Significant Nuclear Project Risks and Control Strategies to Achieve Success

By John Archer, PE, Senior Project Manager, WorleyParsons Group Inc., and Michael Low, Senior Project Control Manager, Nuclear Technologies Solutions LLC, a subsidiary of The Shaw Group Inc.

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Workers conduct one of the heaviest lifts on record at a nuclear plant at the Sanmen nuclear power plant project in China’s Zhejiang province on June 29, 2009. The 1,020-ton auxiliary building module CA-20 is one of six buildings comprising the nuclear island. Photo, The Shaw Group Inc.

New nuclear power plant owners and their engineering, procurement and construction (EPC) contractors face serious challenges during construction to keep the plants’ completions on time and within budget. History has demonstrated that even managements’ most ardent efforts to achieve project success can be overwhelmed. This article focuses on the critical interface between the utility-owner, the EPC contractor and their subcontractors.

Today’s advanced reactors have incorporated new concepts such as standardized designs and modularization approaches, and management has armed itself with more advanced tools and integration of management processes, lessons learned and risk management—but history has a habit of repeating itself. For instance, at the Finnish Olkiluoto nuclear plant currently under construction there have been quality-related problems, nuclear safety culture shortcomings, schedule and cost overruns and the resulting public concern.1,2

The challenges nuclear plant construction projects face are monumental and require smart, involved and energetic management teams armed with key leadership strategies that begin early in the project’s lifecycle. If management implements these strategies well before engaging the project’s engineering, construction and commissioning efforts, project momentum can be maintained instead of becoming frustrating and demoralizing for the project organizations and their interfaces.

To develop the mega-project leadership strategy concepts in this article, the authors considered:

  • Documented nuclear industry lessons learned from the past 25 years
  • Enterprise models such as those utilized by WorleyParsons to promote cultural development of various organizational interfaces such as personnel safety, risk management and change control
  • Models for nuclear safety and risk management that have been formulated by the Nuclear Energy Institute (NEI), International Atomic Energy Agency (IAEA) and International Organization for Standardization (ISO)3,4,5
  • WorleyParsons mega-projects lessons learned and project success strategies from another industry that featured extraordinarily large modules
  • Project success factors, especially front-end loading (FEL) approaches for schedule and cost control.

 

 

Gen III Challenges

 

Generation III and III+ projects face numerous first-of-a-kind engineering (FOAKE) challenges, including licensing, design and construction and Inspections, Tests, Analyses Acceptance Criteria (ITAAC) testing project phases. The areas of greatest uncertainty in the design and construction are related to financial backing, the political environment and severe weather during construction, because it is difficult to estimate their total overall impact to the project and to effectuate reasonable control. Managing a complex mega-project with its various complexities and multiple interfaces presents organizational challenges, especially when coupled with the need to implement timely corrective action programs while developing organizational relationships between the corporate stakeholders.

In dealing with these challenges, the new nuclear plant builds in the U.S. should benefit from the lessons being learned today at nuclear plant construction projects in Europe and the Far East. Recent information from the U.S. nuclear industry provides encouragement that utilities6 and EPC contractors7 are taking proactive steps to pursue lessons learned, benchmarking, training and detailed design ahead of construction and various “front-end loading” (FEL) efforts that should help reduce some of the uncertainties.

Current project management leadership has several advantages that were not available to those management staffs involved in the nation’s initial nuclear plant construction program. The nuclear industry has come a long way in promoting stronger and more responsive nuclear industry organizations. Nuclear organizations such as NEI3 and the Institute of Nuclear Power Operations (INPO)8 have developed nuclear safety culture programs, lessons learned, benchmarking and project management application philosophies, processes and approaches that promote sound methods for strong management initiatives to reduce uncertainties and provide increased control over the project’s destiny. Key lessons have also been learned during the past 25 years in the nuclear industry in the areas of quality, scheduling, organization and the implementation of a nuclear safety culture.1,2,9

The U.S. nuclear industry, through the efforts of the U.S. Nuclear Regulatory Commission (NRC), NEI and INPO, has been working to promote the industry’s implementation of a nuclear safety culture. On the international front, the IAEA4 has been promoting a risk management culture for improving nuclear power plant performance. When this risk management culture development and implementation model is coupled with the ISO5 risk management principles and guidelines on implementation, both are effectively able to provide the basic models for the formulation of various cultures by the utility owners and EPC contractors. These can then be expanded into such key organizational interface areas as quality (down to the worker level), project scheduling and cost control, and personnel safety. These are the key interface areas having the highest priority.

The overall teaming effort between the owner and the EPC contractor seems to work best when the EPC contractor takes the lead and responsibility for promoting strong, dynamic leadership within its own ranks. The EPC contractor works with the utility owner in a proactive manner to demonstrate cooperation and evidence of how the interfaces between them are being effectively supported. The utility owner has the responsibility in turn to assure that it is staffed with sufficient personnel to provide the necessary interface timeliness and to establish the frameworks for joint teaming, planning, risk management and quality programs that need to be implemented between them.

Personnel at all of the involved organizations must understand the mission—to continuously work to assure that the project is successful in meeting its safety, quality, schedule and cost goals and to find ways to promote an overall teaming spirit.

Challenges facing project leadership include:

  • Staying focused on key project success factors
  • Managing the multitude of interfaces between the project organizations
  • Developing a teaming spirit that involves the utility, EPC contractor, subcontractors and laborers
  • Applying timely corrective action responses to quality issues related to all phases of design, fabrication, construction, startup and records control and retention, including industry issues of counterfeit material and configuration control
  • Understanding uncertainties associated with FOAKE and construction
  • Achieving timely, detailed engineering completion in a high-quality manner well ahead of construction and procurement
  • Dealing effectively with high-quality management oversight with a mega-project’s complicated schedule and obtaining schedule compliance
  • Developing effective cost control strategies with project organizations
  • Promoting teaming relations with labor to achieve high levels of performance
  • Coordinating and documenting the successful implementation of ITAAC
  • Developing resolution roadmaps for significant contractual issues in a timely manner
  • Developing appropriate strategic action plans for occurrence of significant material price escalation
  • Controlling changes effectively and promptly
  • Developing and maintaining experienced, top nuclear talent for all phases of the project
  • Deploying effective, timely project management monitoring and reporting systems.

     

     

    All of these challenges and others need high-level management leadership attention and continued focus for the duration of the project. It behooves owner management to assure that, in its oversight role, it has a documented approach to record how these types of challenges were effectively addressed, as state utility commissions will need to know how management performed in a prudent and timely manner.

     

    High-level leadership

     

    High-level leadership is the key to the overall project’s success for several reasons.

    First, those responsible for their project organization’s deliverables expect their leadership to provide its vision of the target, goals and motivation to achieve the goals. Second, it provides unity of purpose and direction as well as the guidance necessary to define how the project will navigate through its difficult project challenges.

    High-level leadership is also needed to interface with the various regulatory bodies and financial institution stakeholders, as they also have high expectations of management leadership to demonstrate that numerous regulatory commitments and financial objectives are achieved. For regulated utilities, top-level utility management must continually explain to their respective public utility commissions (PUCs) the justification for its decision-making processes.

    Leadership at the highest level is needed by the owner, EPC contractor and subcontractor organizations to address their key joint interfaces in a manner that supports their contractual relationships. It is important for management leadership to periodically emphasize to the project organizations that they have contractual obligations as well as professional and ethical responsibilities to effectively support and protect each other. Many hurdles are to be overcome during the execution of the contract that will require timely management leadership involvement to promote a positive spirit as well as a fair and reasonable conflict resolution. Leadership has to provide assurance to itself that clear lines of authority and responsibility exist and because of the long duration of the project, management leadership is better served if it assures that a succession plan is prepared to deal with organizational change.

    Mega-projects, by their complex nature, drive all of the project’s stakeholder companies to work together in a teaming “win-win” manner for their common good. Basically, the overall project is a success if all of its constituent company organizations are successful and it will likely experience various degrees of failure if any of these organizations fail. Parochialism rarely works to the long-term advantage of any company.

    Leadership on mega-projects is paramount because the project is complex and long-lasting and it is normally easy for conflict and negative behavior characteristics to gain an upper hand, much to the detriment of the project. Leadership should consider the deployment of a project culture strategy that promotes FEL of culture development in the areas of quality, safety, schedule and cost control and nuclear safety, as well as management planning through key interface management teaming.

    Considering the immense size and complexity of the nuclear plant design and construction projects, the strategic approach of implementing various interface cultures as a management leadership approach is not inappropriate, even though it is typically reserved for large corporate enterprises. In essence, the nuclear plant mega-project is not far removed from being considered an enterprise, especially since its cost often represents a major portion of the utilities’ total capital assets.

    Some of the organizational interfaces require considerably more leadership emphasis and focus by management than others at various points in time. Additionally, there are several contractual and proprietary issue constraints that may limit how involved the joint interface management leadership can be. Any real or perceived constraints need to be identified early on so that the real ones can be honored by the organizational teams.

    While recently developed for the nuclear industry, the concept of modularization is not new to other industries. WorleyParsons’ experience in mega-sized project modularization in the oil and gas industries demonstrated early on the critical need for FEL. It became essential for the project’s success to start with project evaluation and front-end planning. This was then followed by conceptual, detailed and procurement engineering with fabrication, shipment, heavy-haul transport and construction management, where “fixing it later in the field” was not an option. Project success was very dependent on the implementation of effective FEL, which as part of the overall planning incorporated good scope definition, lessons learned, upfront design, various logistics and constructability studies, a design freeze concept, defined work packages and early involvement of construction and operations in the design phase.

    Shaw has been involved extensively with modularization concepts including the FEL planning, scheduling, engineering and specification and has been able to experience its challenges. This modularization effort has required considerable FOAKE leadership assessments and application of strategies that focus on lessons learned and risk management and mitigation programs.7

    Project management leadership has a myriad of challenges that are best handled by the timely deployment of high-level strategies as part of its FEL management function. FEL offers project management an excellent opportunity to develop and promote strategic initiatives; enhance relationships between the various project organizational interfaces; prepare the overall project execution plan and supporting plans; establish the overall tone for the project to achieve stronger teaming and training; and initiate implementation of various project culture development-related programs.

     

    Achieving Project Success

     

    To be successful, high-level project leadership should:

    • Implement leadership approaches that are geared toward the long haul
    • Be out in front of the project to give it vision, direction, motivation and a team attitude to achieve project success
    • Focus on assuring that its leadership vision, goals, policies and directives filter down through the organization to the individuals that have to produce a deliverable
    • Clearly communicate delegated and de-centralized responsibilities throughout the organization
    • Communicate effectively to personnel in the organization what elements of the work breakdown structure (WBS) they have responsibility for controlling and by which they will be measured and held accountable for quality, schedule and cost
    • Implement and maintain changes to the overall project execution plan
    • Denote responsibility of the utility/owner
    • Obtain feedback from the EPC contractor that it understands its responsibility and commitment for ensuring the quality of all of the subcontractors and intensify quality oversight of the subcontractors
    • Apply 10 CFR 50 Appendix B as “elements for effective management of the project”9
    • Implement FEL, especially for completing the engineering ahead of fabrication and construction, minimize changes to the design documents, and develop and buy-into the project integrated project schedule
    • Develop project organization interface area cultures for nuclear safety, quality, risk management, scheduling integration and cost control
    • Establish site and manufacturing introductory training including nuclear safety
    • Assess performance of all of the organizations
    • Continuously remind project personnel that the probability of achieving project success in meeting the project schedule and cost objectives is a direct function of the ability of the project to implement quality at all levels, including implementation of high quality project management and control teams in the scheduling and cost control processes.

       

       

      The development of project cultures in key interface areas is an excellent method to accomplish the mission of implementing more consistent behaviors by all individuals in all of the project organizations. With the right culture in place, the project organization is in a much stronger position to withstand organizational changes, have increased levels of confidence to address tough issues with the project team and defend the work that is being accomplished.

      Value is added when the leadership is constantly seeking to gain every advantage possible in implementing strong quality in its scheduling and cost control programs, and leadership can make a difference in promoting high morale among the participating companies, challenging them to achieve excellence.

      Management can hedge some bets regarding where some of the main leadership focus needs to occur to identify risks in certain areas. Once the areas are identified, project leadership needs to actively investigate whether the risks in these critical areas are indeed materializing and therefore need to be addressed head-on or can simply be dismissed. Because the impact of risk to the project’s schedule and costs is so high when quality issues arise, hedging leadership focus on quality in all areas is paramount.

       

      Culture Implementation Impact

       

      The probability of mega-project success is enhanced when the project management leadership communicates its vision, goals, cultural expectations and overall plan to all of the project organization participants. The probability of success is also increased when leadership focuses on the key interfaces between the companies and develops the cultures and strategies for optimal oversight and implementation of continuous improvement methods of these interfaces’ functionality.

      Click to Enlarge

       

      The key interface areas depicted in Figure 1 are associated with nuclear safety, quality, personnel safety, risk management, schedule and cost control. These all deserve high level management’s focus and attention. Furthermore, management will be most effective in propagating these values by developing and promoting a cultural implementation approach.

      The nuclear industry is already focused on implementing a nuclear safety culture, as prescribed in the NEI guidance, NEI 09-07 (Revision 0) DRAFT.3 This provides a process for the development and deployment of a nuclear safety culture that can be extrapolated for utilization by projects involved in design and construction of a new nuclear plant.

      INPO’s “Principles for a Strong Nuclear Safety Culture”8 defines safety culture as “an organization’s values and behaviors—modeled by its leaders and internalized by its members—that serve to make nuclear safety the overriding priority.”

      A well-formulated nuclear safety culture provides project personnel with insight and motivation that aligns with project management leadership. This is accomplished in a manner that promotes an environment involving the use of lessons learned, benchmarking and training to achieve continuous improvement. The project’s interests are best served when the culture is developed with a basic foundation that identifies the culture’s basic principles, framework and processes.

      The formulation of any of the interface cultures also needs to determine how that culture will be organized to promote its implementation, monitoring and continuous improvement. The successful implementation of the project’s interface area cultures will have provided an investment that can be expected to serve the project’s long-term interests.

      IAEA4 and ISO5 standards provide examples for the nuclear plant risk management culture’s principles, frameworks and processes. The development of other project interface cultures such as quality, personnel safety and schedule and cost control can use these examples as models for their cultural development and implementation as well.

      From an overall cultural impact perspective of the nuclear safety culture, the quality and risk management cultures transcend all of the other interfaces depicted in Figure 1. They transcend because they have overlapping tentacles that need to be effectively promoted in basically all phases of the operation and the various organizational interfaces.

      For example, the quality principles’ tentacles reach into the development of a solid and accurate WBS, integrated project schedule and cost identification, trending and cost control system. A project risk management culture transcends into quality, nuclear safety, scheduling and cost control, personnel safety programs and organizational interfaces. For this reason, the development and implementation of the quality and risk management culture, along with the nuclear safety culture, should be given a very high priority.

      The key organizational interface area cultures will have a number of common principles, basic processes and, quite possibly, similar supporting organizational structures and attributes. The IAEA strategy for a risk management framework4 and IAEA’s risk management principles and guidelines5 provide illustrative models for implementation and continuous improvement that are quite similar to the time-honored quality program continuous improvement cycle framework.

      Additionally, the cultures’ process implementing organizations could be similar to the NEI nuclear safety organization and process. This organization identifies some key positions including a site culture monitoring panel and a site leadership team as essential elements of the overall nuclear safety culture.

      The key ingredient in a project key organizational area culture is a process that is based on (1) problem or risk identification and resolution, (2) inputs from lessons learned and benchmarking programs, (3) culture program maturity monitoring and evaluation, and (4) the identification and communication of the management leadership’s overall vision, goals and expectations. The culture’s vision, objectives and communication need to flow down from the top of the project organization to all of the personnel working on deliverables in a timely manner. This is needed so that staff members develop a thorough understanding of the objectives and are continuously motivated to achieve those objectives. All of these interface area cultures will require their own specific design formulations.

      Besides developing project organizational culture initiatives, management leadership will be more effective if it implements specific strategies to provide: (1) visible management leadership, (2) an integrated, timely project execution plan, (3) encouragement of teaming and “win-win” attitudes among the owner, EPC contractor and other subcontractors, (4) project staffing at proper levels with motivated and qualified personnel, (5) effective communication channels for the project team including project newsletters and meetings that inform the project teams how the project objectives are being achieved and how project team individuals are contributing to the overall project’s success, (6) management self-assessments, (7) third-party audits or program consultations, (8) periodic high-level strategy development meetings with the executives of the project organizations, and (9) strategic initiatives to maintain intelligence on current worldwide lessons learned and benchmarking related to new nuclear plant builds to be able to continuously improve the management leadership function as well.

      Regarding the last item, from a high-level strategic standpoint it is very important for top management to stay current with both risks and opportunities that the nuclear construction industry and related industries constantly address. This type of management input can be gained from NRC and NEI information notices, industry workshops and conferences and IAEA and INPO lessons learned publications, among other sources.

      Lessons learned associated with the management of mega-projects can also be obtained from the IPA Institute, which offers mega-project seminars and ongoing project reviews related to project management strategy implementation effectiveness. These are based on statistics-based lessons learned gathered from large numbers of actual projects. Visit www.ipainstitute.com for more information.

      Project management leadership success is directly tied to its overall ability to acknowledge past problems, develop strategies to prevent their reoccurrence and, if problems do occur, discover them early enough to implement fast response initiatives for their correction. As part of the FEL effort, it’s essential to develop a thorough understanding and risk mitigation plan for the types of problems that occurred previously in the U.S. during construction of nuclear plants and that are now occurring at Olkiluoto Unit 3, Flamanville Unit 3 in France and the plants in the Far East. Assessment of these projects indicates that the primary project organization interfaces that experienced the most significant issues were the quality, nuclear safety culture, scheduling and organization interface areas depicted in Figure 1.

      Several of the Olkiluoto Unit 3 problems encountered are systemic, such as the quality issues that had pervaded through various elements of the project’s subcontractor organizations. There was a nuclear safety and quality cultural problem from the standpoint that there was a lack of effective NQA-1–1994 program implementation.6

      Leadership will need to periodically reinforce culture principals to encourage cultural acceptance and timely implementation. The culture’s development in the organizations may be accelerated via the appointment of responsible champions, Web site policies, roadmaps, programs, processes and procedures, as well as training, seminars, mentoring and high-level management support visibility. The implementation of cultures is greatly aided by workshops on an ongoing basis that utilize risk management, lessons learned programs, corrective action programs and other approaches to achieve continuous improvement and enhanced project leadership strategies.

      The development and implementation of effective cultures in the interface areas between the owner, EPC contractor and subcontractors can derive some economy of scale when the cultures’ implementing teams work together to share several common processes, ideas and features. The commonality exists in their respective organizations’ cultures development processes with respect to how they are developed and implemented, as well as the manner in which they are promoted and nurtured. Different culture programs such as quality, nuclear safety and risk management share some common attributes that during implementation, will feed off each other.

      Schedule and cost control cultures must be developed and maintained early in the project and during all phases of project execution. Management needs to lead this culture by fostering the commitment of dedicated resources and time required to effectively manage schedule and cost control. In addition to quality, schedule and cost control, these will be major targets that the power industry and financial world will be watching very closely.

      The key is to get one or two cultural programs operating effectively, leading the participants’ mindset to become entrenched with the basic concepts. The cultures in the other interface areas then will be more easily accepted and implemented.

      The effective implementation of various high-level project joint leadership strategies implemented by the utility-owner, the EPC contractor and the subcontractors will reduce project risks and ultimately lead to enhanced quality, scheduling, personnel safety and nuclear safety.

      There are high stakes associated with nuclear new build projects. Project failure impacts more than just the project itself—it jeopardizes the owner’s financial well-being and casts a dark cloud over the U.S. nuclear industry as a whole. The failure of a new nuclear power plant project results in long-term significant impact not only to the utility but to the EPC contractor and subcontractors as well. Most importantly, the need for electrical power comes at a time when the U.S. needs to achieve energy independence in a way that does not impact the global climate.

      Editor’s Note: The paper from which this article was excerpted was the winner of the Best Paper Award at NUCLEAR POWER International 2009.

      Authors: John Archer, PE, is a senior project manager with WorleyParsons Group. He has more than 35 years of domestic and international licensing, operations, engineering, consulting and construction experience in the fossil and nuclear power industry. Michael Low is senior project control manager, Nuclear Technologies Solutions LLC, Shaw Inc. He has 30 years of engineering, construction and startup field experience.

       

      References

       

      1. Finland Radiation and Nuclear Safety Authority, STUK. “Management of Safety Requirements in Subcontracting During the Olkiluoto 3 Nuclear Plant Construction Phase,” Investigation Report 1/06, (Translation 1.9.2006).

      2. Jukka Laaksonen, Dirctor General, Finland Radiation and Nuclear Safety Authority, STUK. “Experience from Olkiluoto 3 Construction,” Conference Presentation, Nov. 9, 2007.

      3. NEI 09-07 (Revision 0) DRAFT. June 2009. Pg 3.

      4. IAEA-TECDOC-1290. “Risk Management: A tool for improving nuclear power plant Performance,” April 2001. Pg 6.

      5. IAEA Draft International Standard ISO/DIS 31000 – ISO/PC 992. 2008. Pg vii.

      6. NRC Inspection Report No. 70-3103/2006-001 Notice of Violation

      7. Edward Shyloski, Vice President, Nuclear International, Shaw Power Group. “Overcoming Challenges Facing New Nuclear Build,” 2008 NUCLEAR POWER International Conference, Dec. 2008.

      8. INPO Principles for a Strong Nuclear Safety. November 2004. Pg iii.

      9. NUREG 1055, “Improving the Quality and the Assurance of Quality in the Design and Construction of Nuclear Plants,” May 1984. Pgs. 1-6, and 1-7.

       

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