You are on page 1of 7

Who Needs an Owners Engineer?

03/01/2011 | James Connell and Dennis Grennan, HDR Engineering

In the past, members of a utilitys engineering staff spent their career designing and building new
power plants. Today, many utility engineers find that opportunity comes around only once in a
career. To fill the experience gap, an owners engineer company can add to a utilitys team a
cadre of highly qualified power engineers who focus on avoiding design errors and keeping the
project on schedule.
It is a truism of the power generation industry thatdespite calls for energy conservation,
efficiency improvements, and increased use of renewable energythe appetite for power will
continue to grow as our economy rebounds and expands. The result is that, whether or not
consumers publicly endorse them, there is a corresponding need for more power plants, either to
address increases in electrical demand or to replace retired capacity. That need is stoked by evertighter environmental regulations driving cleaner power production and the never-ending search
for innovative ways to generate, store, and move power.
None of this comes free. With price fluctuations and increases for the basic raw materials that go
into a power plant, such as copper and nickel, the cost to build a full-scale coal- or natural gas
fired power plant can easily top a billion dollars today.
And none of this comes easily. Plans developed over many years can end up cancelled when the
stubborn obstacles of approval or financing become insurmountable, leaving both plant owners
and consumers in a tough spot. Even in the best-case scenarios, the maze of complex and
interrelated tasks required to take a project from concept to start-up can seem overwhelming.
Enter the Owners Engineer
The solution of hiring an owners engineer has been used for more than a decade. It emerged as
an industry-based initiative along with the engineer-procure-construct (EPC) contracting method.
The most basic definition of an owners engineer is someone or, more commonly, a team of
experts that serves as an independent advocate for the owner. The owners engineer plays a
supporting but critical role by filling gaps and supplementing a plant owners resources (Figure
1).

1. Independent advocate. The owners engineer provides experienced engineering talent to


augment a plant owners staff during design and construction of a plant. The tasks may focus
on single assignments or may span a multi-year project. Courtesy: HDR Engineering

The jobs performed by an owners engineer can be large or small and can range from playing a
narrowly defined role as a technical reviewer to being a full-scale, start-to-finish extension of the
owners staff who is involved in all aspects of project development, execution, and completion.
An owners engineer can be a key management tool to control the number of overall contracts on
a large, complex project and to provide an independent voice that represents the owner. But
owners engineers can also be key team members on smaller projects, such as air quality control
retrofits or plant renovations; in such cases, they free up the owners staff to focus on ongoing
operations without distraction.
The most effective owners engineers are those who serve in broader, longer roles that give them
time to develop a keen understanding of owner objectives and develop a close relationship with
the owner. This close relationship can be essential because the owners engineer serves as an
advocate for the owners business objectives and identifies skill gaps in the owners staff that can
be filled by the owners engineer team.
From Start to Finish
An owners engineer can help take a project from concept through commissioning. This can be
especially important when personnel cutbacks or inexperience make it hard for an owner to
manage the intricacies and details of a project with in-house staff. And, although there is no way
to remove all risks from a project, an owners engineer can simultaneously enhance opportunities,
reduce overall risk, and ensure a deliverable that is closer to the owners expectations.
Though it may not seem intuitive, hiring an owners engineer can actually reduce a projects
overall capital and operation and maintenance costs. The expense of the owners engineer is often
easily counterbalanced by cost savings obtained through tight control of the schedule, scope
management, change orders, and overall project controls. The owners engineer can also identify
design options that reduce the owners lifecycle costs. Even the tendency of an EPC contractor to
raise costs in response to ill-defined scope or increased risk can be better controlled when an
owners engineer is working on behalf of the project owner to develop a tighter scope.
In the Beginning
Having an owners engineer on board early can make a difference that lasts throughout the life of
a project, even after commissioning and start-up. Developing a detailed project scope definition at
the outset can keep a project on track, just as failure to properly develop one can lower a projects
odds of successful completion. By carefully defining the project size, location, technology
selection, configuration, scope, interfaces, and schedule, an owners engineer who is brought in
when a project is still in the conceptual stage can help turn it into reality.
Some project owners choose to perform their own initial conceptual design, cost estimating, and
scheduling. Before hiring an owners engineer, they may even bring on an EPC contractor to
serve as a technical reviewer of project progress. Limiting the owners engineer role in that way
can lead to less-than-optimal results, caused, perhaps, by a lack of clear scope definition that can
lead to project costs climbing above budget. An owners engineer who is involved from the outset

can help develop a project execution plan and contracting strategy, and the owner benefits from
having a partner who is intimately familiar with all aspects of the project as the work progresses.
Laying the groundwork with the aid of an owners engineer can help the owner identify
opportunities that may otherwise be overlooked while avoiding or minimizing risks.
An owners engineer can also be helpful in securing project financing. To get the best possible
financing deal, a project must clearly defineat a very early stagethe schedule, projected costs,
and suitability of technology and location. An owners engineer can help an owner achieve
business objectives and sometimes even explain why something is not feasible while seeking
suitable alternatives. Often, white papers developed by the owners engineer can help with
effective evaluation of alternatives, identify recommended solutions, and document the reasons
behind key decisions.
Beyond boosting documentation and rationale to result in the best possible financing deal for a
project, having an owners engineer involved at the earliest stage of a project can help an owner
select the most qualified EPC contractor. Potential EPC contractors want to know many of the
same things that financial backers need to know as they make a decision about whether to bid on
a project. Just putting an EPC contract together for a large project is time-consuming and can cost
several million dollars, but devoting attention to the details and minutia of all contract documents
can pay big dividends in avoided change orders and delays as a project progresses.
Some key assistance that an owners engineer can provide at project inception include:

Defining and/or reviewing the project scope.


Assessing and evaluating the budget and identifying financing sources.
Conducting feasibility and site selection studies and alternatives analysis.
Analyzing available technologies and their suitability to a project.
Preparing early project schedules and design criteria.
Preparing technical specifications for owner-furnished equipment.
Preparing EPC contract documents, including RFP (request for proposal) issuance and
response analysis.
Providing permitting assistance and addressing related environmental concerns.

Track and Trend


As a project moves along, the owners engineer is a critical link in keeping the work on schedule
and on budget, tracking progress, and taking note of any emerging trends. When issues arise, as
they nearly always do on large and complex projects, the owners engineer can be an effective
middle man to check original contract documents and review events to avoid unnecessary and
unproductive finger-pointing. Depending on the type of contract, the owners engineer may
provide detailed design, overall project management, contract administration, and construction
oversight.
An owners engineer can be extremely helpful to an owner who wants to purchase equipment by
writing technical specifications and assisting in the purchase of owner-furnished equipment and
making sure that equipment suppliers are in compliance with all contract requirements. The
owners engineer can solicit and evaluate bids, negotiate contracts, and work with the owners
outside counsel to develop contracts.

Change management, implementation of earned value, project cost reporting and trending, and
overall project controls are other areas in which an owners engineer can help as a project
progresses.
As the End Nears
By the time a project nears the start-up and commissioning phase, the owners engineer should be
a familiar and trusted advisor. At that stage, the owners engineer can develop punch lists and
document warranty items in preparation for performance testing and handover from
commissioning to start-up.
The role of the owners engineer can even extend beyond commissioning, based on the owners
needs. For example, if an owners team needs time to become familiar with an entirely new
system, having an owners engineer stick around after project start-up to assist with training can
be helpful. A seasoned owners engineer can also help with any problems that arise during the
initial warranty period, such as dealing with performance expectations or emission limits.
How to Pick an Owners Engineer
With the use of owners engineer services becoming more common across the industry, more and
more firms are offering such services, so how do you select an owners engineer? Should you
pick a large multi-disciplinary firm? A small, specialized firm? A local firm? Hiring a large,
multi-disciplinary firm might appear to be a good choice, but thats not necessarily the case. A
large firm might not be the most cost-effective because of a tendency to overstaff and burn many
manhours very quickly.
Actually, the most important step in selecting an owners engineer is to become familiar with the
individual employees who are proposed to serve on the team. Take some time to understand their
expertise, how long they have been in the industry, and the types of projects they have worked on
previously.
Its also a good idea to hire an owners engineer firm that has prior experience as an EPC
contractor because such companies will bring an understanding of what is involved. That said, it
may not be wise to hire an owners engineer who is working for an EPC contractor or who has
key alliances with vendors. It is important to look for one who is non-conflictedone who
wont jump ship when the RFP for the larger, potentially more profitable EPC contract is issued.
You dont want a company that is trying to gain a foothold at the early stages of project in order
to take on a larger role as the EPC contractor later on. In fact, the project owner can prevent this
from happening by clearly defining the role of the owners engineer in the contract and including
a provision that precludes the owners engineer from bidding on any related EPC contract.
How It Works in the Real World
The following brief project summaries illustrate the variety of projects that can benefit from
having a trusted owners engineer as a key member of the project team.
Omaha Public Power District, Nebraska City 2 Power Plant, New Construction. In April
2005, after three years of planning and assistance from an owners engineer, the Omaha Public
Power District signed an EPC contract to build a 683-MW coal-fired power plant adjacent to a
unit built in the 1970s. (See Top Plants: Nebraska City Station Unit 2 in the October 2009 issue

or in POWER s online archives.) In contrast to the original plant at the site, which involved well
over 300 separate contracts, the new plant was built with a single EPC contract, a key factor in
limiting capital costs to $950/kilowatt. When the new plant went live in May 2009, it was on
budget and on schedule. For more than seven years, a representative from the owners engineer
firm maintained an office on site and in many ways was indistinguishable from the owners staff
(Figure 2).

2. Long-term project support. When Omaha Public Power District constructed Unit 2 of
its Nebraska City Power Plant, HDR Engineering supported the staff on-site for more
than seven years. Courtesy: HDR Engineering

Constellation Energy, Brandon Shores Power Plant, Air Quality Control Retrofit. An
owners engineer project that ran from 2006 to 2010 at the Brandon Shores Plant outside
Baltimore, Maryland, involved project management and engineering in support of project
development, major equipment and construction specification and negotiation, and consulting and
oversight from project inception to completion. (See Top Plant: Brandon Shores Generating
Station in the October 2010 issue.) The project was executed under a target cost EPC contract
with air quality control (AQC) equipment and a new wet chimney procured through direct
contracts with Constellation Energy. The state-of-the-art AQC systems installed for the project
went into commercial operation in December 2009 for Unit 1 and March 1, 2010, for Unit 2. The
new systems make the Brandon Shores Plant one of the cleanest coal-fired power plants of its size
in the U.S. today (Figure 3).

3. Project partner. When Constellation Energy upgraded its Brandon Shores Power Plant
with state-of-the-art emissions control equipment, HDR Engineering spent four years onsite supporting the engineering and construction. Courtesy: HDR Engineering

Alliant Energy, Multiple Sites, Clean Air Compliance Program. Alliant Energy, which serves
more than 1.4 million customers in a three-state region in the American heartland, hired an
owners engineer to assist with implementation of a Clean Air Compliance Program that included
multi-pollutant control retrofit projects at multiple coal-fired stations. The projects include
installation of low-NOx burners and selective catalytic reduction for NOx reduction as well as
activated carbon injection with pulse-jet fabric filters for mercury and particulate matter
reduction. The owners engineer assisted with conceptual design engineering, managing field test
programs to verify design criteria, equipment procurement, and contract negotiations. The
owners engineer also performed a high-level review of detailed engineering deliverables,
including piping and instrumentation diagrams; process flow diagrams; structural, mechanical,
and electrical design documents; and validation of performance guarantees.
Edison Mission Energy, City of Industry, California, Natural Gas Plant, New
Construction.Using an owners engineer helped the Edison Mission Group, a subsidiary of
Edison International, establish a contracting methodology and execute an EPC contractor RFP
and selection process for a new five-unit, LMS100, natural gasfired power plant. The plant will
serve peak power needs in the Los Angeles area. The owners engineer supported development of
the EPC technical specification, finalization of the combustion turbine supply contract, project

cost estimation, and geotechnical survey specification. The project uses reclaimed water as its
primary source of water and includes aesthetic, acoustic, and environmental treatments consistent
with its industrial setting. The site, previously owned by the City of Industrys Urban
Development Agency, is well-suited to this new facility because it had existing water supply,
natural gas supply, and electrical transmission available adjacent to the project site. In this case,
having an owners engineer with both power expertise and the ability to navigate local utility and
permit approvals was key.
We Energies, Rothschild, Wisconsin, Biomass Energy Project. Development of a 50-MW
biomass-fueled cogeneration power plant at a central Wisconsin paper mill benefited from
owners engineer services that included feasibility analyses, conceptual design development, and
project controls (scheduling and cost estimating). Co-locating the plant with an existing steam
host facility will optimize project economics by minimizing capital investment through the use of
existing infrastructure and maximizing energy conversion and efficiency through cogeneration.
This project will nominally supply 200,000 lb/hr of process steam. The owners engineer
supported biomass combustion technology assessments, AQC equipment selection, thermal
performance estimates, capital cost estimates, site layouts, and lifecycle pro forma analysis to
establish respective costs of steam and power generation. The owners engineer also supported
selection of the project design engineer and constructor; technical support continues through
design reviews and technical assessments.
James Connell (james.connell@hdrinc.com) is national director of power facilities for HDR
Engineering and is based in Ann Arbor, Michigan. Dennis
Grennan (dennis.grennan@hdrinc.com) is energy sector marketing lead for HDR Engineering
and is based in Omaha, Nebrask