Coal, Nuclear

Westinghouse Powers up Costing

Issue 5 and Volume 5.

The venerable energy company incorporates new tools into its design process to reduce complexity and lower costs

By Keith J. Bacco, Global Manager, Supplier Manufacturing and Value Engineering, and Robert ‘Jason’ Bartlett, Global Manager, Supplier Manufacturing and Value Engineering, Westinghouse Electric Co.

Manufacturers of nuclear power plants operate in a unique sphere, where design tolerances are razor-thin, safety requirements unrelenting, and standards for initial quality never bend. Yet even in an environment that values quality and safety above all else, cost has priority, too.

For Westinghouse Electric Co., the challenge of cost control in the past sometimes involved as much art as science. As designers created products and sourcing managers negotiated prices with suppliers, the task of establishing what a product should cost often proved difficult.

“We might have had a gut feel about whether a particular design was more or less costly,” said Jason Bartlett, the acting global manager for supplier manufacturing and value engineering in Westinghouse’s Nuclear Fuels division.

But engineers and supply chain managers lacked the evidence to confirm or contest their intuition. That put them at a disadvantage when a design changed after Westinghouse had already contracted with a supplier, or when the company sourced a new design for which it had no cost basis.

The challenge was compounded by external conditions, including the company’s “buy where you build” philosophy, which specifies that Westinghouse make or source much of a power plant’s material and parts within the country where the plant is located. Such stipulations are common, even required, in developing countries where nuclear power is gaining popularity. In China, 70 percent of a power plant’s long-term supplies must be sourced from within the country. In Brazil, the standard is similarly high.

Artist rendering of the AP100 layout.
Artist rendering of the AP100 layout. All photos, charts and figures courtesy of Westinghouse Electric Co.

Even with decades of experience building some of the most highly regulated structures on earth, Westinghouse found it needed better insight into costs to decide which parts it could cost-effectively manufacture itself and which it should trust to suppliers the kind of intelligence that helped keep the “make versus buy” equation in balance.

Westinghouse also knew that insight on costs would provide leverage when it negotiated prices with suppliers, and would help ensure that the company pursued only the best, most cost-efficient designs.

Looking Deeper Into Costs

Intent on bringing more rigor to its costing practices, Westinghouse launched the Supplier Manufacturing and Value Engineering (SM&VE) group in 2010. The group was charged with creating visibility into product costs at every stage of design, including new product development, redesign of existing products, design changes made after orders are placed, and supplier negotiations. Members of the value-engineering group employed the “should cost” method, which uses various analysis techniques to establish what a product or component should cost.

One key item in the SM&VE group’s toolkit is Design for Manufacture and Assembly (DFMA®) software from Boothroyd Dewhurst, Inc. DFMA combines two complementary software applications: Design for Assembly—DFA Product Simplification, which helps engineers benchmark the structural efficiency of their products and then reduce assembly costs by consolidating parts into elegant, multifunctional designs; and Design for Manufacture—DFM Product Costing, which allows developers to examine competing material and manufacturing process choices and judge the cost of those alternatives against the original design.

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DFMA estimates primary cost drivers such as assembly labor, material and operations, along with special tooling, machine size and cycle time details. The Westinghouse team reviews that data alongside separate cost estimates for engineering, transportation, storage, supplier profit and contingency. Combined, those analyses offer a thorough assessment of the inherent cost of a part, as well as the price a supplier might reasonably charge to manufacture it.

For Steve King, the value of the assessments is clear. King is the global director of the SM&VE group, and he and his colleagues use DFMA and the associated costing techniques to navigate “make versus buy” evaluations and advise Westinghouse’s sourcing department.

King’s group also looks for cost savings as Westinghouse engineers move up the learning curve, building successive power plants based on the same design. In recent years, for example, the company has built a series of reactors based on its AP1000 design. For the next AP1000 plants, which will likely be in the U.K., Czech Republic, Brazil, or India, King says the team will reanalyze the original designs.

“Now that we have some field experience with the design, we can become even more efficient in how those pieces of equipment are built,” King said.

DFMA also helps Westinghouse sourcing managers negotiate more effectively with their suppliers. By exploring process plans and specific manufacturing sequences, the team can get a more granular understanding of expected costs. They then pass that knowledge to the sourcing department, which can leverage it during supplier discussions.

“In several instances we’ve had suppliers say it takes 500 hours to build a piece of equipment,” King said. “And yet, we do our assessment and we know it takes only half of that. So we’ve been able to use cost transparency to negotiate better prices early in the process, or when design changes are being made.”

Indeed, Westinghouse’s new costing bona fides have helped facilitate a company-wide shift to upfront engineering. This includes an expansion of the traditional two-stage design process to a four-stage lifecycle that spans concept, preliminary design, intermediate design, and final design. With more stage gates, the supply chain group can involve suppliers earlier, when designers can still make adjustments to mitigate costs.

“Early supplier involvement is definitely important to avoid cost in the design process,” King said. “The projects where we’re using that process are delivering on time or early, at higher margins.”

The shift has also inspired thought changes among Westinghouse’s design engineers, who tended to design parts and assemblies in ways that were proven and familiar to them, but often without realizing the associated cost inefficiencies. DFMA software, by allowing teams to better interrogate design alternatives they may not have considered, has helped those engineers take a more cost-conscious approach to product development.

The Benefits of Visibility

“If we’re looking to maximize the value of a product, DFA and parts reduction is certainly one of the main tools we can use,” said David Dye, a Westinghouse principal manufacturing engineer.

He lauds the software for its ability to assess the value of each component in an assembly.

The reactor coolant loop of the AP1000.
The reactor coolant loop of the AP1000.

“Early in product development, there will be several different designs under consideration, some radically different than the others,” Dye said. “It’s kind of like competing teams, and you have to see which one is going to win out from a cost and quality standpoint.”

Westinghouse is applying DFMA to the heat exchangers, tanks, vessels, steam generators, and other components of the AP1000, as well as other products across its Nuclear Automation, Nuclear Power Plants, Nuclear Fuel, and Nuclear Services divisions. The Automation line has been prime ground for DFMA introduction, due to its relative abundance of high-volume parts.

One recent success in that division involved the design of a pivoting keyboard tray assembly that allows an operator to interface with an instrumentation and control cabinet in a power plant. The keyboard and the tray on which it sits can be folded into the cabinet to prevent unintended entries and allow free motion around the area.

The assembly included fabricated metal components, a variety of fasteners, and electrical components—92 parts in all. Westinghouse applied DFA software to the design, hoping to reduce the part count, the complexity of the assembly, and its overall cost.

Top of the fuel assembly to be used in the AP1000.
Top of the fuel assembly to be used in the AP1000.

The analysis suggested that less than a third of the 92 parts were actually required to meet the product’s intended function, and the company’s designers took up the challenge of stripping away extraneous items. The design team combined many of the parts in the bends and folds of the sheet metal itself, eliminating the need for brackets and fasteners. Sixteen screws disappeared. A dozen washers and an equal number of PEM studs vanished. When the dust settled, 66 of the original 92 parts were gone.

Early successes like this have set a precedent, and engineers are beginning to trust the DFMA method to improve their designs. The cost savings they realize as they reduce complexity derive not only from the materials and labor used to directly make the parts, but also from the secondary effects of simplification on downstream overhead and operations, according to Dye.

Comparison of Important Nuclear Island Buildings.
Comparison of Important Nuclear Island Buildings.

“Within the nuclear industry, especially with safety-related parts, just having a part number is very expensive,” he explains. “You have to have commercial dedication instructions (CDI), inspection plans, and the part itself has to have its materials traced back to ensure that it is what it says it is.” Over the lifetime of the parts, the savings reach well into the millions of dollars.

Institutionalizing Should-Costing

Westinghouse is pleased with the early returns it has seen from its revitalized costing practices. For King and his team, value engineering, design for manufacturing, design for assembly, and should-costing have become essential components in their effort to integrate product design with sourcing and supply chain management. Both teams have come to rely on the costing data as a supplement to intuition.

“I think what it does is quantify what wasn’t quantified in the past,” Bartlett said, creating what he calls an “institutionalized method” to evaluate designs and create reliable costing data.

Each time a sourcing manager requests a cost analysis on a first-of-its-kind product, or seeks pricing guidance when a design is changed after a purchase order is signed, members of the SM&VE group know that they can provide a valuable service to their company, one that melds the highest priority of all—quality—with the age-old business driver of cost reduction.

King and the members of his team realize that they have yet to tap into the full power of the tools. As the program evolves, they plan to extend the use of DFMA to all stages of the product design lifecycle, eventually feeding the data into manufacturing simulations to identify resource constraints and suggest alternate production schedules for suppliers.

For the Supplier Manufacturing and Value Engineering group, it’s all part of the process of ensuring that the highest quality products are delivered to Westinghouse customers on time and within cost.