Global Business Environment
for desalination and water treatment projects
Desalination megaprojects: to participate or not?
• Veolia Water: $37.5 million • Veolia Water: $72 million
Rapidly expanding water desalination market towards bigger capacities (of above 25,000 m3/day) encourages
small-to-mid-size-unit manufacturers to participate in the megaprojects without prior experience in
their engineering and construction and understanding what megaproject is. Wikipedia definition of
the megaproject as an extremely large-scale investment does not throw the light on what to do
to expand the small company business.
Project diversification
First of all, increase in the project scale is accompanied by a huge surge in the disciplines involved
and the depth of detail engineering. Examples are metallurgy of castings, strength analysis of piping,
structural resonance analysis, bio-fouling study, marine study, under-drain hydraulics, process
transient analysis, reliability analysis, used membrane recovery and utilization, disposal systems, etc…
Company shall have clear picture of the work scope and what parts of the work to outsource and to whom.
Megaproject versatility calls for inevitable activity collaboration between companies in engineering,
procurement and construction phases in parallel. Collaboration management shall address collaboration
activity tracking, cross discipline communication and information integration issues.
Neglecting these issues may result in millions of dollars losses and dissatisfaction growth among
the project partners. The latter is very common in the megaprojects performed by international teams.
Project customization
Small projects are built around off-the-shelf equipment. Its streamlined production cannot allow any deviation
even in the selection of standards governing the production. Megaprojects use custom-tailored equipment.
The specifications for such bespoke equipment are much more elaborate going deep into manufacturing
procedures and schedules. For example, the high pressure pump specification may contain up to 80 pages.
For comparison small pumps are ordered with one-page datasheet attached.
International standards for manufacturing, inspection and testing go through customization as well.
Company standards unconditionally supersede the international ones.
Better information quality
Engineering information is iterative in nature. Iteration number increases in geometric progression with the project size.
There are other project features contributing to the information surge.
Process implementation becomes complex. Below is given typical metrics of 150.000 m3/h desalination plant.
Category
P&ID items
equipment specifications
piping isometrics
instruments
I/O points
interlocks
time schedule activities
Qty
3500
100
1000
1000
6500
400
6000
Documentation surge
The pivot of any megaproject is the quality management. It is a time-consuming work built upon documenting
and recording any step in each phase of the megaproject starting from conceptual design to commissioning.
Typical data presentation portfolio for megaprojects usually includes more than hundred (!) report forms
for engineering calculations, inspection and tests, document approvals, order tracking and expediting,
bid comparisons and commissioning. Maintenance of this portfolio is difficult due to negative attitude
of engineers and managers toward paperwork. From my experience the latter was the reason of many project misses.
Never rely on your intuition and never accept arguments like “I did it hundred times. It will work”.
The equipment manufacturers involved in the megaprojects work much harder as well. For instance,
the required submittals for the large-capacity pump include 36 items. So for the seawater desalination plant
driven by 3 pump types (high-pressure booster, low-pressure booster and a main pump) the number of documents surpasses 100!
To save time on ordering and get down the prices, similar equipment is amassed in the same order.
So instead of ordering a pump set including a pump and a motor, the pump is placed in the pump pack order and
the motor - in the motor pack. This business paradigm - package split – requires bigger documentation packages
and more coordination effort.
EP megaprojects with a scope of supply limited to engineering and procurement are most unwanted as the documentation
package becomes a final product of the company. Documentation scope is always poorly defined and a cause of
substantial cost overruns. Unfortunately, documentation sales are a trend gaining momentum in international megaprojects.
Higher stakes, higher risks
With ever-narrowing megaproject margins failure risk should be lower enough not to destroy the company.
Notorious example is the Tampa Bay desalination plant. Project cost overruns were about 29 million US dollars
(27% of total costs) due to serious faults in the process design.
Despite the widespread opinion that the competition is too tough, predicted profits are still high.
Just take a look at a glaring price gap between bidders of 2 tenders - Aruba tender (WEB, 2010)
and the Hialeah one (WEB, 2010).
Aruba (2010)
Hialeah (2010)
• GE Water: $44.5 million
• IDE Technologies: $47.5 million
• Consolidated Water: $54 million
• Inima: $55.7 million
• Acciona: $68.5 million
The only reasonable explanation of the price scatter is the profit calculation methods.