Projects:
We will start with a list of power projects which have been delayed for some or other reasons.
The reasons that have been cited for delay are also mentioned in the table. We will try to find
out what are the broad areas which are contributing to the delay.
2. Sipat STPP St-II (Dist. 1000 MW There was delay in supply &
Bilaspur, Chhattisgarh) erection of material by BHEL. Non-
readiness of Milling System,
Bunkers and Feeders also
contributed to delay.
3. Barh STPP (Mega Power 1980MW There was delay in supply of boiler
Project, District: Patna, material from Russia. Delay in
Bihar) Finalization of boiler erection
Agency as TPE wants removal of
ceiling on price variations.
11. NTPC Kahalgaon, Bihar Expansion Lack of adequate road and rail links,
from 840MW congestion in railway links, low
to 2340MW coal supplies.
12. Ratnagiri CCPP (M/s 1480MW The erstwhile Dabhol CCPP Ph-II
Ratnagiri Gas & Power was to be synchronized during the
Pvt. Ltd., Erstwhile year 2001-02, but due to the rift
Dabhol CCGT Ph II) between MSEB and DPC, the
construction work of Phase-II
terminated since June 17, 2001.
Now the dispute has been resolved
and a new Company Ratnagiri Gas
and Power Pvt.Ltd. has been
constituted with M/S NTPC and
GAIL to revive the project.
Thus we see that the broad reasons for delay in power project can be grouped under following
heads:
1. Delay in supply of equipments from foreign countries like Russia, Korea, etc.
6. Lack of adequate infrastructure like road and rail links to the project site.
In order to analyse the reasons for delay in power projects, we need to understand the various
stages in which the planning and execution of power projects is completed.
3. Power project outline and stages of planning
The development process of any power project can be divided into four stages:
Bidding and
Stage 3
contracting
Project
Stage 4
implementation
Each stage in the above flow diagram consists of various activities. Broadly speaking the
various activities under different stages can be grouped as follows:
1. Administer contract.
2. Contractors develop detailed design.
3. Review design and give approvals.
4. Approve sub-vendors and sub-Contractors.
5. Contractors proceed with construction and commissioning.
6. Control quality on site.
7. Commissioning.
8. Training operators.
Thus we find that most of the bottlenecks in completing projects result from delays in stage 4
activities. We find that most of the delays occur due to contractual problems arising from
poor contract design, absence of provisions for administering contracts and delay in design
approvals activities.
4. Major Physical activities in Power Projects
Power projects encompass a large number of physical activities which can be grouped
under following heads.
a) Land acquisition.
b) Site preparation.
c) Main plant.
d) Balance of plants.
The duration of project activities, especially, main plant and balance of plants is given in the
chart below.
Bars in red colour show activities which have been the cause of delay in power projects.
5. Contractual arrangement in power project
As we have seen above, there are a vast number of activities to be performed in completing a
power project. The coordination of these activities requires a well defined line of control and
monitoring by the client organization. The client’s organization can be divided into three
entities which are directly involved in the development of the new power plant. They are
The client organization appoints an engineering consultancy and project management firm
which specializes in power plant development as the project manager. The role of
engineering consultancy firm which acts as the project manager includes the following:
The project manager also appoints another specialist consultancy firm as its sub-consultant to
provide technical support. The link between the client organization, the project manager and
the contractor is shown in the diagram below.
Client
Management
Project Manager
(Consulting firm)
Sub Consultant
(Technical Support)
Sub- Contractor
Sub- Vendor
Conclusion
Timely completion of power projects is very crucial to the development of our country. The
complexity of work involved in power project and the involvement of several parties like
government, environmental agencies, owner (power utility), contractors and sub-contractors
make the timely completion of power project a very challenging task. Delay in power project
can be due to several reasons like delay in land acquisition, delay in supply of equipments,
delay in approval of drawing and design documents, etc. Study of the contract agreement
between the owner and the contractor suggests that the existing contract document has a lot
of loop holes and lacks any clear cut measure to check the delay at different stages of power
project. By incorporating suitable measures and defining strict norms and penalties for
completing each of the individual activities in the contract document, we can bring
substantial improvement in the timely completion of the power project.