10. The demand for power projects is steadily increasing. The increasing demand for power construction projects is being driven chiefly by the need to replace aging infrastructure as well as the desire to develop cleaner and more sustainable generation facilities. The constant demand for more and more electricity is not that surprising but, according to Jeff Richardson (Energy Solutions) and Eric S. Gould (Modus Strategic Solutions), the pipeline market size for power-generation projects in 2028 is expected to reach $10.6 trillion, i.e., double what it was just in 2022.
9. "Net Zero" is the new normal. In December 2021, President Biden issued an executive order proclaiming that, by 2050, the federal government will be a Net-Zero contributor to the climate crisis. To achieve this goal, the greenhouse gasses ("GHGs") released by government operations must be less than (or equal to) the GHGs absorbed/removed from the environment. Other government bodies and private companies alike are adopting similar Net-Zero goals. Because not all of these promises are created equal, Moody’s Investors Services has a tool to help consumers compare and evaluate companies' carbon transition plans. According to panelists, Amanda Schermer MacVey (Venable), Brendan Hennessey (Pillsbury), and Laszlo von Lazar (Black & Veatch), these Net-Zero commitments are likely to result in more rigorous supplier codes of conduct and heightened carbon tracing efforts on construction projects.
8. The quest for Net Zero is our modern-day "moonshot." Currently, coal and natural gas are responsible for almost 60% of electric generation on the U.S. market. That means, to get to Net Zero, the U.S. market will have to replace 60% of electric generation with green energy. This is no small feat. Amanda Schermer MacVey aptly analogized the pledge to achieving Net Zero to President Kennedy's public commitment in 1962 that the United States would land a man on the moon before the decade was over. The gauntlet has been thrown, now we have to figure out how to get there.
7. Despite their promise, nuclear-powered projects have proven difficult to execute. Building out more nuclear-powered project would aid immensely on the way to Net Zero. Given the intermittent availability of wind and solar, nuclear energy is presently the only source of non-GHG electric power that is also reliable for base load generation. Despite their promise, nuclear projects do not have a strong track record of successful execution in the United States. Only two nuclear projects were constructed in the United States since the turn of the century (10 more nuclear projects which were planned were subsequently canceled). One of these projects―Vogtle Units 3 and 4 in Georgia―was $17 billion over budget and 7 years late. While extreme, these schedule and cost overruns are lessons to be learned from, not justifications to avoid nuclear power projects entirely.
6. We may be on the verge of a new Nuclear Revival. According to Jeff Richardson (Energy Solutions) and Eric S. Gould (Modus Strategic Solutions), the key to seeing the nuclear energy sector flourish is learning how to construct these projects on budget and on time. Building something the same way more often tends to yield more predictable the outcomes; the problem with nuclear projects is that very few of them have been approached the same way. Favoring Small Modular Reactors ("SMRs") which, as the name suggests, are smaller in scale and rely on modular construction techniques could allow us to get to a place where contractors could learn to literally stamp out nuclear plants with less risk of extreme budget and/or schedule deviations.
5. The delivery systems and risk allocations traditionally relied on might not work anymore. Power projects historically relied on an Engineering Procurement Construction, or "EPC", delivery model where a single contractor assumed the risk of delivering the project on time and within budget. Finding a good EPC contractor to take on power projects has become increasingly difficult. In a panel discussion with Matthew Meaker (Sundt Construction) and Laura B. LoBue (Pillsbury), Neal Sweeney (Jones Walker) hypothesized that the traditional EPC contract was "dead." What we need to see in its place are more collaborative contracts that emphasize shared objectives, open communication, joint risk management, and incentive-based payment structures. This sort of radical approach will foster shared accountability and better position the project for a successful outcome.
4. The goal on any power project should be to encourage early reporting and resolution of disputes. If a dispute arises on a power project, or any mega project for that matter, owners and contractors should do their best to keep the project moving forward while parallel tracking claim investigation. Panelists Robert Brown (McKenney’s), Joseph Dennis (Arup), Daniel Fuchs (Manion Stigger), and John Snyder (Bechtel) shared their insights into what to do early in the claims process to set claims counsel up for success. Perhaps most insightful was their suggestion for clients to appoint a case manager (someone who is not on the project team) to liaise with outside counsel and coordinate access to the fact witnesses and documents. It was refreshing to hear that they also saw the value of document discovery and devoting the time and resources to an "Early Case Assessment" so counsel can fully understand the issues before formal dispute resolution has commenced.
3. Keep your insurance brokers close. Christopher DeBruin (Alliant) and Chase Johnson (Lockton) gave an insightful presentation on common insurance-related issues on construction projects. The big take home here was for owners and contractors to consult with their brokers early and often and report any potential claims to their carriers as soon as they arise. If contractors attempt to address warranty issues which later turn out to be defects on their own, their subsequent claim may be denied. Another piece of advice from Chris and Chase: hire a claim submission consultant to help assemble what you need to properly document your claim. When contractors don't hire these vendors, the documentation is poor and the claims get denied.
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| An Elvis sighting at the welcome reception... |
2. We should learn to prioritize people over profits. In 2021, the San Manuel Band of Mission Indians (the "SMB") acquired the Palms Hotel & Casino, becoming one of the first tribal enterprises to own and operate a casino in Las Vegas. Peter Arceo, Chief Gaming Officer of the SMB, spoke of the heightened emphasis tribal gaming organizations place on employee wellbeing and social responsibility. When the SMB acquired the Palms, the previous owner had already invested hundreds of millions of dollars in its redevelopment. But it was clear to Peter that none of that money had been spent on the back-of-the house spaces that only employees would see. The first dollars that the SMB spent at the Palms were used to renovate the employee locker rooms and dining room. Where many companies might see such investment as a waste given the lack of clear return, Peter saw value in such improvements because they would make the Palms a better place to work.
1. If you're going to lose money gambling, it's best to do so amongst friends. Some of the best lessons I take away from the Forum meetings occur outside the conference room. So when three of the Forum's divisions (D1, D2, and D12) joined together for an evening of craps and cocktails, I knew it would be an instructive night. Thanks to the generous sponsorship of Solomon Page, I learned there is truth to craps being the most difficult table game in Vegas. Aside from learning the odds associated with the dizzying amount of bets available, I now appreciate that it takes a certain skill to be able to roll the die hard enough so they hit the back of the table, but not so hard enough that they fly off the table entirely. At the end of the night, I don't think I was the only one who fared poorly against the House...thankfully, we still have our day jobs.
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