Writing 1_Lesson 1

Writing 1_Lesson 1 - project and be sure that the costs...

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Dulhasti Power Plant April 16, 2011 ITT Online The Dulhasti Power Plant Working in a harsh geographical condition represents a big challenge to create cost estimation. Project costs estimates are based in normal conditions, but many of projects are conducted under abnormal conditions. The geographical situation of the Dulhasti Power Plan in the section of Himalaya it was an absolutely abnormal situation.
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To create this plant, all the supplies would have to be send using air transportation at exorbitant costs. The raw material would have to haul by helicopter for miles over snowbound areas. Despite all this, it was decided to sign a contract with the French and delays started as result, leading to extra costs. Using a fixed price contract, Indian government will be experiencing advantages and disadvantages of using this method. Having a fixed price contact they can have a strong control incentive to control cost. They can know from the beginning, the total cost of the
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Unformatted text preview: project and be sure that the costs will not vary during the project. The disadvantages of this fixed costs are that the project may not be completed if they begin lose money and this represent expensive cost reimbursable contract. In consequence, the price to build de power plan will increase due to the risk. In this specific case, after the second bidding process, the Indian government accepted the French offer lower than the first offer, but still the project costs continued increasing. The geographical situation and the dispute in the territory make the project difficult to conduct smoothly. Thats why the article from the book says: "in order to offset the expenses of the project, the cost of the power by the plant has raise by over 500% and they still don't have a completion date....
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Writing 1_Lesson 1 - project and be sure that the costs...

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