21st century nuclear lessons learned

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Abstract 21st Century Nuclear Lessons Learned , Presentation, K.

Aupperle 2007

21st Century Nuclear Lessons Learned , Presentation, K. Aupperle 2007

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EXTERNAL REFERENCE

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High Bridge Associates

Industry Lessons Learned for 21st Century Nuclear Projects

Charles W. Hess, Burns and RoeKenneth J. Aupperle, High Bridge Associates

11/13/2007

Making the Renaissance Real

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Those who cannot remember the past are condemned to repeat it

George Santayana

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Those who cannot remember the past are condemned to repeat it

George Santayana

Its a form of insanity to repeat the same steps over and over and to

expect a different result.

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Approach Methodology

Industry data search/compilation of > 100 projects NRC, intervener, corporate, and personal files

Case study analysis of cancelled/completed projects Case study analysis of completed/successful projects Common causes for failure Common causes for success

Authors Nuclear Industry Experience > 70 Years

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Accomplishments of the Past

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Utilities During This Period

All regulated 50% operating companies; 50% construction

management companies Very familiar with large capital projects Favorable laws governing expansion of electrical

generation

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Historical US Construction Cost Experience75 (pre-TMI-2 plants operating in 1986; $2007)

5

14

7

12

26

11

No. of Units

269%$4633/kW$1725/kW1976-1977

381%$5098/kW$1336/kW1974-1975

334%$4305/kW$1291/kW1972-1973

348%$3057/kW$878/kW1970-1971

294%$2308/kW$784/kW1968-1969

209%$1354/kW$648/kW1966-1967

% OverActual OvernightEstimated OvernightConstruction Start

Mark Gielecki and James Hewlett, Commercial Nuclear Power in the United States: Problems and Prospects, US Energy Information Administration, August 1994.

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Project Management Expertise Timeline

1960 1970 1980 1990 2000 2010

?

?

Commercial Project Management

Nuclear RequirementsNuclear Requirements

Commercial Project Management

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Keys to Success

Planning, More Planning, & Risk Based Project Management

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1 0 0

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F E A S I B I L I T Y- P r o je c t F o r m u la t io n

- F e a s ib i l i t y S tu d ie s- S t r a t e g y D e s ig n

a n d A p p r o v a l

P r o j e c t" G O '

D e c i s i o n

M a j o rC o n t r a c t s

A w a r d e d & S t a r t C o n s t r u c t i o n

P L A N N I N G a n d D E S I G N

- B a s e D e s ig n- C o s t a n d S c h e d u le

- C o n t r a c t T e r m s a n d C o n d i t io n s

- D e ta i le d P la n n in g

S T A G E I I S T A G E I VS T A G E I I IS T A G E IP R O D U C T I O N

- M a n u f a c tu r in g- D e l iv e r y

- C o n s t r u c t io n- In s ta l la t io n

- T e s t in g

T U R N O V E Ra n d S T A R T U P

- F in a l T e s t in g- M a in te n a n c e

I n s t a l l a t i o nS u b s t a n t i a l l y

C o m p l e t e F u l lO p e r a t i o n

Abi

lity

to S

igni

fican

tly In

fluen

ce P

roje

ct

Cos

t/Sch

edul

e O

utco

me

Proj

ect P

erce

nt C

ompl

ete

A b i l i t y t o S ig n i f ic a n t l y In f lu e n c e P r o je c t C o s t /S c h e d u le O u t c o m e s o v e r t h e P r o je c t L i f e - C y c le

C h a r t a d a p t e d f r o m P M I P M B O K F ig u r e 2 - 3 . R e p r e s e n t a t iv e C o n s t r u c t io n P r o je c t L i f e C y c le

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Right Reasons for Project Failures

Economic recessions in the 70s reduced load growth

Inflation and high interest rates Regulatory changes forced rework Design changes during construction TMI-2 eroded public support

Necessary Parsing in a Hostile Litigious Environment

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Real Reasons for Project Failure

Insufficient utility leadership and ownership Lack of a nuclear mentality at all levels Lack of commitment to quality processes and

QA Contracting practices that stampeded

contractors into bad practices Inadequate training

Failure of Leadership and Lack of Project Focus

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Advanced designs Passive safety systems, reduced active systems, and fewer

components/quantities

Streamlined regulatory process, one step COL Federal incentive program, Energy Policy Act

Insurance, financing, and production tax credits

Modest inflation and financing rates Owners committed to standardized design approach

Todays Improved US Industrys Parameters

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Industry owners, OEMs, and EPC contractors are more organized for outreach

NuStart, NEI, INPO, EPRI

More sophisticated management processes/software Modularization approach/capabilities Integrated material management planning

techniques

Todays Improved US Industry Parameters

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First-of-a-Kind projects are not fully understood Technical, organizational, regulatory, and global dimensions

Degraded nuclear supply chain Engineered equipment and bulk material Craft labor and professional labor elements

Unproven ITAAC process Intense demand side competition/dynamics

US domestic, international, and nuclear/non-nuclear sectors Global supply chain logistics and risks

International supply chain and shippers

Todays New Challenges and Issues

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Operating plant paradigm of owners Small project paradigm of owners Problematic Risk Shedding approach for elements the

owner/licensee cannot shed State PUC cost recovery rate base issues

Inhibiting utility planning/procurement activities Affecting utility commitments

Stove-piped Organizations No Integrated Project Teams

Yesterdays Challenges/Issues Still Here

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Recommendations

Apply resources for early planning, planning, planning

Use risk-based project management approach Establish a strong integrated management team Provide a firm financial basis for project Select a technology that matches corporate goals

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Recommendations Provide appropriate contracting vehicles that allow

win-win solutions for owners and contractors Fixed price when basis exists Target cost/incentives/penalties Target milestones/incentives/penalties Cost plus/task based

Project management leadership Training, training, training Involve all stakeholders in process Develop active intervener mitigation plans

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Lessons Learned for the 21st Century Failure is possible

We have not corrected the real reasons for project failure Skill in one aspect of nuclear power does not assure

success in new builds Knowing when to spend is as important as financial

strength Success depends on upfront planning and dedicated

project management follow-through You cannot shed risk on a mega project; you must

manage it

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The Prize!

Thank You!

A Project built within budgeted cost, schedule, scope & quality targets

21st century nuclear lessons learned

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