Choosing a TSO Supplier

Transcription

1 Choosing a TSO Supplier TM on Technical Support Organization (TSO) Roles and Responsibilities John Moore Nuclear Power Engineering Section j.h.moore@iaea.org Vienna, May 16, 2013 International Atomic Energy Agency

2 Agenda Documenting Drivers / Preparing Specification Contracting for an NPP Contracting for a TSO Technical Bid Evaluation Economic Bid Evaluation Bid Evaluation Negotiation

3 DOCUMENT DRIVERS AND PREPARE SPECIFICATION

4 Documenting Drivers Why do you want an external TSO? Need expertise? Need cost savings? Need flexibility? Work not core to NPP operation? Work simple / been done before / repetitive? Temporary increase in work? Gain knowledge from TSO?

5 Documenting Drivers (cont. d) Why might you not want a TSO? May cost more if work is long term (overheads / admin costs of managing contract) Less control over staff decisions / priorities TSO may not be a dedicated to developing staff TSO might decide to leave / not do business (i.e. increased risk)

6 Bid Specification Specify: Type of work TSO will do (general support, specific systems etc.) Expected volume of work Process for individual sub-projects (rebid with fixed price, draw down contracts etc.) Availability / response requirements Owner s engineering & acceptance processes to be followed & turnaround times Owner support provided (training, licensing support etc.) Commercial / financial expectations

7 TECHNICAL BID EVALUATION

8 Contracting for an a TSO NPP NPP TSO Bid Evaluation (Technical) Scope of Supply and Features Technical features; Project implementation; Warranties; National participation and technology transfer; Nuclear fuel; Alternatives and options

9 Scope of Supply and Features Turn Key approach Full Service Supplier Typically NPP Supplier / consortium Advantages: Full knowledge of design basis (if plant relatively new or unmodified) Experienced technical staff Disadvantages: Cost typically high (little competition / few suppliers) Possible complacency Less attention if new plants not on horizon

10 Scope of Supply and Features (cont. d) General Purpose Engineering Suppliers Can be single supplier / partnering arrangement or several competing suppliers that bid on individual projects.

11 Scope of Supply and Features (cont. d) Advantages of GP Suppliers: Can bring experience in wider industry; Can provide specialized knowledge the general NPP supplier might not have; Can bring cheaper rates; More competition for continued business, therefore less chance for complacency; More likely to have a local office (or be willing to set one up if a guaranteed a steady stream of business).

12 Scope of Supply and Features (cont. d) Disadvantages of GP Suppliers : Won t know plant design basis as well as NPP Supplier or Utility Staff; May not be feasible it utility doesn t have good access to plant design basis; Knowledge and experience may be individual-person dependent (fewer back-up personnel); Typically need more utility assistance and oversight.

13 Scope of Supply and Features (cont. d) Note: Some utilities include TSO external engineering work with general EPC services arrangements (engineering, procure, construct) These are more complicated to set-up, but align accountability for jobs more clearly with a single entity. Responsibility for Nuclear Safety always however remains with the Owner/ Utility.

14 Technical Features; Need to evaluate and decide who does what (i.e. internal versus external companies) Possible strategies Some key work always kept in house TSO used for overflow work only TSO does Balance of Plant / non-safety work TSO used for Specialty work only Multiple TSOs dependent on work/specialty

15 Technical design features (cont. d) Need to share this strategy with TSOs Makes TSO more efficient; Allows for planning and efficient use of resources; Allows right expertise and staff levels to be available when needed; Makes internal utility engineering job easier (less internal scrambling since TSO can better anticipate upcoming work)

16 Technical design features (cont. d) Need to evaluate: Past performance with your utility and with others; Breadth / depth of technical services; QA program, including training and qualification; Experience of Leadership Team.

17 Project Implementation Need to evaluate how TSO intends to manage the work scope contracted. Some areas to consider: Structure and Organization (roles & responsibilities, experience and availability of key personnel, any sub-contracting being done?) Project schedule (degree of integration of vendor schedules with utility schedules; level of schedules provided); Construction and commissioning support (engineering only or turn-key full service; roles and responsibilities for directing field staff and authorizing design changes);

18 Project Implementation (cont. d) Documentation and Configuration Management (how vendor systems integrate with utility systems; robust QA program; well defined interfaces for document transfer; intellectual property issues resolved) Management system (consistent with GS-R-3; including promotion of safety culture and continuous improvement / corrective action processes) Risk management (vendor provides a comprehensive risk mitigation plan and understands / accounts for applicable risks)

19 Warranties Provisions for correction of defects need to be included in contracts Utility most protected if warranties start with placing of applicable equipment into service (i.e. not upon equipment or design delivery) TSO typically won t accept financial accountability for force majeure (extreme weather, political, equipment supplier issues etc.) or consequential damages (e.g. loss of electricity generation). Good utility contract management can ensure some of these are in agreements.

20 National Participation & Technology Transfer May or may not be a concern for Utility. If of concern, items to consider include: Technical feasibility of national participation and technology transfer; Potential quality / schedule impact of offered participation; Potential advantages for plant operation and maintenance; Differences in scope among TSOs.

21 Alternatives and Options Bidders will often provide alternate TSO arrangement possibilities that are slightly different that requested in tender/scope they are responding to; If certain offers are appealing, consideration should be made to have other bidders provide an equivalent proposal.

22 ECONOMIC BID ANALYSIS

23 Contracting for an a TSO NPP NPP TSO Bid Evaluation (Economic) Results of technical bid evaluation & corresponding interfaces; Commercial & contractual terms and conditions; Economic parameters; Financing terms & conditions; National participation & technology transfer; Owner s costs; Bids for initial fuel and reload(s);

24 Results of Technical Bid Evaluation Already done (typically done in parallel with financial evaluation) Not revealed to financial evaluators until after financial bids evaluated

25 Commercial Terms & Conditions Best if framework written in advance by Utility (bidders can request exceptions) Need company to (during team evaluation (engineering, process) finance, legal, supply chain etc.)! Get help if you need it. understand bidder cost structures / how they build up costs to customers (pay, benefits, Vendors will know their cost structures at a expenses, detailed profit level margin, and admin where costs, they travel make costs or etc.). lose money. Ask for it now or you will never know! Need provisions for intellectual property, correction of defects, liability, payment schedules, charge out rates & inclusions, dispute provisions etc. This is a very complex subject. Get your best people on it and use the whole

26 Economic Parameters Reference date of prices (often bid date); Review / increases during life of agreement; Provisions for project-specific prices (e.g. fixed price projects) Exchange rates (reference currency versus foreign currencies).

27 Financing Terms & Conditions TSO or utility financing of equipment purchases / major capital projects? TSO ability to finance such projects? Joint ventures with Construction firm needed? Security of financing? Insurance provisions?

28 National Participation & Technology Transfer Complementary to Technical Evaluation; May or may not be a concern for Utility; If a concern, need to quantify future benefits of local development on Utility costs and on national economic development

29 Owner s costs Depending on bid, Utility/Owner will have more or less costs (staffing, records, contract management etc.). Bid comparison requires differences in owner's costs be evaluated to ensure bids are compared on an equivalent basis.

30 BID EVALUATION PROCESS

31 Bid Evaluation Criteria Weight Vendor 1 Vendor 2 Vendor 3 Use a predefined template for evaluation; Technical Understanding of scope of work 10% 5 Appears TSO cannot provide refuelling support. 9- All bid areas responded to with minor exceptions taken. Consider sharing template with TSO 10% 7 General Manager 2 No Managers with assigned to project was former experience at formerly Construction Bredonia NPP vendors as part of bid process; Technical-Experience of Key Personnel Manager of Bredonia NPP 8 Need for seismic analysis capability not included in bid. 5 Some Bredonia NPP Experience. Civil/seismic area appears weak. May include 8% mandatory 9 Original NPP Plant (go 8 Some /no-go former criteria); 7 Several former Technical - Knowledge of Bredonian NPP Design Basis Supplier. Has all DP information except for Bredonia NPP engineers on staff. Well experienced minor site-implemented technical staff on a variety Take time and use modifications. a challenge of similar plants. process to ensure bids evaluated fairly. Etc. Totals 100% Bredonia NPP engineers on staff.

32 NEGOTIATION

33 Negotiation With Bidders Normally pick highest ranked bidder for negotiation, with one as back-up; Need technical, financial, legal & commercial staff allocated to negotiation team; People at the table must have authority; Substantial changes can occur as part of negotiation process; Can take substantial time (months or years depending on complexity).

34 SUMMARY Drivers for a TSO are varied; It takes effort to set up and manage the relationship; TSOs are NOT the same as having internal staff; Industry OPEX has shown difficulties in several utilities. Attention to the process & vendor relationship is critical.

35 Thanks for your attention! QUESTIONS / COMMENTS