Case Study: Hydroelectric Power Plant achieves accurate, risk-aware construction budget estimates with Palisade's @RISK

Latin American Energy Leader Selects @RISK to Evaluate the Budget Implications in Constructing a Hydroelectric Power Plant

Hydroelectric Power Plant, one of Latin America’s largest providers of hydroelectric energy in Colombia, faced high uncertainty and cost risk in planning a new underground plant and needed more accurate budget estimates than simple contingency mark-ups. To assess project viability, funding, insurance and procurement, the utility turned to Palisade and its @RISK software to build stochastic, risk-aware cost models.

Palisade implemented Monte Carlo–based @RISK models using discrete, triangular and Bernoulli distributions to produce three budget views. The deterministic estimate (~USD 561,471,075) understated variability; the stochastic @RISK model showed a mean around USD 560M with potential to reach ~USD 595M, and when unexpected events were included the mean rose to ~USD 586M with scenario clusters near USD 570M and USD 620M and roughly a 50% chance of exceeding the expected cost. Those results enabled the Hydroelectric Power Plant to improve contingency planning, procurement and insurance terms, quantify key drivers of cost, and better determine project feasibility.

Hydroelectric Power Plant