In 2020, a few months into the uncertainty of a global pandemic, Ontario Power Generation (OPG) completed a CDN$3.4 billion nuclear plant refurbishment project on time and on budget.
Projects of this scope, scale and public profile are notorious for massive cost and schedule overruns. Prior projects — including ones undertaken by OPG — have been cancelled at considerable financial and reputational cost.
To help it succeed where many have failed, OPG turned to transparency and upfront planning, aided along the way by a robust and effective independent oversight program.
Project Background
OPG is Ontario’s largest power generator, with two nuclear plants, Pickering Nuclear Generating Station and Darlington Nuclear Generating Station.
These plants are responsible for more than 20% of the electricity produced in Ontario, generating enough energy to power 2 million homes.
CANDU nuclear reactors such as those at Darlington, which began operation during the 1990s, require significant mid-life refurbishment. In the early 2000s, OPG was facing a key decision: whether to refurbish Darlington or replace it with a significant alternate source of energy to serve the province’s needs.
The Darlington Nuclear Generating Station was a solid candidate for continued operation. It was a high-performing plant and there was a robust business case behind the idea of refurbishment. It was also close to the city of Toronto, which meant that needed talent and resources were available.
For all these reasons, the project was well supported by decision-makers. But the stakes were high. This project needed to succeed, for the sake of not only Ontario’s energy supply, but also potential future projects.
“The province was very supportive of the project, and so was OPG. There weren’t a lot of headwinds on doing the project, but there was a lot of concern about doing it right,” Jim Carter, a senior consultant for Modus Strategic Solutions who worked on the Darlington refurbishment project, said.
A previous refurbishment project that OPG had undertaken struggled, and it was widely criticized for being well over budget and behind schedule. At that time, some of the units the company planned to refurbish were ultimately written off instead.
At this point, many stakeholders — from provincial leaders to ratepayers to company management — were questioning the wisdom of pouring resources into such high-stakes refurbishment projects if they were doomed to fall short of their goals.
The Darlington refurbishment project received a green light from the province. But OPG’s project team and company leadership felt the pressure. If this project wasn’t successful, it would put the future of nuclear energy in the province in jeopardy.
Planning for success with independent oversight
The Darlington project involved refurbishing all four units. The OPG team chose to “de-risk” the project by first executing one of the units — Unit 2 — in isolation to get comfortable that it could indeed be finished successfully.
They also included off ramps in their planning. If the first unit failed to meet expectations, the remaining units could be at risk for cancellation.
Planning for the Darlington Refurbishment Project began in 2007, and Unit 2 was shut down for refurbishment in 2016.
To give the project its best chance for success, the team chose to implement a layered oversight model. Independent experts would monitor the project and provide assurance to OPG leadership, its board of directors, and the Ontario Minister of Energy. Modus was brought in to help provide independent oversight in support of OPG’s board.
While there were pockets of skepticism within OPG about the concept of independent oversight, these expert teams were viewed by most of the project team and the company leadership as necessary.
Roy Brown was on the OPG refurbishment team. He said that his team generally welcomed the support. But they were concerned that interacting with the oversight experts might stand in the way of doing the work that they needed to do. This was especially true considering there were multiple organizations involved, who might be looking at the same processes and asking similar questions.
“The shop was always open, but I only wanted stones turned over once,” Brown said.
On the ground: How independent oversight worked
OPG was committed to transparency, which was critical to making sure the project was successful. Modus and the other oversight experts were given open access to meetings, people and data as needed.
In her role in commercial management and project assurance for OPG, Carla Carmichael worked on the refurbishment project. She said that the Modus team provided assurance to OPG’s board through quarterly reports regarding the ongoing project work.
For example, the company leadership understood the importance of properly communicating the cost estimate internally and externally and placed significant emphasis on getting it right.
“So, in the early days, before the project was approved for release, Modus consultants came in and reviewed the cost estimates, ensuring that what we were providing to the board of directors was reasonable and that it was recommended to release the funds to the project,” Carmichael said.
But Modus’ expertise also meant that they were able to serve in an advisory capacity, helping to elevate the project overall. The team was embedded with OPG’s project team during the project’s planning and execution.
Dave Stiers was part of OPG during the planning phase of the project, helping to determine what oversight would look like. The project team appreciated having the support of Modus consultants as a sounding board and a resource on a project that went beyond OPG’s experience, he said.
“A lot of us didn’t really know what good looked like. The people on the project team were of high quality, so they wanted to do a good job. But they needed guidance,” Stiers said.
Modus consultants’ experience with other types of projects helped leadership keep the focus where it needed to be, he said. They also supported the project team by raising issues to senior management and giving them more visibility.
Results
Unit 2 of the Darlington Refurbishment project was completed on budget and on schedule, returning to service in June 2020.
OPG expected to reduce both cost and schedule for future units and needed to take full advantage of the Unit 2 lessons learned. Modus helped the project team evaluate the opportunities to improve and bring more certainty to performance of the subsequent refurbishments.
The refurbishment project continues, with Units 1 and 3 now operating at full power as well. Both Units 1 and 3 took advantage of lessons learned from Unit 2 and completed ahead of schedule and under budget. The last project, Unit 4, is scheduled to be completed in 2026.
OPG is also building more generation capacity, having received a license to build four new small modular reactors (SMRs). Modus assisted OPG in vendor selection and in bringing industry-wide lessons learned to the SMR project planning program.
Darlington’s Unit 2 contributed significant lessons, creating a body of work that will help future generations of nuclear and other capital construction projects as they implement the lessons learned.
This project needed to be a success, and it was.
“I don’t think the benefit to the nuclear industry can be quantified. That project demonstrated that nuclear projects can be done on time and on budget,” Carmichael said.
“We need clean, reliable energy to continue building out our AI infrastructure, take us to Mars, whatever it might be. I’m not saying that the Darlington Refurbishment Project is the reason this all can happen, but it certainly helps to show that you can have a successful nuclear project,” she said.
