Missouri Power Plant

Brief

In 2001, steam generator equipment traveling from Japan to the United States – destined for a power plant under construction in Missouri – was badly damaged by a typhoon in the Pacific Ocean.

Anticipating the potential consequences of this project-critical equipment delay, the engineering, procurement, and construction (EPC) contractor retained HKA shortly after the storm event. Our brief was to help define the multiple impacts on the project and determine how to address them.

What we did

The contractor and our team understood that a precise record of the various effects of the equipment damage on the project cost and schedule would be essential.

We established procedures to monitor and track disruption and delay costs as these were incurred. HKA monitored the disruption cost calculations on an ongoing basis. Our experts also met with the insurance companies and their claim underwriters to provide ongoing documentation and describe the tracking and monitoring process.

Following the completion of the power plant, HKA helped the contractor use the contemporaneously prepared disruption calculations to quantify economic damages in three different disputes – against the equipment manufacturer, the ocean cargo insurance carrier, and its ownWe quantified delay and disruption costs, as well as other losses caused by the delayed steam generators. In addition to filing expert reports, HKA provided deposition testimony in the cases against the equipment manufacturer and the ocean cargo insurance company.

Our experts also testified at trial in the third case against the contractor’s risk insurance company.

Outcomes

To overcome the impacts and complete the project on time, the contractor went on to invest an additional US$38 million.

By engaging HKA early in the process, our client was cost-effectively positioned to handle any potential future litigation stemming from the damaged steam generators and construction delays.

In 2007, the contractor was awarded more than US$20 million in a jury verdict on the risk insurance claim, which was 100% of the damages presented by HKA’s expert testimony. Also, with our assistance, it successfully settled the two other litigation matters out of court.