Why do nuclear power projects continue to be plagued by schedule delays and cost overruns? A recent paper on small modular reactor deployment by Modus’ Jim Carter, published in The Electricity Journal, draws from historic and recent research as well as nearly fifty years of personal, first-hand involvement with the nuclear power industry. The concepts in Jim’s paper apply across the nuclear power industry.
In the paper, Jim examines past project management tools and techniques as well as licensing and cultural issues, and draws comparisons with the current situation. He identifies experience-based, specific recommendations for avoiding problems on new megaproject builds. And he shares current best practices, providing guidance for reducing uncertainty and improving overall project performance.
In a new series of blog posts, Jim will break the paper down into the specific areas where project owners can and should apply observations from past nuclear construction projects to help deliver successful deployments of all kinds.
The U.S. once led the world in nuclear power generation. However, new nuclear facility deployment in the U.S. has stalled. As of June 2016, seven operating nuclear plants[1] were scheduled to close by 2025, representing over 32 million metric tons of carbon emission increases per year (the equivalent of 6.9 million cars in the U.S. if replaced by fossil fueled plants).
While several of these closures have been postponed, the 2025 date is still appropriate. Despite all their benefits, solar and wind generation can’t be expected to supply the growing demand for electricity without other sources such as nuclear and fossil.
Some herald large project standardization and Small Modular Reactor (SMR) technology as attractive ways to deploy safer and more cost-effective and financeable nuclear plants in the U.S. and abroad. However, the success of standard plant commercialization and deployment will be significantly measured by the success of early deployments. Whether large units or SMRs, “business as usual” will not lead to success.
Current new large nuclear projects under construction in the U.S. were expected to experience a streamlined construction period based on innovative modular construction techniques, standard designs, and advanced project management, design, and construction tools and techniques. However, the current new-build plants have experienced some of the problems that historically plagued the industry.
Indeed, there are some growing pains associated with a new design, new manufacturing, and a new NRC regulatory regimen. However, most of the challenges are controllable. There is a lot at stake in deploying the first wave of standard nuclear plant designs. But, with rigorous planning and proper execution, it can be accomplished effectively, within cost and schedule projections.
Previous challenges
Scoping. In addition to scope definition deficiency due to incomplete design, scope control was often lost when changes weren’t properly added to the scope. This of course contributed to inaccuracies in the budgets and schedules. In addition, responsibilities for executing scope items were often obscured by inadequate programmatic methods for managing scope.
Lack of clear definition of responsibility for performing base scope and authorized changes often led work not being performed and/or not planned. In some instances, ripping out completed work was necessary to install a change, causing cascading schedule and cost impacts. Formal change authorizations were necessary to accommodate contractual requirements. Too frequently, these change orders were executed and approved for expediency without effective challenge, vetting, and alternative analysis. More cost and schedule impacts resulted.
Build before design completion. Following the lead of earlier fossil plants and many industrial facilities, utilities in the 1970s tried to build complex nuclear facilities with somewhat of a “design as you go” approach, perhaps hoping to achieve schedule compression, but actually forcing schedule delays and cost increases, precluding effective construction planning, and rendering budgets and schedules inherently inaccurate.
Public commercial commitments also became subject to significant criticism as costs increased due to design maturation. The notion of completing design before building is not new, but we still see it on large projects across industries.
Custom designs. The designs of twentieth-century U.S. nuclear plants can be classified by identifying the vendors that provided the Nuclear Steam Supply System (NSSS). However, with a very few exceptions, the NSSS generally consisted only of equipment supply and design specifications for safety related systems. The remaining design, physical layout and associated procurements were performed by others. Structures, balance of plant systems, and auxiliary/support systems were usually designed by the prime contractor with significant owner preference input.
Given the relative long duration of these projects, personnel turnover often changed the preferred configuration or equipment selection. Owner preference and regulator-initiated changes occurred throughout project. Often, early engineering activities had little appreciation for the requirements of downstream organizations such as plant maintenance and operations.
As a result, the lack of early input from experienced operations, maintenance, and test personnel prompted costly mid-project changes. Occasionally, the dominant party (squeaky wheel) in arguing for design preferences ruled the day, regardless of the cost/benefit.
Suggestions for New Nuclear Deployment
Change management. A detailed and accurate scope definition based on a comprehensive requirements assessment; engineering and design maturity; and procurement and construction planning is not enough. There is never certainty until the project is completed.
Therefore, a well-planned change management program is important. Before implementing a CM program, however, an accurate cost and schedule baseline must be in place. Without accurate baselines, processing changes can become overwhelming and subject to abuse by “after the fact” or inappropriate approval in order to keep the work moving. It’s not uncommon to see situations where there is not enough time to process scope changes.
Change management programs vary, but they should be simple to execute and must address causation, causal responsibility and funding source; budget and schedule impact; and responsibility for execution. The programs should provide for updating databases such as those dealing with schedule and cost control. Approval authority should be as low in the organization as reasonable.
It’s important to note that contract changes may be necessary, so contract management and supply chain organizations need to interface. Initial contract language should have provisions for dealing with in process changes. If a solid change management program is in place at the time of contract negotiations, much later effort can be avoided.
Estimates. It stands to reason that the more complete design and procurement activities are, the stronger the estimate and schedule. Nonetheless, owners and contractors continue to publish estimates and embark on construction with critical aspects of design and procurement incomplete.
The categories advanced by the Association for the Advancement of Cost Engineering serve as guides to band the estimate accuracy and to assign ranges to elements of the estimate in developing contingency. Nuclear plan developers should consider achieving at least Class 2 Estimates (including contingency) with the understanding of the associated accuracy.
Scope control. Today, nuclear generation plant designs are becoming standardized and the industry recognizes and accepts standardization. Nothing is guaranteed, however. Scope changes will be necessary, especially as the first wave of standard plants is built. These changes will be minimized to the extent plant designers and process managers have considered owner/operator, supplier, construction and commissioning input. The parties may have legitimate positions, but the cost/benefit of each must be assessed, together with the typical balancing of capital cost vs. (future) O&M costs. The decision authority may be the party holding the purse strings.
However, new nuclear developers must strongly resist unnecessary changes in order to preserve the standard design model. Consideration of all stakeholder interests must be accomplished during the early (first wave) standard design process. If not, the risk and impact of changes will increase. Changes after project initiation are more impacting than changes in the pre-project period.
Engineers with limited construction, operations, maintenance and commissioning experience must be supported by experienced experts. And nuclear designers and process managers must be extremely rigorous in all aspects of standardization. All parties must be rigorous in resisting change, and limit changes to those that are absolutely necessary. Such change control should be addressed in appropriate contracts.
Download the paper: Small modular reactor deployment: Learning from the past and the present
[1] Clinton, Quad Cities, Fort Calhoun, Oyster Creek, Pilgrim, Fitzpatrick, and Diablo Canyon
