When Fluor Enterprises Inc. won the contract to build a state-of-the-art power plant for Newmont Nevada Energy Investment Ltd., the project team faced an immediate onslaught of challenges. Launched amid a dearth of skilled talent and increased regulation of environmental emissions, the project had a lot to overcome.
But the team incorporated a blend of ingenuity and rigorous project management processes to get the job done—ahead of schedule and under budget. And here is why the Newmont Power Plant project is the 2009 PMI Project of the Year.
In July 2004, Newmont Nevada Energy Investment Ltd. awarded the contract to Irving, Texas, USA-based Fluor Enterprises Inc.
A subsidiary of Newmont Mining Corp., the energy company was developed to generate more than half of the energy needs of Newmont’s rural Nevada-based gold mine and produce a surplus of power sold to the local grid.
But logistical problems lay in wait.
Image: Richard Gerspacher, PMP, Fluor Corp., Patricia Downing, Newmont Mining Corp., James Mackey, Fluor, James Brown, Fluor, Gary Hevelone, Newmont
Just after Fluor was awarded the contract to build the plant, market conditions took a turn for the worse as the demand for technical resources and construction commodities exploded.
By 2005, global demand spurred 2 percent to 8 percent price jumps in commodities such as heat exchangers, compressors, and gas and steam turbines, while electrical equipment costs skyrocketed by between 12 percent and 18 percent.
The increase in commodity prices was swiftly followed by another disaster: Hurricane Katrina. After the storm struck the U.S. Gulf Coast region, an abundance of skilled labor and materials were pulled away to help with the region’s recovery efforts.
Adding to the pressure, Fluor agreed to complete the power plant without any schedule float or delays. Every month lost to scheduling issues would cost Newmont US$5 million in energy savings.
With a completion date set for 28 June 2008, the team had to start meeting milestones almost immediately to ensure the plant was online within the 29-month timeframe.
But first, the team needed to quickly overcome labor shortages.
Luring workers to the desert—with its extreme temperature fluctuations—proved a challenge, so the company advertised aggressively in regional papers.
The company even hired a full-time “housing coordinator” to work with local motels in repairing rooms designated for Fluor employees. To boost motivation, the company also offered completion and safety bonuses if workers remained onsite through their contracted date.
Despite the odds, the project wrapped up almost 10 weeks ahead of schedule, which saved Newmont US$20 million in overhead and US$15 million in power costs.
To keep the project running smoothly (and on schedule) the project team worked to keep stakeholders informed every step of the way.
For example, to effectively communicate the plant’s capabilities, the project team created a detailed reliability, availability and maintenance (RAM) analysis that included projections for planned redundancies and the number of hours the plant would need to be down each year for maintenance.
Working in tandem, Fluor and Newmont reviewed the results of the RAM study to determine a protocol for allocating capital to ensure the plant’s reliability.
Because the team prioritized open, collaborative communication, more ideas were brought to the table—which helped them exceed planned performance guarantees and translated to significant fuel savings for Newmont.
The plant has achieved greater than 99 percent power availability since it went into commercial operation in May 2008—and that means an increase in planned power sales for Newmont. Throughout the project, the team relied on strong project management methodology that allowed them to complete milestones and infuse the project with innovation.
And the project has garnered a virtual trophy case of awards. In addition to being named the 2009 PMI Project of the Year, the project was named Top Plant for 2008 by