UCI Solar Projects - Lessons Learned (2)
-
Upload
jamal-nelson -
Category
Documents
-
view
28 -
download
2
Transcript of UCI Solar Projects - Lessons Learned (2)
University of California, IrvinePhotovoltaic Solar Project
Lessons Learned – A Catalyst for Change
Andersen ConstructionSenior Leadership Conference
May 8, 2015
The Moment You Can’t Ignore
What To Do
“So, what should you do when an un-ignorable moment occurs? First, do nothing. It’s tempting to take bold and immediate action, to try to
resolve or “fix” the problem to show yourself and others that everything is under control. But it can be dangerous to try to fix what may look like an operational problem before understanding it fully, because of the deep
issues of culture and identity that may be involve.”
- Malachi O’Connor and Barry Dornfeld –
The Moment You Can’t Ignore – When Big Trouble Leads To a Great Future
PRESENTATION OUTLINE
• Project Highlights
• Players & Performers
• The Hustle
• Rise & Fall Timeline
• The Damage
• Lessons Learned
• Moving Forward
• Big Picture Questions
PROJECT HIGHLIGHTS
• University of California, Irvine (Orange County)
• Three existing parking structures – post tension concrete
• Operational campus
• Structural steel frame with solar panels and racking system
• Emphasized production & performance criteria
• Seismic Zone 4
THE PLAYERS
• Andersen Construction
• Sunergy (Intermountain Energy Partners)
• NextEra
• University of California, Irvine (The Regent)
• Miyamoto
• Design Affiliates (CSHQA, Calder Richards, etc.)
DEAL HIGHLIGHTS
• Cost defined per Kw ($2.85/Kw)
• $9M – 3 Structures – 6 Month Duration
• Mutual Agreement of Understanding – 5% fee guarantee
• Engineering, Procurement & Construction Agreement (EPC)
• Design Services Purchase Agreement
• Solar Power Generation Agreement (SPGA)
THE TIMELINE -- SUNERGY RISING
�Sunergy World
• Established June, 2009
• Incorporated May, 2010
�Sunergy World Irvine Solar 1, LLC (Idaho)
• Formed October, 2010
�Sunergy World Irvine Solar 1, LLC (California)
• Certified February, 2013
�Sunergy World, Inc. – Corporate Capability Statement
• Published May, 2013
THE TIMELINE – SUNERGY PARALLEL UNIVERSE
�2005 – 2010: Andersen & St. Alphonsus
• 6 negotiated projects
• $15M valuation
�2010-2014: Andersen & St. Alphonsus
• 11 negotiated projects
• $22.6M valuation
THE TIMELINE -- SUNERGY CCS 2013
THE TIMELINE -- SUNERGY CCS 2013
THE TIMELINE -- SUNERGY RISING
�July 21, 2012 – UC Irvine Solar Proposal Letter
“UC Irvine was very pleased with your recent proposal…our Vice Chancellor of
Administration has asked that we pursue formalized contract development,
including enhanced site engineering plans…We understand that during this process
your detailed site evaluations may uncover issues or barriers which will prevent those
sites or portions thereof into the final plan. These reductions in scope are expected
and preferred over any price inflation that might otherwise be necessary.”
�April 22, 2013 – Solar Power Generation Agreement
• Sunergy World Irvine Solar 1, LLC – Generator
• The Regents of The University of California
THE TIMELINE -- SUNERGY RISING
�May 21, 2013 – Engineering, Procurement & Construction Agreement
• Sunergy World Irvine Solar 1, LLC – Owner
• Inspec Facility Group, Inc. – Contractor
• Exhibit B Schedule of Values (Cost of Delivered Project): $6,230,381
�July 22, 2013 – The Regents of The University of California
“I am writing this letter to explain the authority of the public entity called “The
Regents of the University of California” to issue building permits for construction
projects on its campuses…the University is a public entity with full powers of self
governance…the University is exempt from local building and zoning codes…”
THE TIMELINE -- SUNERGY RISING
�October 29, 2013 - Miyamoto “Structural Engineering Peer Review”
“We have completed our structural engineering peer review…this package consists
of the final construction documentation for the project…we have determined that
the Construction Drawing package as described above, dated October 29, 2013, is
in general compliance with the Project Design Criteria and the California Building
Code.”
�October 30, 2013 – UC Irvine “Notice to Proceed”
“Work shall be accomplished in accordance with the solar power generation
agreement, amendments, specifications, individual authorizations and / or change
orders. You are hereby notified to commence work on the subject project by Friday,
November 01, 2013. Completion Date is, Monday, March 31, 2014.”
THE TIMELINE -- SUNERGY RISING
THE TIMELINE -- ANDERSEN FALLS
�December 5, 2013 – Memorandum of Understanding
• Guaranteed 5% fee & Contingency 3-4%
• Issue Sunergy a development service contract
• Engage in EPC contract with PSEG -- $9.1M
�February 12, 2014 – PSEG Draft EPC Agreement
“…largest risk profile to an EPC – commissioning, generation guarantee, and warranty
info. I think you will be pleased to see that the items are reasonable and produce a
greatly reduced risk profile”
– Sunergy e-mail date February 12, 2014 -
THE TIMELINE -- ANDERSEN FALLS
�April 22, 2014 – Horses change: NextEra
• Andersen notified of new deal partner
• Acquisition Letter of Intent between NEER and Sunergy World (March 21, 2014)
• New Draft EPC Agreement presented to Andersen
• 1st discovery of missing scope budget – who is carrying Builder Risk
�June 5, 2014 – NextEra EPC-1 Redline Review
• 1st round redlines returned early May
• Quantifying and qualifying differences between EPC and SPGA
• Claim origins of non-disclosure of permitting/review requirements of UCI
THE TIMELINE -- ANDERSEN FALLS
�June 26, 2014 – NextEra Final EPC-1 Agreement
• (3) Redline versions – 108 pages – few redlines captured in final version
• NTP issued to Andersen from NextEra
• NTP Issued by Regent of California to DG Irvine Solar 1, LLC
• Work to commence starting July 1, 2014 and complete by December 31, 2014
• EPC-1Agreement is for 1 of 3 structures…Social Sciences
“Once we successfully complete these structures let’s start installing them all over the
entire UC System!”
- NextEra e-mail dated June 26, 2014 –
THE TIMELINE -- ANDERSEN FALLS
�July 1, 2014 – First Collective Project Team Meeting
• UCI campus – Andersen, NextEra, Sunergy, UCI Facilities Management
• UCI action items list – (33) Sunergy and (24) Andersen design/coordination items prior to permitting site access or start of construction activities
• Transformer replacement issue presented to Andersen
• Sunergy determines defined inverter counts are incorrect
• Things are quickly beginning to unravel…
“NextEra needs a formal letter or email from the person or people who are able to make this commitment at Sunergy/Andersen clearly taking responsibility for the costs associated with
the upgrade as well as the schedule risk.”
- NextEra email dated July 2, 2014 -
THE TIMELINE -- ANDERSEN FALLS
�July 24, 2014 – Andersen Issues 1st Delay Impact Notice
• Design review process
• Field change approval
• Written Specification requirements
• Time overruns on GPR/X-ray due diligence
• Need for Value Engineering due “quality of design”
• Non-issuance of NTP on remaining (2) structures – Student Center & Mesa
• Updated Critical Path Schedule provided…new completion of March 17, 2015
THE TIMELINE -- ANDERSEN FALLS
�July 31, 2014 – UCI Final Offer: Student Center & Mesa
“Want to make very clear to you how disappointed senior management is with the
progress of the last two UCI sites…this is our deal to Andersen…no other changes will be
entertained…we have already taken the hit, with no sharing from Andersen, for the
effects of missing the December 31, 2014 COD…so the provisional Cliff Date LD will be
March 31, 2015. Alternate steel supplier can be entertained once other points are agreed upon. We need a final response today or we will look to pursue other options”
- NextEra email dated July 31, 2014-
THE TIMELINE -- ANDERSEN FALLS
�August 8, 2014 – Sunergy Begins Backing Out
As the project is getting into full swing, my role is quickly diminishing in needing to be the
point of contact. The structural steel design phase is complete and the field work is
starting a new chapter…Matt will be your main contact moving forward on all aspects of the project…”
- Sunergy (Cameron Coleman) e-mail to Structural Engineer (Calder Richards)-
�August 10, 2014 – Sunergy submits Pay Application
• Design & Engineering Service Agreement: $300,000
• Pay Application No. 1: $99,000
• Andersen withholds payment due to fee erosion through buyout
THE TIMELINE -- ANDERSEN FALLS
�August 29, 2014 – NextEra Adds On-site Project Manager
�September 4, 2014 – Sunergy Holds a Hostage
• “Complete” design docs not turned over until new payment terms are agreed
• New Sunergy Purchase Agreements: 3 @ $33k, Andersen fee reduced to 3%
• Racking system remains undesigned/engineered
“We do not want Sunergy to repeat what we just went through with NextEra, with
Andersen…let me know your schedule so we don’t delay the project.”
- Sunergy (VanGulik) email to Andersen on September 4, 2014 –
THE TIMELINE -- ANDERSEN FALLS
�September 22, 2014 – Seven Promise Rings of Sunergy
• Monitoring – “we fully intend to take care of this scope…”
• Racking Design – “majority of racking design is complete…”
• Interconnection Fee – “I will make sure this is taken off your plate…”
• Panel Installation – “Cam will make sure there is a complete bid proposal…”
• Commissioning – “related to monitoring, will be part of Sunergy scope…”
• Owner Meetings – “Mark will attend the weekly UCI meeting…”
• Submittal Review – “Mark will review with the team during the weekly meeting…”
- Sunergy (VanGulik) email to Andersen on September 22, 2014 -
THE TIMELINE -- ANDERSEN FALLS
�October 2, 2014 – Andersen Issues 2nd Delay Impact Notice
• Transformer procurement
• Additional design demands by UCI
• Prohibition of access by UCI
• NextEra non-responsive to Notice
�October 17, 2014 – Andersen Issued 3rd Delay Impact Notice
• Updated CPS provided – Social Sciences completion by January 27, 2015
• Additional design demands by UCI
• Prohibition of access by UCI
“There is no extra cost to be paid, period on expediting this schedule. You have failed to provide sufficient evidence as to any owner caused delay…At this point, I see all delays as a direct result of Andersen’s failure to manage their subcontractors and vendors…the deadline remains 12/15/14.”
- NextEra email response to Andersen Delay Claim No. 3 -
THE TIMELINE -- ANDERSEN FALLS
�October 21, 2014 – UCI issues NTP on Student Center & Mesa
�November 14, 2014 – Andersen Issues 4th Delay Impact Notice
• 12 week delay on release of final two structures (NTP)
• At-risk release of steel fabrication without field verification
• Unresolved transformer procurement
�November 25, 2015 – NextEra on The Sunergy Hunt
“…questions from our legal counsel…can you provide the answers as best you know them: 1) How does Andersen communicate with Sunergy, i.e. addresses, phone numbers and points of contact. 2) If Sunergy was paid by wire transfer, we need the bank account information. 3) If
Sunergy was paid by regular check, we need to see the cancelled check to try and determine where it was deposited and who endorsed it.”
- NextEra email to Andersen on November 25, 2015 -
THE TIMELINE -- ANDERSEN FALLS
�December 1, 2014 – Andersen Prepares for Art of War
• Revisit of EPC with focus on Section 11.2.1
• Solicitation of 3rd party legal counsel
• Defenses against Liquidated Damages
�December 8, 2014 – Andersen Submits Formal Extension Request
• Extension of provisional acceptance per provisions afforded in Article 11.2.1 of EPC
• Contention of Force Majeure event caused by AHJ
• Zero cost change order for additional time extension
�December 11, 2014 – Andersen Refusal to Execute NextEra Estoppel
“Counterparty is not aware of any event, act, circumstance or condition constituting an event of force
majeure or otherwise excusing the performance of either party under the agreement…”
THE TIMELINE -- ANDERSEN FALLS
�December 16, 2014 – NextEra Issues Notice of Breach to Andersen
• Failure to perform under Section 5.3.3 of EPC contract
“Owner believes it is necessary for Contractor to replace the current electrical, module
installation and racking subcontractor with Rosendin Electric and reflect the substitution
in an updated acceleration plan in order for Contractor to comply.”
• NextEra proposes partial power generation in exchange for reduced LD’s
• Andersen receives unsolicited bid from Rosendin Electric ~ $1.8M
• Andersen elects to spend $60k in acceleration costs to meet 12/31/14
• Andersen forwards Notice of Breach to Sunergy
THE TIMELINE -- ANDERSEN FALLS
� December 23, 2014 – Andersen Response & Counterpunch
• Provided Notice of Dispute per Section 17.1 of EPC
• Presented counter claim of Owner Caused Force Majeure event
• Owner Caused Delay entitlements per Section 5.4 of EPC
• Claim of NextEra conduct of deceitful intent – withholding of critical information
• Willful duplicity with The Regents of California
• Change Request with costs of acceleration demanded by “Owner”
• Request for period of Friendly Consultation as defined in Article XVII of EPC
THE TIMELINE -- ANDERSEN FALLS
� January-February, 2015 – Period of Friendly Consultation
• NextEra request for Andersen to retract Claim
• Accept partial Liquidated Damages
• Solicit UCI for extension of time per terms of SPGA
• Revised “final answer” completion schedule
• Agreed damages on Social structure with offsetting credits for early finish on Student and Mesa structures
• New completion date: May 28, 2015
THE TIMELINE -- ANDERSEN FALLS
�January-February, 2015 – 4th Quarter Shading Injuries
“It was brought to our attention there was an inner row shading issue at UCI Social Sciences…the production analysis as well as the valuation of the project is based on the
design of the structure and more specifically the layout of the modules…any deviation from the original design and layout may have significant effect on the project production and thus
project valuation and may constitute damages…”
- Sunergy Letter to Andersen on January 29, 2015 –
“We did our design long before architectural drawings were produced and based our layouts on some sketches provided by Cam.”
- Structural Engineer (Calder Richards) email to Andersen on February 4, 2014 –
“I think the issue was there was little or no architectural input while we were doing our design, it was almost exclusively Cam and I hammering out what needed to be done. I don’t even
know if the Architect had started anything when we were in the design phase.”
- Structural Engineer (Calder Richards) email to Andersen on February 20, 2015 -
SHADING -- DESIGN COORDINATION
Reinforced purlins at all overhangs – no coordination between A and S design.
Solar panel layout not coordinated with structural.
THE TIMELINE -- ANDERSEN FALLS
� Social Sciences Structure
• Mechanical Completion – February 18, 2015
• Solar Power Generation – February 28, 2015
� Student Center Structure
• Mechanical Completion – March 31, 2015
• Solar Power Generation – April 10, 2015
� Mesa Structure
• Mechanical Completion – April 29, 2015
• Solar Power Generation – May 9, 2015
THE TIMELINE -- ANDERSEN GENERATES
THE DAMAGE
� Immediate Fee and Contingency Erosion – gone in 60 seconds
� Types of Costs Incurred
• Site Investigation (X-ray & GPR)
• Incomplete Design & Permitting – At Risk release of structural steel
• Acceleration of Labor
• Operating Costs – travel, accommodations, tools, etc.
• Regional Subcontract Labor (Unions)
• Added & Missing Scope
• Field Errors & Corrections – self performed layout
• Material Cost Escalation
THE DAMAGE – INCOMPLETE DESIGN
GPR locate of PT tendons for AB placement --40” embedment
Field drilling oversized column baseplates
THE DAMAGE – INCOMPLETE DESIGN
Solar racking system install -- labor intensive, delayed design
Custom column baseplates at up-turned PT beam
THE DAMAGE
� When the Dust Settled…
• Fee loss of ~$500,000
• Net project loss of ~$3,250,000
� Of this…90% / $3,000,000 attributable to our “partnership”
• Incomplete Design
• Delays in Design
• Incomplete Scope
• Misrepresentation of Budget Inclusion
� Intrinsic(Other) Damages
THE DAMAGE
LESSONS LEARNED
�How We Came Up With Them
�What Are They…Failures & Successes
• Critical Self Evaluation
• Lessons versus Learning
�Where Do We Go From Here…
“The Past Is Where You Learned The Lessons.
The Future Is Where You Apply The Lessons.
Don’t Give Up In The Middle”
LESSONS CAPTURE
�Document Review
• ~2,000 pages of correspondence (letters, email, daily reports, minutes, etc.)
• ~1,500 pages of legal documents (contracts, drafts, etc.)
• ~500 pages of financial audit documents (invoices, jobcost reports, receipts, etc.)
�Project Timeline
�Safe-Zone Download – Rules of Engagement
THE LESSONS -- TIMELINE
THE LESSONS -- SAFE ZONE DOWNLOAD
THE LESSONS -- MATRIX
�From Our Matrix – Identified forty seven (47) items
�Sorted by Classification & Sub-classification
�Classifications – can be misleading
• Due Diligence (8)
• Preconstruction (13)
• Construction Management (25)
THE LESSONS -- MATRIX
�Sub-classifications
• Market Awareness
• Precon Estimating
• Schedule & Scope
• Standard Operation Procedure
• Assumptions
• Contraction
• Existing Conditions
• Logistics / Planning
• Performance Standards
• Communication
• Execution
• Owner Relations
• Record Keeping
THE LESSONS – FEELING HEAT
THE LESSONS -- HOT IN HERE
�Preconstruction: Market Awareness (4)
�Duel Diligence: Market Awareness (3)
�Construction Management: Communication (6)
�Construction Management: Execution (6)
�Construction Management: Logistics / Planning (6)
�Construction Management: Standard Operation Procedure (4)
THE LESSONS -- HOT ZONES
�Preconstruction: Market Awareness (4)
• We didn’t know what we didn’t know (new market, new contract type)
• Unfamiliar and inexperienced in Seismic Zone 4 (structural requirements)
• Unaware of what we were getting into (SoCal, AHJ requirements, Client)
• No homework on NextEra prior to contracting ($40B year Corp.)
THE LESSONS -- HOT ZONES
�Due Diligence: Market Awareness (3)
• Knowing the Market, Vendors, Contractors, Unions (unpredictable labor, no trade partner security blanket)
• Not knowing/respecting the relationships in play (Sunergy, NextEra & UCI)
• Conflict of interest with turnkey relationship (Sunergy, Sale of Solar Project, Other Solar Deals)
THE LESSONS -- HOT ZONES
�Construction Management: Communication (6)
• Poor coordination/communication between office & field staff (disconnected, phone & email, low morale, insufficient resources)
• Insufficient site visits due to lack of budget
• Internalized crisis management…project team working in silo/bubble
• Lack of communication created tension & frustration (working against each other)
• Ignored early warning signs, continued forward with focus on future opportunities
• Failure of team and management to meet and discuss real time issues
THE LESSONS -- HOT ZONES
�Construction Management: Execution (6)
• Speed of decision making versus speed of construction (design delays reduced time for execution)
• Assumed liability with self performed work (layout, limited budget, over burden)
• 3rd party influences (Miyamoto) and above code requirements (submittal review)
• No upper hand or even footing with contracted “partners” (pre-liens, T&M agreements)
• Failure to rally – silos within region and project team (tough times, no teamwork)
• Real time understanding and accuracy of budgets (where do we stand)
THE LESSONS -- HOT ZONES
�Construction Management: Logistics / Planning (6)
• Project team contract review not performed – knowing the responsibilities of the team
• Field staffing assigned after contract award (staffing plan, roles & responsibilities)
• Insufficient project staffing and execution (needed field PE, field office)
• Unaware of risks and failure to manage risk (contract language)
• Failure to project, define and manage costs we could control (GC’s)
• Field team working conditions
THE LESSONS -- HOT ZONES
�Construction Management: Standard Operating Procedure (4)
• Lack of follow up – enforcement of compliance (lost recovery mechanism)
• Failure to inform and engage senior leadership (financial status, lost opportunity of participation)
• Delayed design and buyout – failure to formally notify Sunergy (no correction notices)
• Could have pulled out early…stayed in it (unable to forecast outcome with early warning signs)
THE LESSONS -- HOT FLASHES
�Critical Outlier Category Failures
• Assumptions > Due Diligence (blinded by relationship)
• Unfamiliar contract structure
• Non-involvement in pre-design
• Walked in and bought someone else’s #’s
• Subcontracts and Purchase Agreements
• Waiving of Rights with each Owner payment
• Inconsistent / Insufficient Daily Reporting
• Lack of follow-up / enforcement of compliance
• SOV Payment coordination with Corporate Accounting
• Prequalification of subcontractors
• Placement of team members for success
LEARNING IS DOING – MOVING FORWARD
� Back to The Fundamentals (John Wooden)
� Preconstruction is the most important thing
� Operations focus balanced with business development
� Risk management and contract review standards
� Define responsibilities and demand accountability
� Strength in numbers – lean on your team
LEARNING IS DOING – MOVING FORWARD
� Weekly Project Pulse
� Regional Controller, Preconstruction & QA Manager
� Update of Subcontract and Purchase Agreement Language
� 5 Dysfunctions of a Team – Removal of Silos
� Strength Finders 2.0
� Web based Daily Reporting System
LEARNING IS DOING – WEEKLY PULSE
BIG PICTURE QUESTIONS -- TO BE CONTINUED…
• Did we grow to fast…are we creating infrastructure to match?
• Do we have appropriate checks and balances in place?
• Could this happen again – How – Avoidance measures?
• Do our core values sometimes get lost in translation?
• Were these the failures of just individuals, our culture, or both?
• What should be the consequences – what is the messaging?
CLOSING THOUGHT…WE AS LEADERS
“Leaders are the ones who run headfirst into the unknown.
They rush towards the danger.
They put their own interests aside to protect us or pull us into the future.
Leaders would sooner sacrifice what is theirs to save what is ours,
And they would never sacrifice what is ours to save what is theirs.
This is what it means to be a leader.
It means they choose to go first into danger, headfirst into the unknown.
And when we feel sure they will keep us safe,
We will march behind them and work tirelessly to see their visions come to life and proudly call ourselves their followers.”
Simon Sinek
“Leaders Eat Last: Why Some Teams Pull Together and Other’s Don’t”
QUESTIONS…?