ECRI – 7 juin 2012 p 1
AREVARisk Mapping andRisk Management
Offshore Wind Projects
Louis-François DURRETSEVP AREVA RENEWABLES
ECRI – June 7th 2012
ECRI – 7 juin 2012 p 2
Film:ALPHA VENTUS WIND FARM
ECRI – 7 juin 2012 p 3
Table of contents
1.AREVA in Renewable Energies
2.AREVA Organization for Risk Management
3.Yearly Risk Mapping Campaign
4.Project Risks & Opportunities Management
5.Example: France – Offshore Wind – Saint Brieuc
ECRI – 7 juin 2012 p 4
Our StrategyNuclear energy
�Build one third of new nuclear generating capacity in accessible markets
�Secure fuel supplies for our current and future customers
Renewable energies
�Become a leading player in renewable energies
� Increase the competitiveness and efficiency of our technologies
�Supply solutions for baseload and peak demand
While constantly improving safety, security and transparency performance
ECRI – 7 juin 2012 p 5
Available low-carbon technologies within AREVA’s scop e of expertiseAvailable low-carbon technologies within AREVA’s scop e of expertise
4 AREVA EPR™
reactors under construction in China, France and Finland
Global strategy combining technological solutions and EPC capabilities for biomass power plants
Proven and bankable 5 MW Wind turbinededicated to large scale offshore wind fields
Most cost-effective,utility-scale turnkey concentrated solar power(CSP) solution
27 reactors upgraded by AREVA worldwide
A low-carbon power generation portfolio
Nuclear
New Build
Nuclear Plant
Modernization
Solar Steam
Augmentation
Solar Power
Generation
Bioenergy Power
Generation
Offshore Wind
Power Generation
The world’s first hybrid coal/solar power plant selected in Australia , a second one recently sold
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Renewable energies: a low-carbon power portfolio with a strong track-record
More than 500 projects worldwide totalizing over
5 GW
35 years of experience
Bioenergy PowerGeneration
Supplying and installing 120 turbines with a 600 MW output (Global Tech 1 &
Borkum West 2)
Increasing production capacity up 100- 200
turbines per annum by 2012
Offshore WindPower Generation
2x125 MW solar thermal project selected by Reliance,
a major developer in India
544 MWe in operation, construction and advanced
development
Concentrated Solar Thermal
Source: AREVA
Hydrogen & Storage
Decentralised systems for storing and generating power with or without
renewable energy sources
Myrte storage system (500 KWc)
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Synergies between nuclear andrenewable energy activities
AREVA financial strength
Innovative project financing solutions
Established relationship with numerous utilities in many countries
One-stop-shop for complementary low-CO 2 electricity generation solutions
AREVA brand
Quality Management
Long-term industrial commitments
Customer synergiesCustomer synergies Technical Know-how and R&D capacityTechnical Know-how and R&D capacity
Financial guaranteesFinancial guarantees Industrial synergiesIndustrial synergies
EPC and project management
Thermal transfer and steam management
Corrosion, welding and nanotechnologies
ECRI – 7 juin 2012 p 8
Table of contents
1.AREVA in Renewable Energies
2.AREVA Organization for Risk Management
3.Yearly Risk Mapping Campaign
4.Project Risks & Opportunities Management
5.Example: France – Offshore Wind – Saint Brieuc
ECRI – 7 juin 2012 p 9
R&O Management – Why ?
Assets
Flow and processes safety
Activity continuity
Disaster Recovery Plan
PROTECTION PERFORMANCE IMPROVEMENT
Strategic targets achievement contribution
Differentiation
Continuous improvement
Opportunities
Company targets
ECRI – 7 juin 2012 p 10
AREVA Risk management is structured on two pillars:
1. « Yearly Risk Mapping Campaign »
� Identifies, characterizes and ranks risks of the Strat egic Action Plan (4years plan),
� defines the mitigation action plan,
� Controls their implementation and efficiency.
2. « Risks and Opportunities on Projects »
� identifies the risks on projects,
� defines the mitigation action plans and the financia lcontingencies included in project costs
� Controls their implementation and efficiency
� The two pilars are coherent and synchronized.
Organization & Process 1/4
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AREVA organization is structured on two corresponding le vers:
1. Direction des Risques et Assurances (DRA) drives th e Yearly RiskMapping Campaign:
� Define methods, processes and tools,
� Leads a network of risk Managers assigned to the BGs/B Us/Units,
� Reports to AREVA Group CFO
� The Group Executive Management Board validates the ris k mapsand action plans
� The risk maps and action plan are presented to the Aud it Committee of the Supervisory Board
� The Audit Department controls the implementation and e fficiencyof action plans by conducting audits (about 20%)
Organization & Process 2/4
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Organization & Process 3/4
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AREVA organization is structured on two corresponding le vers:
2. Operational Units (BGs/BUs) are responsible for « Risks and Opportunities on projects »
� Projects:
� Investisments projects,
� Customer offers and large projects,
� JVs, etc.
� Project teams define the risk, opportunities, action plans and related contingencies in a « R&O Register »
� The Risk Managers (BGs/BUs) validate the R&O Register
� Regular Project Reviews control progress of action pla ns, evolution of the risks and validate the release/increa se of financialcontingencies
Organization & Process 4/4
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� Dedicated resources:
� A Central team in DRA defines and deploys tools and pr ocesses for the riskmapping campaign, provides coaching and control of ex ecution,
� A network or Risk Managers, in BGs and BUs drive the r isk mappingcampaign, coaches and validates risk and action plans on projects,
� High importance is given to the development of compete ncies:
� Training programs are defined and delivered by AREVA University, and existsince 15 years,
� « on demand & customized » training sessions for BGs / B Us according to the specificities of their businesses.
� In 2012: + 300 persons trained through 12 to 15 Group sessions acrossFrance, Germany & USA ,
� Risk Managers follow specific professional trainings an d are training instructors
Resources and development of competencies
ECRI – 7 juin 2012 p 15
Table of contents
1.AREVA in Renewable Energies
2.AREVA Organization for Risk Management
3.Yearly Risk Mapping Campaign
4.Project Risks & Opportunities Management
5.Example: France – Offshore Wind – Saint Brieuc
ECRI – 7 juin 2012 p 16
Risk Mapping Campaign - Process
Phase 1
Phase 2
Phase 3
Identification of risks
Evaluation of the Probability
of Occurrence
Matrix Occurrence / Severity
=Level of Danger
Results of the Study = Level of
Control
Recommandations
Matrix Level of Control/Level of Danger
= Level of Risk
Study of processes and
site visits
Evaluation of the Severity of
consequences
ECRI – 7 juin 2012 p 17
TECHNOLOGY, PRODUCTION FACILITIES1.01 – Incidents/Accidents at installations1.02 – Product storage capacity1.03 – Pollution (radioactive, chemical)1.04 – Third-party damages1.05 – Local area1.06 – Natural disasters1.07 – Regulations1.08 – Safety at work (physical risks)1.09 – Transport 1.10 – Process performance1.11 – Dosimetry and health
NUCLEAR2.01 – Criticality accidents2.02 – Clean up/dismantling2.03 – Waste and/or nuclear material centers and
control
BUSINESS3.01 – Customer risks3.02 – Commercial / Marketing risks3.03 – Contractual risks3.04 – Supplier risks3.05 – Project risks3.06 – Product risks3.07 – Risk due to partners3.08 – Legal risks
ECONOMIC, POLITIC, STRATEGY4.01 – Country risks4.02 – Terrorism 4.03 – R&D and intellectual property4.04 – Strategy4.05 – Financial risks4.06 –Fluctuations/exposure of the portfolio of act ivities
4.07 – Minority shareholdings4.08 – Influence (loss/lack of) 4.09 – Ethics
HUMAN RESOURCES5.01 – Labor risks5.02 – Knowledge and key people management5.03 – Attractiveness
5.04 – Integrity5.05 – Confidentiality
ORGANIZATION6.01 – Crisis management6.02 – Organizational risks6.03 – Communication (excluding crisis)6.04 – Information systems6.05 – Synergies6.06 – Physical protection (safety of property and personnel)
R&O Identification – BRM categories
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Severity rating Scale « BU level »
ImportanceFinancial Impact:
Annual Operating Income 2010
Social Impact Image Impact
4 > 20 MEUR Social consequences that could endanger entity strategy/ integrity or affect significantly the entity above
Impact on image with potential consequences on entity strategy/ continuity or affecting significantly the entity above
3 10 – 20 MEURSocial consequences that could endanger entity business continuity or impacting heavily entity efficiency
Impact on entity image affecting mainly local stakeholders or specific customers and generating a lasting loss of confidence
2 4 - 10 MEUR Identified social impact but without lasting consequences on human resources
Identified impact on image but without lasting consequences on the entity
1 < 4 MEUR Negligible social impact Negligible impact on image
Scale at BU level, Please indicate the scale used at the entities level
ECRI – 7 juin 2012 p 19
Main Risks summary
˚̊̊̊To be launched83rtyui
Clean-up / Dismantling
ÆCritical72qsdfg
Criticality accidents
¯To be launched63plk,n
Dosimetry and Health
˚̊̊̊Unsatisfactory43okjhbvcx
Process performance
ZZZZCritical82n,;:!
Transport
ZZZZTo be launched53ijhb
Safety at work (physical risks)
-Unsatisfactory64hjklm
Regulations
¯To be launched74fghjkl
Natural disasters
¯Closed73erfgb
Local area
˚̊̊̊Critical54cvbn,;
Third-party damages
¯Closed33azsdc
Pollution (radioactive, chemical)
ZZZZTo be launched
72azerty
Product Storage Capacity
-In progress64aqsdfgn,;
Incidents / Accidents at installations
Risk evolutionaction plan statusLevel of control
(from 0 to 8)
Importance(1, 2, 3 ou 4)
Description of consequences and impacts
on others entities, BU, …
Description of causes and expected events
Risk category
First Updating
ECRI – 7 juin 2012 p 20
0
1
2
3
4
5
0 1 2 3 4 5 6 7 8 9Level of Control
Importance
Critical
Risk not controlled Risk unsufficently controlled Risk basically controlled Risk completely controlled
Strong
Medium
Weak
ECS - Green Box commercial positioning-----
Wind - GT1 Risk Analysis Impact & PM capability-----
ECS - Intellectual Property Protection
ECS - Performance industrial tool-----
Bio - AKB Masisa & Hamburgo Project overcosts
Bio - AKB - Project Management & accounting-----
Wind - Gear box design validation
Bio - Projects not materialized or delayed-----
Bio - AKB Accounting
ECS - Fire H2 / O2-----
Bio - Safety at w ork
Wind - Safety at w ork-----
EC&S - Safety at w ork
Wind - New product development capability
Wind - Warm-up Alpha Ventus
Wind - Ramp-up capacity of production-----
Wind - Re-sell DOTI WTG-----
ECS - Loss of key competencies
Wind - DOTI Claim
2010 Risk Mapping BG/BU/Unit
Xxxxxxx
Xxxxxxx
Xxxxxxx
XxxxXxxXXXXXX
XxxxXxxXXXXXX
XxxXXXXXX
XxxXXXXXX
Xxx
Xxx
Xxx
ECRI – 7 juin 2012 p 21
Sites, Entities, BU and BG Yearly synthesis
2011 Main Risks
Sites, Entities, BU and BG
2012 New Main Risks
For each one :
Description of theirimpacts (environnemental, media, operational, financial) evaluatedat the moment the present Risk Mapping exercise isconducted and including the results of the action plans alreadylaunched in 2011 and before, with as muchquantification elements as possible.
The arbitration for the choice of those 5 risks isthe responsibility of the Operational Unit Management at eachlevel.
2012 Risk Mapping
For each one :
Precise and detailed description of the action plans to correctly manage the risk at full term
-Detailed actions,
-Detailed Resourcesallocation (finance, human,…
-Schedule of the actions (including multiyear)
- Description of the potential impact level weare aiming after the action plans are achieved
GROSS IMPACT NET IMPACT
2011 Risk Mapping
For each one :
Precise, detailed and understandabledescription of the chosen risks
5 Main Risks for each site,
entity, BU and BG
From the 2011 results.
Take the 5 Main Risks for each entity (Site, entity, BU, includingBG).
If any, replace some of the chosen risks by new main risks appearedfrom 2011 on, but keep a maximum of 5 Main Risks.
CAUSES IDENTIFICATION
ECRI – 7 juin 2012 p 22
Table of contents
1.AREVA in Renewable Energies
2.AREVA Organization for Risk Management
3.Yearly Risk Mapping Campaign
4.Project Risks & Opportunities Management
5.Example: France – Offshore Wind – Saint Brieuc
ECRI – 7 juin 2012 p 23
CUSTOMER
� Project context : scope, organization...
� Specific stakes : new technology, new market/customer …
� Project Objectives : scope, planning, budget, performances
� Perimeter : entities concerned by the analysis: risks and opportunities for who? Possibility to perform the analysis with partner(s)
R&O Identification Which scope for the analysis ?
Consortium
LEADER
supplier
Partner
ECRI – 7 juin 2012 p 24
Project Management Methodology (PMM)
Project Management Methodology (PMM)Architecture
Project Rating
AREVA Project Management Policy
Small Project Manual
Project Management Plan
Project Charter Project Closeout
ContractManagement
1 1 -- IntegrationIntegration ManagementManagement
2 2 -- Scope ManagementScope Management
Verification & Validation
RequirementManagement
Product Breakdown Structure
Time Management
Project Execution Logic
Progress Method
3 3 -- Time ManagementTime Management
Schedule Practice
4 4 -- CostCost ManagementManagementEarned Value Management
CostManagement
8 8 -- R&O ManagementR&O Management
9 9 -- ProcurementProcurement ManagementManagement
5 5 -- QualityQuality ManagementManagement
Lesson LearnedManagement
Project Quality Plan
Configuration management
Risk & OpportunityManagement
R&O MethodProcurementManagement
6 6 –– HumanHuman ResourcesResources ManagementManagement
Project Organization
Project Organization
Note
7 7 -- Communication ManagementCommunication ManagementProject
Performance Report
Project Finance Report
Project Governance
Documentation Management
Work Breakdown Structure
Project Management
Glossary
Mandatory In progressRecommende
d
R&O Management Plan
TRAC
Interface Management
Change Management
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Importance of Risk management in the end-to-end project cycle
Contract Award
Provisional Acceptance
& Warranty Start
TenderIn itiation
& PlanningExecution, Monitor ing and Control Closing
Transfer
to Project
Transfer Meeting
Customer Kick-off
TenderReception
Transfer to Service
Internal Kick-off
Partner Kick-off
F inal Acceptance & Warranty
End
Closing Review & Lessons Learnt
TenderSubmission
Qualification
AOC M0
Contract Signature
Authorization
AOC M4
Transfer Meeting
Basic & Detailed Design
Manufacturing
Integration & Testing
Transport.
Construction, Install. & Commissioning
Observation Period Punch List Clearance
Design Launch
Manuf. Launch
Factory Acceptanc
e
Site Acceptance Customer Handover
Project Execution Reviews
Key activities& deliverables
• Commercial Pipeline
• BUSTAM Data & Validation- Project & Customer Description- EAS, Cash Curve, Taxes
- Cost Breakdown Structure- Legal Executive Summary- Risk Analysis
• Industrial Capacity Check
• Offer
• Negotiations with the Customer
• Contract
• Project Manager Appointment
Integration
Scope
Time
Cost
Quality
Human Resources
Comm.
Risk
Contract & Procurement
Project Charter Project Management Plan
Requirements Matrix , WBS
Detailed Schedule
Budget, Detailed Costs
Quality /EHS Measures & Plan
Team & Organization Setup Staffing Plan, Workload
Communication Channels
Risks Analysis, Action Plans
Site Permits, Crit ical Sourcing
Execution Governance Interfaces Management
Products/Documents Design, Delivery, Acceptance & Handover
Progress Monitoring and Control
Cost Monitoring & Control Invoic ing
Quality /EHS Assurance & Control
Organization & Workload Management
Project Execution Review & Report Customer Relationship Management
Risk Monitoring & Control
Changes & Variation Orders Management
In tegration
Scope
Time
Cost
Quality
Human Resources
Comm.
Risk
Contract & Procurement
Go No Go
AOC M2
Offer Validation
AOC M3
Key Gates
Design Acceptanc
e
Contract coming into force
Offer & contract Project
execution
ECRI – 7 juin 2012 p 26
Table of contents
1.AREVA in Renewable Energies
2.AREVA Organization for Risk Management
3.Yearly Risk Mapping Campaign
4.Project Risks & Opportunities Management
5.Example: France – Offshore Wind – Saint Brieuc
ECRI – 7 juin 2012 p 27
R&O on a Project such as Saint Brieux
R&O process started as part of tender preparation & will continues to project close out.
The overall programme is broken down into individual projects e.g.
� Implantation of manufacturing facilities,
� Wind turbine manufacturing, installation and commissioning,
� Wind turbine maintenance.
Each project is analysed individually and the results subsequently consolidated to give programme view.
The analysis used as decision making and project management tool.
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Risks on integration & very diverse scopes:
�Marine operations (transportation, installation, commissioning, O&M)
�Leading edge technology products (various components in offshore wind turbines)
�Construction (wind turbine foundations)
�Grid connection (cabling, sub-station)
�Convince local populations on environmental impact.
Major risks encountered
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What to remember
AREVA has a long and rich experience of Risk and Op portunities management, inherited from Nuclear operations,
This Risk management perfectly applies to Renewable activities considering the complexity of projects,
Offshore Wind is one of the most complex and demand ing activity for the Group:
• Need for high availability of the turbine,• Need for a clear interface with installation activi ties,• A highly complex supply chain,• Offshore services require the highest safety standa rds.
ECRI – 7 juin 2012 p 30
Conclusion
Questions
& Answers