What costs seem likely to be incurred and by whom? Who might be liable to cover the costs? Is NB Power likely to get all of their costs covered? If not which costs are at risk? Diagram the parties. Estimate from the limited data who is responsible? Identify issues. Sol:
The following costs would be incurred:
1. Replacement Cost: Cost involved in manufacturing the new turbines. 2. Delay Cost: As it would take another 1 year to manufacture the new turbines which requires NB power to get the old rotors re installed. 3. Loss of Revenue: As the new turbines were expected to increase the plants power output, so till the time it is repaired NB turbines has to bear the loss of revenue. Also the additional power would be required to be bought so that the demand of the customers is fulfilled. 4. Repair Cost: Both the turbines were around $20 million and to repair them it would take another $10 Million. 5. Cost of shipping rotors back for repair to U.K and then back to St. John Canada 6. Reshipping cost of new rotors
7. Cost involved in getting the turbines out of the water i.e. paying for engineers, divers, and equipment involved. 8. Filing Claims
9. Loss of Time
10. Pre-Shipment Inspection Cost: Cost for inspection of both the repaired rotors and the new rotors 11. Efficiency would be reduced: Reduced life of turbines as a result of being in salt water for so long. The life would be reduced from 25 to 30 yrs to 6 years only 12. Delivery of the refurbished turbines or the new turbines has to be scheduled so that it doesn’t interfere with the fishing season 13. Investigating Cost
14. Exports, Imports, duties ,taxes and transhipment costs 15. Checking, Packing Costs: Costs associated with checking the quality and quantity of the goods to be in conformity with the sales contract....