A consortium of energy suppliers led by Stadtwerke München had begun construction of a large offshore wind farm in the North Sea. The project, which involved technical and planning challenges and had an investment volume of 2 billion euros, ran into difficulties. The commercial managing director, who up to this point had been employed by one of the shareholders, had little experience in large-scale plant construction. The consortium therefore hired the interim manager, who was experienced in managing large-scale projects, on a temporary basis to lead the project out of the crisis.
The project included prefabrication, the construction of the offshore wind farm at a water depth of 40 meters and the networking of 80 wind turbines, each with an output of 5 megawatts. Extensive official requirements had to be observed during planning and implementation, particularly in the area of environmental protection. The project GmbH had around 100 employees, of which around 20 were in the commercial department, and was managed by a tandem of a technical and commercial managing director.
Increase in expected total construction costs put pressure on profitability
Budget and deadline overruns in its own scope of services, the delay in the installation of the land connection to be provided by a grid operator and the insolvency of a major supplier led to massive increases in the expected total costs of the project. In addition, new findings and unexpected developments in the subsoil and environmental influences made technical changes necessary. In addition, subcontractors had registered additional claims in the hundreds of millions for additional technical work and delays. This project situation, which deviated from the planning, led to breaches of the covenants stipulated in the loan agreements and to intensive discussions with the financing consortium of around 20 banks.
Economic efficiency calculation updated over the planned operating period of 25 years
At the beginning of the mandate, the interim manager first created the necessary transparency regarding the budget deviations to date. In order to avoid further overruns or to predict them early enough, he strengthened the project controlling. In the next step, he updated the profitability calculation over the planned operating period of 25 years to reflect changed assumptions such as expected wind speeds, new values for construction costs, deadlines, revenue per kWh and operating expenses.
Successful negotiations with subcontractors and authorities
The interim manager was able to get the project back on track in a variety of negotiations with subcontractors and authorities. After the assignment, the commercial department was transferred back to the managing director seconded by a main shareholder as planned. Before completing the assignment, the interim manager drew up the concept for the wind farm's future operating company and recruited its management team.
Wind farm goes into operation with planned energy supply
The shareholders were satisfied with the progress of the project. The wind farm was connected to the grid in 2015 and has been operating as planned with a capacity of 400 MW ever since. The construction project company has become a smaller operating company as planned.
