The decision to step in and take over delivery of a massive emissions reduction project when the contractor went bust has not only proved successful for the client, but has changed Rhead Group’s business
The winner of this year’s Outstanding Achievement Award is a project management company that stepped into the breach to keep a £200M-plus project on track when the main contractor went into administration.
Rhead Group, a UK-based consultant with a history of expertise in the oil and gas sector, was managing a massive programme to help National Grid cut its emissions when the contractor on the project went out of business last May.
The most obvious course of action might have been to halt the job, spend some time ascertaining exactly what still remained to be done and then re-tendering what was left of the project. However, working with National Grid, Rhead opted instead to employ the contractor’s workforce in order to finish the work.
Rhead has a long standing relationship with National Grid, and has been providing professional services to the organisation on a framework basis for more than 10 years.
The emissions reduction project was the most recent in a long list of major projects that the company had managed for National Grid, and Rhead was involved right from the start, once the client’s asset management team had identified the need for the work.
The programme involves replacing National Grid’s ageing fleet of gas-driven compressor stations – used to keep gas flowing through the national transmission system – with more modern, energy efficient electric alternatives. Rhead managing director, energy Philip Evans describes the existing turbines as “gas jet engines”, and says they are ideal for the job of driving the compressors because, like aeroplane engines, they can be turned on and get up to speed very quickly.
However, as Evans adds: “They are maturing in age and becoming less efficient. And from an emissions point of view they are becoming less compliant. Technology has come along now in the form of electrical motors that can take the place of these gas turbines, so National Grid selected some of the larger, harder-driven turbines to replace with large electric motors.”
This programme of replacement will eventually cascade down to all the compressor stations, but to kick it off National Grid picked three locations where replacement would make an immediate and substantial difference to its emissions.
Of all the things we had to do to keep the project moving, the biggest was the retention of staff, because that was where all the knowledge was
The three sites are at St Fergus in Aberdeenshire, Kirriemuir in Angus and Hatton in Lincolnshire, with St Fergus – the site where around 25% of the UK’s gas comes onshore – being by far the largest of the three.
Replacing the gas turbines will reduce environmental emissions such as nitrogen oxide, carbon monoxide and carbon dioxide by up to 35%. A contractor was appointed to carry out the work at all three sites under one contract, and construction work started back in 2009/10. All went well to start with, but early last year Rhead started getting anxious that all was not well with the contractor’s business, and eventually the company went into administration.
“As we were monitoring the programme and progress, we started to get a feel that there may be problems,” recalls Evans. Part of Rhead’s role involved being aware of any potential risks throughout the lifetime of the project and to come up with possible ways to mitigate those risks, so as soon as Evans and his colleagues had an inkling that there may be a problem with the contractor, they started looking at different options.
“The natural fall-back would be to down tools, re-scope what was left to do, and go back to re-tender,” says Evans.
“But that would have taken four or five months, and would have led to a total delay of at least a year.
“We looked at all the options available to us, and concluded that the route of least resistance was to step in and try to make it happen ourselves,” he adds.
Risks and liabilities
Rhead chief executive officer Nigel Curry says: “We gathered all the people who would be involved if the company took on responsibility for the contract, and had a whites of the eyes conversation about can we do this, should we do this, and what are the risks and liabilities?”
He adds: “The team resoundingly said ‘this is the right thing for the client and the right thing for the contractor’s employees’. The easy decision would have been to walk away, but that is not how we operate.”
Rhead’s human resources (HR) team set about meeting all of the 132 people who had been made redundant by the contractor’s administrator – 90 of whom were at the remote St Fergus site – to reassure them that their jobs would be safe and to get them all re-employed.
“Of all the things we had to do to keep the project moving, the biggest was the retention of staff , because that was where all the knowledge was,” says Evans. “These people had been on site for two years.”
This new service offering is not going to be a flash in the pan
Understandably, people who had previously been working for the contractor were very anxious about the future. Around 75% of them were living away from home, and many were worried about simply paying their bills. Evans says the fact that the HR team met them all face to face helped to reassure them that the company was serious about taking them all on and making sure they got their next pay cheque.
At the same time, though, the company had to go through all the necessary procedures to get the required certifi cation and insurance for the various specialist activities that its new workforce would be undertaking.
Meanwhile, Rhead’s commercial department had to renegotiate contracts with local suppliers at the three site locations for materials, equipment hire and even hotel rooms.
Astonishingly, within just three weeks Rhead had re-employed all the workers, and the three sites were back up and running.
Progress has been excellent since work restarted, and the company is planning to hand over the sites to National Grid this summer.
With the projects coming to an end, many of the workforce have already been transferred onto other work at the St Fergus terminal site, and Curry is adamant that the contracting expertise should not be lost. “For me, this is a great opportunity to expand in this area,” he says.
“I would be massively disappointed if we don’t develop on the back of this.
“We have shown that we can drive real value in this space, and this project has given us a platform to do that. The team has delivered an outstanding piece of work during a challenging period, and we are very proud of what they have achieved,” he adds.
Curry also believes the skills of his new contracting workforce are transferable not only to other projects in the oil and gas sector, but also in power and rail. “This new service offering is not going to be a flash in the pan,” he says.
“It is something we will continue to invest in.”
In awarding Rhead the Outstanding Achievement Award, the judges wanted to give recognition for the way the company had “saved the day” and “gone beyond normal consultancy”. As one judge said: “They could have walked away, and they didn’t.”
Rhead Group was established in 1985, and has grown to the point where it now employs around 750 people and has a turnover of £75M. Services include project management, programme assurance, dispute resolution and project controls. The company has offices in the UK, Australia, Singapore and the UAE, and works in a range of sectors, including energy, defence and transport.