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Using Risk Management to Reduce Cost and Customise a Contract for a Water Reuse Desalination Plant

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This paper presents the results of a study into reducing the construction and operating costs of a small desalination plant built for the purpose of treating effluent from a waste water treatment plant and recycling it to industrial and irrigation users. Detailed modelling of the plant and its associated pump stations and pipelines revealed how the risks of the project could be allocated between the plant builder and operator and City West Water, the client of the enterprise. The study also revealed how the design of the contracts themselves could be used to also reduce costs by striking a balance between the commercial objectives of the contractor and the social objectives of the client. Sufficient detail is included in the paper to permit others the option of considering a similar approach in engaging a contractor to design, construct and operate a treatment plant.
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Keywords: Cost Reduction; Mass Balance; Performance Contracts; Risk Allocation; Risk Management

Document Type: Research Article

Publication date: 2011-01-01

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