PROJECT DEVELOPMENT

PROJECT TALK

WITH SVEN SWENSON

In the last edition of Project Talk, I spoke with Mick Papp of SusEnergy. He emphasized the need to have the right project manager as your trusted change agent, and he stressed how imperative it is to provide them with adequate support in the form of time, money and (the right) people.

For this article, I visited with Ken Ciarletta, who has a long and auspicious career in wood and wood products, most recently as the CEO of Nova Energies. Ken also spent 20 years with Georgia Pacific and 10 years with Weyerhaeuser, mostly in timber, pulp and paper and engineered lumber. From his 39-year career, his greatest claim-to-fame to date is perhaps being the man behind the Georgia Biomass facility in Waycross, Georgia. It was the largest pellet production facility in the world when it was completed, and as such, was arguably the most positively impactful wood pellet project at that time. The facility has since changed hands, and Ciarletta has “semi-retired,” but both continue to be strong performers with a lot of value.

I first spoke to Ciarletta in October. One of his initial comments to me was something we’ve all heard before: “You don’t know what you don’t know.” In the context of project management, it’s one cliché that will pay dividends if embraced, and will likely cost you money if you don’t. So, how do you embrace it?

You must have participating team members who do know. The project manager must be cognizant of the mental map of the project, and know where the team members fit in. If there are places on the mental map that are unexplored, you need to find someone who has already explored those areas and get them on the team in some manner.

Swenson

Give them the time and infrastructure necessary to provide timely feedback. Pick their brains using tried and true techniques to bring things to the surface, which can be as simple as designating a certain time for risk identification and mitigation brainstorming. Then, you need to listen to the message. Most importantly, you must act.

So, if nobody internal to the project has that experience, it is prudent to engage with a consultant who has the “been there, done that,” gold stars and scars to prove it. You can and should happily pay that person for their knowledge and avoid some of those scars—and perhaps gain some gold stars yourself.

Projects incur massive delays and expense by not having access to that experienced person to answer questions or provide a suggested course of action. I was provided an example of such a project in my younger days, and it has stuck with me such that I’ll pass it along here, providing credit to the wise man who lived it and passed it on to me, Walt Query.

Query offered that he was brought in as the “experienced consultant” after several failed attempts at erecting some steel-framed towers. When the crew originally assembled the towers, initially, everything was matching up wonderfully, but then became more misaligned as they moved up the structure. Some sections were too long and some too short, such that holes did not align and they could not finish the install. They were convinced the design was incorrect. Enter Query. He asked a few questions, and then simply pointed out that they needed to have all the connection points loose fit until the entire tower structure was in place, and then systematically perform the tightening such that the tower remained in alignment. It’s the same princi-

ple as tightening the lugs when installing a tire on your car—if you tightened the first lug nut all the way down right away, chances are pretty good that you’ll have a wobbly tire. The crew had been torquing each joint to final acceptance criteria prior to proceeding to the next joint. The slight, imperceptible misalignments from lower levels became additive to the misalignments as the install continued upward. Eventually, this created misalignment in the upper regions and could not be overcome by tolerances, and the prefabricated bolt holes were no longer viable. Alternatively, leaving the joint assembled, but not completely torqued, allowed for the misalignments to work themselves out as needed to position higher members. The absence of this simple piece of knowledge—a thing the crew did not know they did not know—was sufficient to result in days of rework.

Gold star for Query. Scars for everyone else. So, in this vein it’s well worth assessing the core knowledge base in the project, and adding that pedigreed consultant to your complex or more costly projects to fill any identified knowledge gaps. You will never know exactly what issues you avoided, but the consistent and periodic involvement of a true consultant early on will provide for insight that can dramatically change the project (but if you do it correctly, you won’t necessarily know the positive impact). Hypothetically, Query’s review of the tower installation process before field work began in the real-life example above would likely have led to an innocuous comment from him such as, “Don’t torque down on the joints until all the members are in place.” You would perhaps never recognize that getting that advice early and acting upon it was worth tens or potentially hundreds of thousands of dollars, and days of unlost time.

You should also keep in mind that calling in the expert to get you out of a problem is much more expensive than having that experienced member on the team from the start, and avoiding the issue all together. In the scheme of things, the cost of the consultant may look like an expensive “nice-tohave” in the head count, but that cost pales in comparison to some of the issues found by going it alone. The only thing worse is hiring a consultant and then not acting upon their recommendations.

Ciarletta stresses the need to have experience on your team, particularly when talking about building a new greenfield pellet facility. Many people talking biomass these days have a finance side of the program and can see the money-making potential, but don’t have an engineering or a wood products background, so they really don’t know what they don’t know about the industry. When you see trucks of raw wood going down the road it may look pretty simple—grind those trees right on up and squeeze out some pellets; however, you need to know about forests and wood chemistry, including the biologics for a sustainable, cost-efficient product. Understanding of your feedstock, where it comes from, what you can mix, can’t mix, etc., is vital. Call in the expert.

Ciarletta provided numerous examples of where experienced counsel could prove invaluable. Many of these topics are worthy of in-depth discussion in and of themselves, but I’ll summarize a few that are amplified in a greenfield build. The complexities of running a new business must also be factored into the project, and a lot of money can be lost with just a few missteps.

Realistic time frames. You must expect to have weather delays and other issues (e.g., supply chain) and be prepared to pivot to other planned activities to remain productive.

Environmental agencies. Get to know your state and local rule enforcers long before you need something from them. Make them your allies early, and work together.

Understand your cash flows. This includes the expected delays and ramp up, and initial operating costs. These costs must be considered, and will not be insignificant.

Training. Many aspects of running a biomass facility have aspects of “art,” as well as science. Be prepared to augment the normal vendor training with hands-on or mockups, and several sessions as opposed to the one-and-done typically offered.

Offtakes and logistics contracts.

These must be solid. You need to fully understand the force majeure clauses, particularly if selling overseas where the sensitivity to dust and potentially dangerous storage or use practices have not been historically as robust as U.S. standards. If invoked, and you no longer have a viable contract, what do you do with your trained labor force and the facilities until the offtakes are viable?

Spare parts. This is something to think about during design, not just when the project is nearing completion. Engage your vendors early, and do not rely simply upon their standard spare parts lists. Take the time and effort to truly understand the single point vulnerabilities during design, and eliminate as many as possible. This will help determine early what spares may be needed during a startup, and limit one-offs and special parts in the design. Knowing early is crucial, as you cannot trivialize potential expediting fees. Ciarletta stated he has had to pay $30,000 expediting for a $25,000 part, more than doubling the expected cost of the component. And if your critical gearbox is one-of-a-kind manufactured only occasionally in rural Findland ... (during the design phase you should try to not let that happen, but if it does, you need to know).

Most importantly with spare parts is the need for the bioenergy industry to work together—create those relationships with other bioenergy proponents to help each other out of parts situations. Ciarletta offered that even the biggest players have had problems. “Everybody goes through the gauntlet, so learn from it, and be ready to help your fellow operator.” Ciarletta developed lasting relationships with his major competitors and made good on his tagline: “Hey, if I can help you in any way, let me know.”

Call it what you will—quid pro quo, karma, mutual back scratching—the key is to develop relationships, help each other and work together to advance bioenergy. So, with that, I’ll echo Ciarletta—please let me know if there is anything I can do to help.

Author: Sven Swenson Senior Vice President of Technical Services Delta Energy Services LLC Sven@workdelta.com 352-201-984