VANCOUVER – BC Hydro today released an independent review of the Site C project's risk and cost management processes by Ernst & Young LLP and BTY Consultancy Group Inc. The report stated: "Overall, our review finds that the project is well defined and that the processes for managing risks and costs are largely representative of leading practices. Execution of the major work packages are clearly scoped and supported by both a robust set of project management practices and tools, as well as by a team with deep experience on delivering major projects for BC Hydro."
Ernst & Young and BTY Group were engaged to assess the Site C project's practices for cost and schedule forecasting, including risk management and mitigation, to ensure the appropriate processes are in place to build the project on time and on budget.
The review focused on four key areas:
- Review of contracts (over $50 million) awarded to date.
- Review of risk management plans, processes and risk registers.
- Review of cost management plans and processes, with an assessment of overall cost controls.
- Review of key cost drivers and indicators compared to the estimate baseline.
During the months of July and August 2016, Ernst & Young and BTY reviewed over 100 project documents, interviewed senior project personnel and conducted a site visit.
Key Excerpts from Report
The Ernst & Young/BTY report stated that:
- "Given Site C's early stage in its lifecycle, our review did not find any evidence to suggest that major project milestones and financial targets will not be met. Overall, the Site C project is both clearly defined and well-planned."
- "BC Hydro employs an industry leading approach to project management via the Project & Portfolio Management system, with practices scaled to both the complexity and size of Site C."
- "While project execution risks do exist, those risks are well-understood and managed by the project team."
- "A robust process was followed in order to establish the project budget, and extensive due diligence was conducted."
- "Site C benefits from best-in-class software that BC Hydro has implemented and integrated over the past five years, including SAP, P6 (Primavera), HeavyBid, Unifier, and others."
- "Finally, we were strongly encouraged by the level to which Site C has leveraged the depth of knowledge within the broader BC Hydro organization around key areas such as project, contract, and interface management."
The Ernst & Young/BTY report also provided a list of recommendations for BC Hydro to consider going forward. BC Hydro has reviewed and considered the recommendations in the report and has developed an action plan to address them.
The Ernst & Young and BTY report is available online.
About Ernst & Young and BTY Group
Ernst & Young (EY) is a global leader in assurance, tax, transaction and advisory services. Their advisory services include risk management and performance improvement.
EY has experience with major hydroelectric projects, having recently reviewed cost and schedule management processes and controls as related to the Muskrat Falls Project.
More information is available at www.ey.com.
BTY Group advises clients worldwide on risk and cost management for their real estate and infrastructure projects. Their Cost Management services enable more effective cost planning, control and cost and risk management for a construction project over its lifespan. BTY provides clients with cost estimates at key design stages as well as advising on procurement, constructability, scheduling, lifecycle cost analysis and value management, in order to minimize risk and maximize project value at any stage. More information is available at www.bty.com.
For more information
BC Hydro Media Relations
604 928 6468
Background
EY/BTY Recommendations and BC Hydro Actions
| EY Finding / Recommendation | BC Hydro Action |
|---|---|
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While the complex nature of these interfaces will put significant pressure on BC Hydro to manage and control as multiple contracts run in parallel, we are encouraged by the depth of experience across the organization in managing complex interfaces. Recommendation 1: An interface manager and team should be considered as part of the overall project organization. |
BC Hydro will develop an interface management plan between major contracts and implement an interface register. |
|
Current contract management needs and reporting requirements are placing significant strain on the capacity of the Site C project team. Recommendation 2: As the project progresses, Site C would benefit from an independent review of the capacity and capability of the project team to deliver upon evolving project needs. |
As the project progresses, BC Hydro will commission an independent review to ensure sufficient capacity and capability with regards to contract management and reporting requirements. |
|
The project team is aware of the risks on the Main Civil Works package and is supporting the contractor in many aspects. Recommendation 3: The Main Civil Works contractors would benefit from a forward-looking capability and capacity review to help monitor contractor performance against schedule. The implementation of Earned Value Management and Unifier will also support contract management. |
BC Hydro will:
|
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We observed strong schedule development and controls processes, including a challenge function, when reporting schedule against planned. The underlying data feeding the schedule and capability and capacity to manage the project will need to be evaluated throughout the lifecycle. Recommendation 4: BC Hydro should commission a comprehensive, independent review of the project schedule at a work package-by-work package level in order to both validate schedule content and to identify any schedule risks. |
BC Hydro will commission an independent review of the project schedule at a work package-by-work package level to validate schedule content and to identify any schedule risks. |
|
The capacity of the project team to keep pace with reporting requirements will be challenged going forward. Recommendation 5: Reporting requirements should be assessed and streamlined where possible. |
BC Hydro will propose to streamline reporting by changing the frequency of some quarterly reports to semi-annually, where appropriate. |