Construction of the sea water reverse osmosis desalination plant was announced by the state of Victoria, Australia, in June 2007, after the state experienced a spell of dry conditions for over a decade. The plant was part of the state’s water strategy “Our Water, Our Future”. Its main purpose was to augment the water supply in Melbourne, and contribute over 30% of the capacity required. The project was awarded to AquaSure Pty Ltd on 30th July, 2009. AquaSure is a consortium that consists of Thiess, Macquarie and Degremont (King 2010, 119).
The Victorian Desalination project entails the scheduling, financing, building and process of the desalination plant and marine structures, among other features. The project also entails the delivery of an underground water supply for the project extending for 87 kilometres, as well as, the purchase of renewable energy. It is the largest desalination project in Australia, and one of the largest desalination plants in the world, expected to provide up to 150 billion litres of water annually. This water is expected to provide water for various cities and towns including Melbourne, Geelong, South Gippsland and Westernport. The construction is divided into three 50 gigalitre (GL) modules that are dynamic enough to meet the supply needs (King 2010, p. 121).
The role of the Thiess Degrémont Joint Venture is to map and create the plan by delivering all the components of the project in the design and construction phase. The design and construction management plan outlines the management guidelines for the TDJV, as well as, its consultants and subcontractors. The project components and deliverables are divided into four areas. The first area involves the marine intake and outlet structures, with the exception of land-based construction activities that involve tunnels. The second area involves the desalination plant and facilities including land-based construction activities such as the intake and outlet tunnels, seawater intake plants and screens, pre-treatment plant and buildings, reverse osmosis plant and buildings and treated water storage among others. Both area 3 and 4 involve utilities such as the transfer pipelines between the plant and Melbourne’s water supply, booster pump station, power supply, the high voltage current underground cable and the ancillary fibre-optic cables (Daley 2011, pp. 27).
The primary reason why the Victorian state decided to construct a desalination plant is to meet the water demand for the increasing population. Another key reason for the heavy investment in a desalination project is the climatic change, which resulted in a prolonged drought, in Victoria. As a result, the state identified a need to provide its population with a high water supply that is not dependent on rainfall. The Victorian desalination plant is being constructed on the Bass Coast, at the periphery of Wonthaggi town, since the area has the best placement compared to other areas identified in the feasibility study, including western port, port Philip Bay and Surf Coast. The preference of Bass Coast over the other regions was due to its open access to high quality and high activity ocean water from which sea water could be drawn. The site also presented a direct channel for the dispersal of saline concentrate. Other factors that influenced the selection of the site include the apt terrain and ease of linkage to Melbourne’s water supply (King 2010, p. 137).
The contract was awarded by the state to AquaSure, with the official status of the project proponent being transferred from 1st of September, 2009. The project deed allows AquaSure to subcontract its duties to the design and construction contractor, TDJV. Consequently, the vital environmental needs in the project will be handled by TDJV, owing to their contract with AquaSure. TDJV is just one of the many organizations working with AquaSure to facilitate delivery of the Victorian Desalination Project (Daley 2011, p. 29).
The companies involved in construction of the Victorian desalination project have diverse specialties. Degrémont is a Suez environment organization and recognized internationally for its reverse-osmosis desalination technology. “Thiess is one of Australia’s leading and most relied on construction and services companies, and Macquarie Capital is the world’s strongest and most experienced infrastructure advisor” (ICN 2010, p. 2). Ocal companies have also been engaged in the project. Some of them include Tyco Water, which was awarded a $150 million deal to deliver 84 km of pipeline and Fytogreen, which obtained a $4.3 million contract to create, set up and sustain a “landscaped, living green roof on top of the desalination plant” (ICN 2010). Other companies that got contracts are Olex, which secured a $43 million contract to supply power cable, and Ortech Industries, which received a $7 million deal to fabricate the “steel beam system and acoustic ceiling panels that form the desalination plant’s living, green roof” (ICN 2010, p. 2).
The project has two sets of costs: the capital cost of $3.5 billion, and the net present cost of $5.7 billion. The capital cost varies from the net present cost in that the former signifies the expenses incurred in design and construction, which is used to compare the scale of the project to other projects based on delivery terms. The net present value, on the other hand, is a measurement of the costs to be incurred over a long time, as applied in public-private partnerships (PPP). The period for Victorian Desalination project is 30 years. Any increments in the capital costs for the project would be incurred by AquaSure, and not the Victorian state.
“The amount announced in June 2007 for the water project was $3.1 billion. Escalation of this figure based on the Australian Bureau of Statistics (ABS) construction indices for plant, labour and materials took the figure to $3.42 billion” (Victorian Desalination Project: Project costs 2010, p. 7). The addition of other features like use of underground power, top-notch architecture and additional road and water supply upgrades led to extra costs that lead to a cost of over $3.5 billion (Victorian Desalination Project: Project costs 2010, p. 7).
The net cost of the project implies that the state government will be paying a sum of $1.37 per one thousand litres of water for 30 years. The amount of water that is used every year is controlled by the government, which implies that the net cost of the project may be less that stipulated. This means that the cost of delivering the project through a PPP with AquaSure saves the government $ 1 billion, when compared to the latter funding it by itself. In addition to saving on expenses, delivery of the project as a PPP allows the government to benefit from the private sector “experience in designing, building and maintaining the desalination plant, while protecting the public interest and ensuring that water remains publicly owned” (Victorian 2010). The contract requires AquaSure to conduct its operations entirely on renewable energy (Victorian 2010).
Project risks are identified through the TDJV project risk management process, which is in “compliance with ISO 31000:2009 “Risk management – Principles and guidelines” and the relevant corporate requirements of Thiess and Degrémont” (Bryant 2010, p. 4). Most of the risk management measures in place are based on preparedness and response to environmental incidents and emergencies. The environmental risks will be handled according to the Environmental Incident Response Plan (EIRP) for each Area. The EIRPs are part of the Design and construction crisis management plan, and cover environmental concern only. The EIRPs will be reviewed as need be, and updated whenever there is a considerable incident (Bryant 2010, p. 4).
The design and construction crisis management plan and EIRPs ensure that there is a standard protocol that is adhered to with regard to notification, recording, classification, investigation and reporting of all work related incidents. These incidents can occur in all areas of the project and involve subcontractors and other facilitators to ensure their safety, as well as, proper management of incident situations (Bryant 2010, p. 5).
The crisis management plans contain contact information and time frame for appropriate authorities who need to be alerted in the event of an emergency. The EIRPs, for instance, have various objectives including provision of guidelines to manage environmental incident situations, minimising of risk to all parties involved including AquaSure, TDJV and other stakeholders, ensuring continuity of operations during execution of procedures after the occurrence of an incidence, and ensuring the placement of proper reporting and communication procedures (Thiess 2010).
The role of risk management is to lay out the procedures that guide the process of operations in the event of an incident. These guidelines ensure that the results of al occurrences are assessed, reported and remedial activities executed in a timely manner. The procedures that need to be followed by various stakeholders are also outlined, to ensure that relevant parties are involved in managing, responding to and investigating incidents. The EIRPs, for instance, require that area environment managers ensure that the project team is trained and equipped to handle various environmental situations such as ground contamination, chemical spills, fuel spills, emergency contact details and location of contaminant structures (Thiess 2010).
The project management structure for Victorian Desalination Project I shown in table 1 below.
The design and construction component of the project has various phases including design and pre-construction, construction, construction verification and cleaning, testing and Commissioning, close-out and defects liability.
The design and pre-construction phase involves evaluation of the procurement process for identifying tenderers, designing solutions for performance requirements and licensing of permits before the commencement of construction operations. The construction phase entails the implementation of designs identified in the previous phase and definition of management standards for adherence by suppliers, consultant, subcontractors and personnel. This phase also involves the establishment of the responsibilities of all management positions and involves the establishment of various guidelines to monitor and audit performance of the project.
The third phase, which is the construction verification and cleaning phase, looks into hydro testing and leak testing of pipe work and tanks and tunnel flooding before hand over to the Commissioning Team. The process involves implementation of risk controls and regulation of verification and cleaning activities before a permit is issued (Fytogreen 2012, p. 110).
The testing and commissioning phase involves the identification and management of high risk equipment failures and errors in design and construction. The phase also includes a commissioning, completion and handover management plan. The final phase is the close-out phase, which occurs after the design and construction activities are complete. At this point, the desalinated water supply can be safely operated at full capacity, though there are some construction details that are incomplete. This phase is followed by a defects liability period, whereby the personnel are involved in monitoring, inspection and audit processes to assess the performance against requirements of the design and construction plan (Fytogreen 2012, p. 111).
Since 19th June in 2007, there have been numerous changes in the Victorian water project. In September 2007, it was announced that the project would be undertaken as a public-private partnership under the government’s Partnerships Victoria (PV) framework (Hobbs 2008, p. 276).
The Victorian government called for Expressions of interest on 4th June 2008, whereby 8 submissions were received. On September 30th, 2 bidders were shortlisted, and the tender documents released to both AquaSure and Basswater. In January 2009, there was a 12 month public process to evaluate the possible environmental and social impacts of the project, which was verified by the Independent Expert Group (IEG) (BassCoast 2009, p. 4).
After approval of the project in March 2009, the government announced AquaSure as the winner of the bid on 30th July 2009, and on 28th September of the same year, Thiess Degrémont commenced earthworks on site. In 2011, just 2 years on the site, the marine and tunneling works are complete, and so is the laying of hydro testing of the 84 km transfer pipeline, and laying and energization of the 87km underground power. Construction on the desalination plant is quite advanced, and commissioning is currently underway. The site has employed over 6000 people to date, with thousands more indirectly employed by companies supplying to the project. The project has also generated opportunities for almost 90 apprentices and trainees to date (AquaSure 2010, p. 3).
Communications management is divided into internal and external communications. Internal communications involves various networks, interfaces and regular meetings established within the project team as stipulated in the design and construction management plan. There are various methods of internal communication including InCITE, weekly project meetings, weekly construction coordination meetings and regular environmental communications, such as, toolbox talks, pre-starts, daily construction meetings, and work instructions (Wee 2010, p. 6).
External communications include the design and construction involvement plan (DC-CIP), which identifies the strategies required to ensure proper engagement between stakeholders and the community. This involves processes for recognizing and tackling concerns, as well as, organizing enquiries and complaints. Overall management of external communications is conducted according to the AquaSure Community involvement plan (CIP).
The design and construction management plan is aimed at ensuring that the performance requirements of the project comply with the legislation. This plan provides controls for the construction and design phases by the contracted firm, AquaSure. Consequently, the design and construction management plan ensures that AquaSure observes the contractual Project Deed and provides certainty of adherence to the indicated outcomes for appropriate activities. Some of the requirements of the project involve evaluation of the environmental requirements, which ensure that the project design process complies with environmental sustainability processes in order to reduce the possible effects of construction operations on the environment and community (Division 2009, p. 8).
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