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Horns Rev 3
When opportunity knocks…
Mattias Sjöberg
Project Director, Horns Rev 3
Project Management Summit
December 2nd, 2015
The challenge and the opportunity
Strategy
A core pillar in Vattenfall’s new strategy is to grow significantly in wind
power - pace to be 400-600 MW p.a.
Challenge
Vattenfall’s existing project pipeline is substantially
smaller than the
2016
2013
growth target, and the wind power market is increasingly competitive.
Opportunity knocked..
In 2013, the Danish state invited interested parties to participate in a
competitive tender for the right to build and operate 400 MW offshore
wind power at Horns Rev 3.
2
2020
The project
Project location overview
The site
Horns Rev 3, 400 MW (Orange area)
Horns Rev 3
400 MW
Production: 1,7 TWh/year
Export cable and Offshore Substation in Energinet.dk scope
Wind farm owner to install foundations, inter-array cables and wind turbines
Investment: € 1,1 bn
3
.
The Horns Rev 3 tender conditions
The Danish state performed initial project development (securing permit, initial
site surveys etc.)
The site was then put up for auction through an EU tender run by the Danish
Energy Agency (DEA)
4 bidders prequalified:
The winner to be awarded the construction permit and a feed-in tariff for 20 TWh
(~12 years) and to reimburse development costs of 10 m€
Single award criteria: Lowest requested feed-in tariff per kWh
Penalty for non-construction (40 m€) and
for late commissioning
4
The HR3 timeline and process
1 000 m€
60 -100 m€
Jan 2017-Dec 2019:
3 years commissioning window
TG2
TG3
3 m€
2013
Nov 2013
Official
publication
2014
3 March 2014
Pre-qualification
2015
2016
16 Feb 2015
Binding bid
Feb-Jun 2015
Project award
5
2017
From Jan 2017
Guaranteed
connection to
the grid
2020
Jan 2020
Full operation
of offshore
farm
The initial challenges
1. The fundamentals
How to reach a sufficiently secure business case that allows
Vattenfall to make a ~100 m€ bet for a > €1 bn investment?
How to reach a sufficiently aggressive business case to have a
good chance of winning?
=> How to tick both boxes within the 14 months available?
2. Internal process and deliverables
There is no VPMM Tollgate for “submitting a binding bid”
No guidance was given from EGM/BoD regarding their expectations on decision
material or business case certainty.
=> What is the project to deliver for decision making?
3. Project team and steering
Project kick-off simultaneous with Vattenfall’s reorganisation – Wind business was split in two
regions – the project ended up in Nordic – and all offshore experienced staff in Continental.
Team members distributed over 5 countries and 8 offices.
=> How to manage a team in 5 countries and 2 line organizations?
6
Challenge 1: The fundamentals
The challenge
How to reach a sufficiently secure and aggressive business case?
How it was addressed:
EU procurement process started for all major parts of capex/opex
Wind turbines
Foundations
Cables
Vessels
High focus on risk identification and internal transparency in risk communication
Trade offs in focus
Maintaining high optionality vs making supplier/technology decisions to reduce complexity
Finalise negotiations pre-DEA bid to maximise security vs keeping competitive pressure open
for period when owning project
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Challenge 2: The internal deliverables
The challenge
What is the project to deliver for decision making?
How it was addressed:
Relevant parts of TG3 requirements used to create a “TG 2,5”
The DEA tender process and our own EU tender processes used as “fixed framework”.
Frequent internal discussions on trade offs, risks and strategic options.
Trade offs in focus
Project to define the actual decision material through its work vs awaiting guidance from above
8
Challenge 3: Project team and steering
The challenge
How to manage a team in 5 countries and 2 line organizations?
How it was addressed:
Small, dedicated and empowered team
High trust environment and decisions taken at lowest possible level
Frequent sound boarding between project manager and line manager
Monthly Project SteerCo for strategic topics, resourcing and anchoring
Trade offs in focus
Frequent and “all team members” meetings to keep holistic view vs allowing sufficient time for
actual work.
How big decisions could the project team be entrusted to make without escalation?
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And what happened?
The project output
The tender outcome
77,0 øre per kWh
10
…but the project had not yet met the Definition of Success…
Resulting reflections on project management agility
Agility – “the ability to move about
quickly and easily”
Reflections
Define overall purpose and definition of success – i.e. clarify the “Why”, discuss the “What” and
delegate the “How”.
Set a few top level stable frameworks/processes to support the overall project purpose, as to allow
the rest of the project to be very “process light”.
Keep project organisation flat and empowered – all team members having holistic view of project.
Spend a lot of time analysing the difference between the really important items that make or break
the project, vs “smaller” items that are “just work”. Sometimes the conclusions are surprising.
Have the strength to maintain optionality on all items that are important - “by when do we really
need to make this decision?”. A decision made is an option killed – and will make it harder to adapt
when circumstances change.
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 Challenge common view that quick decision making is a sign of strength and slow one of
weakness.
Final thought
The agile project manager’s prayer
“…grant me the empowerment to make quick decisions when
needed, the strength to make slow decisions when preferable,
and the wisdom to know the difference”
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Thank you for your attention!
Any questions?