winnig the client

Modern Desalination Feasibility Study (FS) is a complex analysis ranging from desalination practicality to ecosystem resilience and water security. Its scope keeps on expanding.

In practical terms, FS is part of the desalination project-plant life cycle connecting the customer and the contractor. For both (!) FS should give a definitive BUILD/NO_BUILD answer and explains the major problems in case the answer is negative.

FS is a legal basis for investors and bankers in deciding whether investing in a particular project is a wise choice.

FS complexity surpasses any desalination know-how, its duration – the plant construction. Notorious example is the Carlsbad desalination plant with the cost approaching US$ 1 billion. (2015). If we assume that this plant of 190 MLD is no different from other grass-root plants, its construction alone should have cost below US$ 250 million and the rest is plugging it into existing ecosystem – US$ 750 million. It includes connections to power grid and water mains, their upgrades, mitigation of environmental impact, lobbying, etc.

High non-revenue collateral costs of desalination are a good reason to start FS with an optimization of the desalination capacity vs the ecosystem "disturbance".

Surprisingly, the internet is inundated with FSs disregarding this simple requirement. Worse, most of the recent FS tenders consider desalination capacity as the unmodifiable input, not output, and substitute authentic FS tasks with the EPC contractor's ones. For example, a month ago I got an invitation to participate in FS with the following agenda.

  • Prefeasibility studies including Environmental Feasibility
  • Preparation of Detailed Project Report (EPC contractor's scope)
  • Detailed Engineering (EPC contractor's scope)
  • Bid Documents for the installation of XX MLD capacity (!?) Sea Water Reverse Osmosis Desalination Plant
  • Construction, Commission, etc. (Engineering Consultant scope)

These 6 lines describe typical situation on the FS market – underestimation of the FS impact on the ecosystem health and substitution of the customer interests for those of the private contractors.

Turning the desalination capacity into output moves us deep into the systems engineering, saturated with such terms as sustainability, resilience, security, reliability, changeability, and forecasting.

If prediction of the water consumption shows that the water deficit will grow with time then time-to-plug shall be the second parameter of the desalination size optimization covered by FS. Introduction of the time category into FS turns it into perpetual activity to be maintained by the customer. If we assume desalination capacities will follow the water consumption growth, then FS shall address the problem of desalination plants upgrade and extension as well.

The next point is how to tie the water production to consumption on daily, weekly and monthly bases. SWRO desalination favors constant production, while water consumption varies substantially. An example is typical daily demand for Sydney's water. daily demand for sydney's water

The latest big addition to FS is risk assessment (identification & classification) and water supply resilience. You know what uninterrupted power supply (UPS) means, don’t you? What about uninterrupted water supply (UWS) requested lately by industrial customers?

FS shall address risks of underperformance or production interruption, their impact on environment and consumer's well-being. For example, in 2017, the Carlsbad plant fulfilled only 70% of water orders. This figure poses an obvious question. What would happen if this plant would have provided 70% of water instead of 7% to the San Diego region? It would not be far from truth saying that this production loss was due to off-spec seawater quality – Entry Number One in the what-if scenarios of the water supply resilience analysis.
Other less-probable scenarios are not as innocuous as the one mentioned.

  • Loss of the power supply for 4 – 48 hours
  • Plant shutdown for 24 – 200 hours due to oil spillage
  • Plant shutdown due to Tsunami or earthquakes
  • Plant shutdown due to intake pipe collapse, etc.

All these points - the desalination size, time-to-plug and production-consumption tie-in and risks - require tremendous volume of information to be collected, systematized, and maintained.

Information availability and accuracy are absolutely neglected words in all the FS tenders I am acquainted of. It is naïve to expect that the FS consultant might execute data modeling and architect the information database overnight.

Lack of database makes FS meaningless. This GO/NO-GO point is a tremendous opportunity for a contractor to create a service channeling new experience and knowledge to the prospect in return for early access to the data crucial for assessing the project risks. During the plant construction some uncaught risks are converted into losses. In the past I participated in 2 grass-root projects with overruns amounted to 30 – 50% of the project budget (US$ 30 – 40 million).

There are a number of reasons why EPC contractors disregard FS.

  1. Little revenues comparing to the project execution (Who cares about risks?)
  2. Long duration of FS requires resources otherwise to be used in the project execution (4 – 18 months)
  3. Work scope and content are poorly defined
  4. Required is higher level of expertise in systems integration, prediction models analysis

Below is an example of poorly defined scope of work.

"The successful Bidder shall carry out all the Work / Services whether specifically mentioned or not in this tender document but required to be carried out in order to fulfill the scope of Services in a comprehensive manner to meet the objective of the tender and to the satisfaction of Client, the same shall be carried out within the overall quoted price and without any contractual implication to Client."

The most probable reason for inclusion of such an "all-inclusive" clause into the tender is a feeling of insecurity due to lack of formal FS database and procedures.

Starting FS without EPC contractor backup is exercising in futility as practicality sought after shall be of the same magnitude for both sides – the customer and the contractor. Besides, unlike the FS consultants, contractors have access to fresh costs and time information on real projects, and maintain connections with the original equipment manufacturers (OEM).

How important are these connections? I came across a number of FSs where authors, instead of the costs, wrote – "the supplier did not respond to RFQ" (?!)

I think successful FS is 95% building the database and 5% its interpretation. The minimalistic database should touch upon the following points.

  1. Water consumption curves for different consumer's groups
  2. Consumed water quality analysis
  3. Seawater chemical analyses over the time of the year
  4. Hydrological data (soil, high/low tide levels, current velocities, bed structures, etc.)
  5. Environmental data (meteorology, marine environment status, noise)
  6. Design basis data
  7. Documents governing the plant design and engineering
  8. Procurement data (taxes and duties, local suppliers and manufactures)
  9. Costing database
  10. Scheduling database
  11. Reliability prediction database
  12. Prediction (of impacts) and sensitivity analysis models, software and data
  13. Desalination plant potential tenderers database

Maintaining such a huge database is a door to long-lasting partnership with the customer as it will be re-used in all future projects to come. The database is a condition for handling the core problem of FS – the information accuracy requirement mentioned previously.

One of the FS tenders set it in the following way.

"The PFR (pre-feasibility report) shall have a costing with an accuracy of 30% and the DFR (detail feasibility report) shall have costing with an accuracy of 10%".

Is request for 10% accuracy a sign of the customer utter and complete ignorance of engineering? Not in the least. This percentage is a real goal of FS hustle and an attempt to buy key information at a bargain price. It will allow the client move to the final stage of practicality "closure" – to decide on the percentage of ROI (normally below 10%) or an interest rate on tax-exempt bond financing (4.76% for the Carlsbad plant) and start talking with bankers.

As per AACE Estimate Classes for the project costs accuracy prediction, to guarantee the 10% accuracy, FS shall include Front-End Engineering and Design (FEED) corresponding to Class 2. As seen moving from Class 4 (FS) to Class 2 (FEED) increases the bid preparation effort by a factor of 5 to 10! platform not only offers already pre-built FS database but allows one to create FEED just in 40 hours. And it is free for use.

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