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The lawsuit, in conciliatory phase, that the EPM manager claims against the designers, auditors and builders of Hidroituango, ratified by the new EPM Board of Directors, is based, at least in the case of the designers, on a report of the year past of Skava, a Chilean-Norwegian consulting firm, requested by EPM to study the so-called “Root Cause” of the Hidroituango accident in April 2018. With this announcement, the mayor of Medellín and his EPM manager have generated an internal crisis in the company most loved by Antioqueños and, much more serious, an incalculable damage to reputations to national engineering; Added to this are higher costs demanded for the completion of Hidroituango and fines for breach of EPM’s commitments with Creg, as well as the country risk due to possible delays in the project’s entry into operation.
Here I propose to deepen the evaluation of the Skava report, as a complement to my column entitled “The Skava report on Hidroituango”, published in the El Mundo newspaper in March 2019.
Background
On September 10, 2010, EPM Hidroeléctrica ltuango S..A .. ESP (EPM Ituango) and IDEA, majority shareholder of Sociedad Hidroeléctrica Ituango SA (SHI), signed a contract by which the structure for the development of the Hydroelectric Project of ltuango (Hidroituango), where it was established that the project would be executed by EPM ltuango, a company in which EPM would have the majority shareholding. In the contract between IDEA and EPM ltuango, it was agreed that Hidroituango would advance through a “BOOMT” type contract (Build – Own – Operate – Maintain -Transfer), by means of which EPM undertakes to carry out the necessary investments and activities for the financing, construction, assembly, operation and maintenance of Hidroituango, as well as to restore, upon termination of the Contract, the assets of the project, under the terms and conditions established therein.
Hidroituango was originally conceived so that the work would be executed under the form of a turnkey contract, which would include the design, supply and construction of the work by a qualified builder who would bear all the risks. But instead of hiring a third party to build the project, EPM assumed responsibility, not only for the design and construction, but also for the operation of the future hydroelectric plant. It is clear, then, that the designer, the constructor and the operator of the project, and therefore the only person responsible, is EPM.
Skava’s Root Cause Report
First, let’s define what is meant by a Root Cause Analysis (ACR) report. An ACR is a structured methodology of analysis used to identify, through deduction, verification and investigation, the original causes of failure of a work.
“The objective of this study (“ Ituango Hydroelectric Project Physical Root Cause Study Report ”) presented by Skava to EPM on February 28, 2019), is to identify the most probable Physical and Technical Root Cause that originated the events presented between the April 28 and 30, 2018 in the Auxiliary Deviation Gallery (GAD) in the Ituango Hydroelectric Project ”.
The Root Cause Analysis used by Skava in its report on Hidroituango, is a methodology designed for a system in operation, not for a project under construction, such as Hidroituango, which, due to having more actors and involving more decisions than the first of they make your application extremely complex.
A Root Cause report could not be limited, as Skava claims, to the physical and technical root cause, laying the fault on only one of the components of the system, which hardly explains the event (the collapse of the GAD). This leads to omitting the human root cause and the latent root cause. For example, it would be a mistake to assume that the Armero tragedy was due only to the avalanche generated by the eruption of the Nevado del Ruiz Volcano, forgetting the responsibility that should have fallen on the government entities that were incapable and / or negligent in predicting the disaster. .
When a Root Cause Analysis is being carried out, all the physical, human and documentary factors that the analyzed process involves should be placed on the table. The study makes it possible to establish whether the event occurred due to causes inherent to the process, inappropriate decision-making or lack of consistent documentation. Only one of the elements, as Skava claims in its questioned report to EPM, assigning the failure of the GAD to only alleged technical errors in the design and advice of the Ituango Generation Consortium (CGI), cannot bear all the responsibility for the crisis of the accident and subsequent contingency of Hidroituango.
The human root cause involves the interventions and / or decisions that contributed to the generation of the event, in other words it seeks to find human error. In Hidroituango, in addition to CGI, the following have participated: the supervision of the project, the Consorcio Constructor CCC, the Board of Directors of the Hidroituango Society (owner of the project), EPM (responsible and executor of the BOOMT contract), Anla, Upme and the Creg.
The latent root cause is analyzed based on the consistency of the information contained in existing documents (contracts, approved designs, environmental licenses granted, execution schedules, works approval certificates, materials used, etc.). Viewed in its general form, the latent root cause is a derivation of the human root cause.
The engineering linked to the construction of Hidroituango (designers, auditors and builders), which had the least to do with the decisions of EPM’s corporate governance, which generated the construction accident of April 2018, were EPM’s management decisions: the contracting the construction, without an environmental license, of the Auxiliary Deviation Gallery (GAD), the construction and commissioning, without gates, of the two original diversion tunnels, as well as their plugging.
Thus, no one understands the claim of the current EPM management, ratified by its new Board of Directors, to sue Hidroituango designers, auditors and builders for managerial decisions, which, as we have warned, puts the constructiveness of the project at risk, or, at least large delays and cost overruns. Our recommendation is that EPM reestablish harmony with its contractors, for which it is required that any lawsuit against engineering related to Hidroituango be postponed, until the project enters into operation.
What’s coming
Skava’s methodological error in his report is to believe that all the probative value lies only in the technical concept, not in the way it is applied; a misused technical concept can lead to inappropriate decisions.
First of all, Skava’s report should be considered only as a hypothesis not yet verified, since until now there is no direct access to the GAD. On the other hand, the designers of Hidroituango surely have very solid arguments to dispute the probability that a “design flaw”, assumed in the Skava report, is the determining cause of the collapse of the GAD, arguments that they will bring in their defense , which entails a long process before the courts that will leave the project in limbo.
Second, in the short conciliation period between the parties, three months, prior to the demand announced by EPM, it is highly unlikely that an agreement will be reached, unless the terms are extended (There are known cases in which a conciliation has taken years). If this were the situation, the risks for the project would increase due to the possible deterioration of relations between EPM and its contractors, who from now on will work in an environment fraught with the dispute.
Third, it is not certain that designers and auditors will resist financially and administratively the burden imposed by defending themselves against a lawsuit such as the one that EPM claims.
In an open letter, the EPM Professionals Union (Simpro) on August 25 alerted the Mayor of Medellín and the EPM Manager about the country risks of Hidroituango’s delay, risks that translate into higher costs for EPM and for the recovery of the work under construction, regarding the plugging of the original right diversion tunnel, the completion of the intermediate discharge tunnel and the recovery of some of the beacons, among other pending tasks required to guarantee the stability and safety of the work ; To this must be added the serious risk of using the landfill permanently and for long periods, which has been operating without interruption for more than two years. It is designed and built to evacuate the floodwaters of the Cauca River.
Could it be, as has already been mentioned among respected city leaders, and Simpro warns in his open letter that what is wanted is to remove the current EPM contractors in Hidroituango, and deliver Hidroituango to the Chinese multinational The Three Gorges Co? .
A group of engineers graduated from the National School of Mines in 1964, where several former engineers of EPM and former senior officials of the World Bank and the Inter-American Development Bank, experts in the resolution of contractual conflicts in infrastructure works in Colombia and in abroad, we meet periodically, virtually, to discuss national problems and our profession. In the next few days we hope to have a proposal ready that could help resolve the conflict created with the alleged demand announced by the EPM Manager, which we aspire to socialize with the Mayor of Medellín, the EPM Management, its Board of Directors and the Municipal Council.
The debate is just beginning, but it is necessary to note that in sound logic, for the establishment of responsibilities for the Hidroituango crisis, at least a second report, in addition to Skava, should be required to analyze the human root cause and the latent root cause of the April 2018 crash.
We are fundamentally interested in the defense of national engineering, already affected by Skava’s wrong report and by the announced EPM lawsuit, based on the use of such a controversial root cause analysis. Defending national engineering is a guarantee of the completion and start-up of Hidroituango, on which the security of the national electrical interconnection system and the risk of future rationing depend.
We will remain attentive to this debate.
PS For the preparation of this article, its author counted on the advice of distinguished engineers ex-senior executives of EPM, with extensive national and international experience in handling contractual conflicts in infrastructure works.
