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Victorian Desalination Project Report


Initiating

The Victorian State Government initiated Victorian Desalination Project in 2007 due to changes in climatic conditions and declining supply of fresh water in Melbourne and its surrounding.

Objectives

The Project objective is to supply 150 GL (gigalitre) of water per annum. It will also have the ability to increase supply based on demands up to 200 GL per year.

The Project shall also ensure that the cities get fresh water that meets water standards as set by State water policy. The plant must meet water needs of the population and must optimise its supply network.

Scope

AquaSure defined the Project scope under the plant, power supply marine, pipeline, and renewable energy.

The plant

This focused on the quantity and quality of water supplied to Melbourne and its surroundings. The plant uses high standards of technology to drive desalination processes based on reverse osmosis technique. The plant is energy-efficient and has a living green roof.

Marine

The water for the plant comes from the sea. Thus, the Project developer approach aimed at protecting the marine environment through dug inlet and outlet pipes. The Project met specifications of Australian environmental standards.

Pipelines

The project has underground pipes covering a distance of 84 km. The pipeline uses the two-way system to ensure uninterrupted water supply.

Power supply

According to the State Government, the Project shall consume 90MW of power to generate 150 GL of water per year (Victoria State Government, 2012). Power supply will increase if the plan supplies 200 GL per annum.

The Project has based its power supply on renewable energy concept to reduce emissions of greenhouse gases. The Plant also has Renewable Energy Certificate (REC). REC implies that the government shall purchase the energy from the national grid to compensate for power supply.

The plant consumes more energy that it can generate from green sources like solar, wind farms, and landfill gas energy. The plant has reliable energy supply.

Renewable energy

Under REC arrangement, the government shall compensate power supply from the grid.

Planning

The planning process identified key dates for important events. Planning processes also accounted for the Project’s resources, risk, time, and cost management (Lester, 2006).

Procurement

The State Government used the Public Private Partnership (PPP) method in procurement processes. The State Government argued that it would reduce risks, costs, ensure a quality design and construction from the expertise of the private sector, protect interests of the public and ensure competitive processes to maximise value for money.

The State Government used laws and Acts to guide the process of procurement, which AquaSure won after successful bidding procedures.

The PPP method is effective in achieving life efficiency, improving design quality, protecting the quality of services, and ensuring flexibility in managing the Project so as to achieve value for money.

The Project commenced during the recession of 2009 and the subsequent euro crisis. The State Government formulated strategies to combat any changes in the cost of the Project related to financial market activities.

Some of these methods included equal sharing of losses with AquaSure, sharing based on specified rates, seeking alternative funding, or termination of the Project and repaying the debts (Kerzner, 2000).

Cost Management

The PPP method guaranteed the State Government effective cost management right from the bidding process with substantial savings. Under this method, AquaSure shall incur all the additional costs of the Project.

Public Sector Comparator
(Net present cost)
AquaSure’s Winning Bid
(Net present cost)
saving
$6,656 billion $5,720 billion 14.1%

Source: Partnerships Victoria Project Summary

The Project had a maximum cost of $5.7 billion after 30 years. This would cater for all resources and construction of the Project. Consumers shall pay for the increased water costs so as to fund the Project. The REC also ensured fixed costs of energy for the plant.

Risk Management

AquaSure and the State Government shared the Project’s risk. This was another reason for using the PPP model. According to the Victorian Desalination Project Summary, risks covered site risks, scope risks, design, construction and commissioning risks, operational risks, industrial relations, asset risks, change in law, and sponsor and finance risk (Victoria State Government, 2012).

AquaSure would be responsible for water quality and supply for the next 30 years, but the State Government must ensure the water meets safety standards. PPP model also reduced risks associated with the Project delay (Chapman and Ward, 2003).

Integration Management

The Project integrated all elements of its scope such as the plant, pipelines, power supply, marine, and renewable energy in order to create Victorian Desalination Plant. This process depended on objectives and resources of the Project for water supply by 2012.

Communications Management

Communication process started when the State Government declared its interest to construct the plant. Communication process was official.

It involved the affected landlords, the public and other stakeholders of the Project. These are the people who had interests and power over the project (Project Management Institute, 2008).

Communication management also involved updating stakeholders about the Project progress. The Project relied on media communication and press briefings.

Executing

AquaSure executed the Project in October 2009. The Project commissioned water for reliability test on September 2012. This tests cover water quality and reliability of the plant and its components.

Time Management

The project started on 2009, and it was to supply fresh water by 2011. The contract for the Project shall end in September 2039.

The Project shows effectiveness time management that was possible due to the PPP method. However, there were cases of delay due to weather, slowdown, and technical challenges. AquaSure claimed that cyclonic weather had affected their operation resulting into loss of working hours.

The Project also experienced industrial action from protesting workers. There were also reports of about failures involving 99 percent of the water valves resulting into delay (Drill, 2011). This is the Project Milestone on key events.

Key Events Date
Contract Close 30 July 2009
Financial Close 02 September 2009
Commercial Acceptance (water delivery) 19 December 2011
Reliability Testing January – June 2012
Contract expiry date 30 September 2039

Source: Victoria Desalination Project Summary (Project Milestone)

Monitoring and controlling

The State Government monitors water quality and reliability of the plant. AquaSure monitored and controlled the design and construction process. Monitoring and controlling enabled AquaSure to adjust time in order to fit delay from bad weather, unionised workers slowdown, and valves’ failure.

Closing process

The Project is ongoing. Thus, the closing process has not begun. However, the AquaSure shall review the Project’s achievements against its set objectives based on the Project scope. AquaSure shall close the project by February 2013 (Lock, 2007).

The Close down Report

Victorian Desalination Project is still ongoing until 2039. AquaSure shall prepare the closure report upon the Project completion. However, the plant commissioned water supply on October 2012. The actual work shall end in 2013.

Reference List

Capital Projects Division 2009, Partnerships Victoria Project Summary: Victorian Desalination Project, Capital Projects Division, Victoria.

Chapman, C and Ward, S 2003, Project Risk Management: Processes, Techniques and Insights, 2nd edn, Wiley & Sons, Chichester.

Drill, S 2011, Wonthaggi desalination plant faces four-month delay, Herald Sun, Melbourne.

Kerzner, H 2000, Applied Project Management: Best Practices on Implementation, Wiley, New York.

Lester, A 2006, Project Management, Planning and Control, 5th edn, Elsevier Science & Technology Books, Loughborough.

Lock, D 2007, Project Management, 9th edn, Gower Publishing Limited, Hampshire.

Project Management Institute 2008, A Guide to the Project Management Body of Knowledge: PMBOK Guide, 4th edn, Project Management Institute Inc, Pennsylvania.

Victoria State Government 2012, Government Initiatives,

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