Question

Exotic materials in a large power plant

A new state-of-the-art coal-fired power plant was to be built at a newly developed site. There, it would be connected to plants that would also provide biological waste as fuel, in return for high-pressure steam and energy.The power plant reaches high efficiencies, filters its exhaust gas and particles, and is able to compress and back CO2 into subterranean reservoirs of old gas fields. The project showcases the latest technology concerning coal-fired plants, including new material types not used before. These were required to sustain the high temperatures reached in the extra-large boilers.These material types proved quite an interesting effort to estimate: being very brittle, they require a lot of pre-heating and cooling down. The welding itself also requires up to 10x more time to perform than with regular steel alloys used in these types of plants. Many different material factors had to be derived to be able to estimate this project. With factors between 1 and 10, finding the proper amount of resources makes all the difference when determining the viability of the project.

1. Why cost escalation occurs, please determine what part the reasons below might have played in the engineering project above and give examples how the reasons below contributed to potential cost escalation on the project above and note any potential solutions you could envision for mitigating the cost escalation.

Hint: Cost escalation may occur due to several reasons:

a. Uncertainty and lack of accurate information – lack of clear project objectives, scope, requirements, etc. E.g. Space or defense projects, historical renovations, etc.

b. Changes in design or requirements – changes by a customer, not considering the overall impact of the system design on the environment, etc. e.g. redesign of a floor plan

c. Economic and social variables in the environment – labor strikes or labor shortage, material shortage, inflation, etc.

d. Work inefficiency, poor communication, and lack of control – lack of project planning and management.

e. Ego involvement of the estimator – lack of experienced, professional estimation of costs.

f. Type of project contract – fixed price contracts (which force contractors to control costs), cost-plus contracts (which allow costs to escalate and profits to be added).