Loy Yang Power, GHD ù A Case Study in Alliancing

Loy Yang Power (LYP) owns and operates a 2160 MW brown coal fired, base load power station in the Latrobe Valley, Victoria, Australia (Loy Yang A). It also owns and operates a brown coal mine that supplies fuel to its own power station and a nearby 1000 MW power station owned by International Power (LoyYang B). The mine supplies 32 Mt of coal per annum from an open pit, which is currently about 4 km long by 2 km wide and 180 m deep. LYP has 500 employees and a substantial amount of work is also carried out by contractors and consultants. GHD Pty Ltd(GHD) has been contracted to provide mine planning and earth sciences expertise. GHD is an international professional services company that operates globally in many market sectors including mining, industry and the environment. The company has major offices in Melbourne and also within the Latrobe Valley. This paper sets out the experiences that GHD and LYP have gained in establishing a unique alliance arrangement for GHD to provide a range of mine planning, earth science, dam surveillance and environmental services to LYP. The underlying philosophy of the alliance is to closely align the objectives of the two companies such that GHDÆs recompense for service delivery is proportional to the benefit achieved by LYPÆs business. Quality of service, whole of life costs and risk management are important aspects and are reflected in key performance indicators against which GHDÆs performance is measured. Currently GHD provide 20 000 hours of labour to LYP per annum, which are delivered by up to 120 staff who possess the required diversity of skills. The paper explains how the contract was initially let as a conventional service agreement and explains why the contract was transformed into an alliance. It then illustrates the operation of the alliance with reference to the 2006 work program. The paper concludes with thoughts on how the arrangement can be further developed for the future to the benefit of both parties.