tainty (e.g., site conditions, weather and availability of labour and materials) and requires specialized
project management skills including quality control, schedule adherence and critical path management, as
well as managing relationships with key stakeholders and permitting authorities. These factors typically
rely on the performance of the construction contractor, who commits to design and build the asset on
behalf of ProjectCo for a fixed price by a date-certain. An independent engineer (IE) is engaged to assess the
construction schedule, budget, design, EPC contract, technology, technical staffing, protections against
completion delays and initial performance risk, and the operating period cost components of the financial
model. Origin Invest's assessment of construction period risk includes the following:
struction completion risk and any commissioning requirements specified in the revenue contract are
generally transferred to a construction contractor via a fixed-price, date-certain, turnkey EPC contract.
Origin will asses the degree of pass-down of construction risks and, to the extent ProjectCo is left with any
construction risks, the potential frequency and severity of adverse outcomes will be evaluated.
terrain and/or geographical location is involved. For power generation, Origin generally ranks complex- ity
by technology (from most to least complex) as follows: nuclear, coal, natural gas, hydroelectric, wind and
solar. Origin's assessment of complexity during construction may be affected by a number of factors,
including (1) design and technical requirements; (2) technology; (3) the nature of the contract (fixed-price
versus cost plus); (4) scale of the project; and (5) the experience level of the sponsor, EPC contractor and
O&M contractor.
times, and add to initial operation "teething" problems. Typically, the equipment vendor is motivated to
support the early installations of new-generation equipment and will provide additional ramp-up and initial
performance support, as well as increased warranty support. Due diligence should confirm that additional
support is provided under the vendor sales contract when new-generation technology is used.
for large projects with four- to five-year construction periods and moderate to high complexity.
Origin Invest project assessment criteria include contractor specific risk: (1) risk management and project
control; (2) project complexity and contractor expertise; (3) scale of operations; (4) nature of contracts (i.e.,
percentage of fixed-price contracts); and (5) diversification of revenue.