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Tips For Negotiating For The Construction Of A Chinese Power Plants.-Technical Issues

written by: johnzactruba • edited by: Lamar Stonecypher • updated: 1/21/2010

The way projects are constructed in China is different from the rest of the world. An understanding of how projects are implemented is a must for the successful negotiation and completion of the project in third world countries. What are the technical issues?

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    The tremendous growth in nstalled Power Generation capacity in the last deacde has helped China in developing enormous manufacturing capacities, engineering and construction skills. This has enabled Chineses companies to offer Power Plants at considerably lower unit cost per kW to the rest of the world.

    Some of the technical issues that need to be looked into are discussed below.

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    Clarify the Scope.

    In China various government entities implement the Power Projects. The main entities are the design institutes, manufacturing companies and the construction companies. Each agency is clear of their scope of job. It is normal practice that equipment supplier limits his scope of supply to his equipment. The construction company meets the interface requirements. But in international projects the scope of work by different agencies could widely vary. Local government regulations, customs duties, local trade practices all play a major part. Chinese companies tend to think the way they work in China. Contract negotiations should very clearly identify and document the scope of work of each agency. This can avoid cost overruns and delays during project implementation.

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    Documentation

    Experience in a large number of projects enable the Chinese workmen install complex equipment with minimum or no documentation. They rely more on their memory. In International projects local workmen have the trade skill but will require proper documentation for carrying out the job.

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    Benchmarks

    Construction of a large number of power plants in a short span of time necessitated the compilation of construction data. Most of the construction data like manpower, material, equipment and utility requirement are documented and available in handbooks. Using thesebenchmarks it is easy for the Chinese construction companies to arrange for the various resources. The discipline and dedication of workmen in China is beyond comparison to many of the third world countries. Same is the case with availability of resources. Applying Chinese benchmarks for project implementation in other countries has its limitations.

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    Engineering

    In China Design Institutes do the engineering and design work for a power project .Most of the provinces have their own design institutes catering to regional requirements. Today many of these institutions are part of EPC companies or consortiums installing power projects outside China. Most of these institutes have expertise in technical issues related to regional requirements. Choice of the correct expertise with relevance to local conditions is essential for the smooth project implementation and operation.

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    These issues are not limited to Power Projects but also applicable to other Industrial projects like Cement plants.

Zen and the Art of Constructing A Chinese Power Plant.

Developing countries are looking more and more for Chinese made Equipment and EPC companies to build Coal Fired Thermal Power Plants. They have their own project implementation methods proven in the Chinese context. Can this work outside of China? How to get the best out of both the worlds?
  1. Negotiating for the Construction of Chinese Power Plants - Communication Issues
  2. Tips For Negotiating For The Construction Of A Chinese Power Plants.-Technical Issues