|NEC Contractor of the Year Winner 2018
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|NEC Contract Innovation through Additional Clauses Highly Commended 2018
Castle Peak Power Station, located on the west coast of Hong Kong’s New Territories, is the largest power plant in Hong Kong with a capacity of 4,108MW. Maintenance of the station’s coal plant and flue-gas-desulphurisation (FGD) systems are being carried out under NEC.
Client CLP Power Hong Kong Limited engaged contractor Hargreaves Industrial Services under a five-year NEC3 Term Service Contract option C (target contract with price list) worth £150 million (£14 million) in 2014.
For its outstanding performance on the contract, Hargreaves won the NEC Contractor of the Year Award in 2018. CLP Power, which adopts NEC for sub-system maintenance across all three of its power stations in Hong Kong, was highly commended for the NEC Contract Innovation Award.
Commissioned between 1982 and 1990, Castle Peak Power Station has four 350MW and four 677MW generators. The primary fuel is coal, which it burns at rate of around 5Mt a year, but two of the units can also use natural gas and ultra-low-sulphur diesel as back-up fuels. The FGD system was commissioned in 2011, reducing sulphur dioxide emissions from 24,000t in 2008 to around 5,000t in 2015.
Hargreaves’ contract includes maintenance of ash and dust handling equipment, coal stockyards, conveyors, ship unloaders, mobile plant, water collection and conservation systems, FGD absorbers and gypsum systems. The contractor works particularly closely with CLP Power on maintenance and improvement of the FGD system. As CLP Power strategic procurement manager Teddy Tsang says, ‘Continuous improvement of the FGD system is critical to its reliability and performance.
‘The Castle Peak coal plant and FGD maintenance contract is one of seven sub-system maintenance contracts we have let under the NEC3 TSC. Worth a total of HK$1 billion (£96 million) over 5 years, these contracts play a critical role in ensuring the reliability of Hong Kong’s electricity supply,’ says Tsang.
CLP Power has adopted NEC option X20, key performance indicators (KPI), in the contracts and written 21 KPIs covering health, safety, environment (HSE) and technical matters. The annual overall KPI scores are then linked with the contractor’s pain-gain share under TSC Option C.
Tsang says that the technical KPIs measure the availability and reliability of each plant sub-system. ‘Our NEC contractors effectively take ownership of the performance of each sub-system and have a free hand in planning and carrying out its maintenance. This is an excellent demonstration of the NEC “spirit of mutual trust and co-operation”.’
One of the technical KPIs covers innovation. ‘This aims to encourage our NEC partners to develop new working method to improve existing processes to achieve better safety, plant and cost performance. The innovation KPI drives both sides towards continuous improvement,’ he says.
‘Overall, through innovative use of KPIs and the pain-gain sharing mechanism, our evidence shows that NEC outperforms other forms on contract in terms of safety and plant performance as well as cost management.’
Meetings and Awards
CLP Power’s senior managers hold regular meetings with the NEC contractors to help foster working relationships. ‘The meetings not only review contract performance but also provide a platform for exchanging ideas on the operation of NEC. By reshaping the process from time to time, we eventually reach the optimum level of best practice,’ says Tsang.
In 2017 Hargreaves won the CLP Chief Operating Officer’s Award for being the best contractor as well as the CLP Golden Award for Good Housekeeping (Operation Sites Category) and the CLP Castle Peak Power Station Generation Business Group Housekeeping Award.
The company was also awarded a full five stars in a British Safety Council occupational health and safety audit in 2017 for its work at Castle Peak, the first such award in Hong Kong.
Benefits of Using NEC
- NEC ‘spirit mutual trust and co-operation’ ensures close collaboration between client and contractors on strategically important maintenance contracts.
- Linking the NEC pain-gain share mechanism of a main option C target contract with secondary option X20 on key performance indicators (KPI) creates a true performance-based contract, encouraging contractors to take ownership of performance.
- KPIs can also be used to improve health, safety, environment, partnering behaviour and innovation performance.
- For coal-fired power station maintenance, NEC outperforms other forms on contract in terms of safety, plant performance and cost management.