Insight # 53 : Getting to the Future

What Nuclear Decommissioning Can Teach About High-Risk PPM

by Darren Glynn & Peter Bachsleitner & Dan Skinner

The UK nuclear sector faces significant challenges, especially when tackling high risk nuclear decommissioning projects. Programme and project management (PPM) can mitigate potential problems and help ensure projects are delivered on time and on budget.

This article shares insight from nuclear industry experts that is applicable to any complex project or programme.

Since its inception in 1994, Pcubed has been supporting its nuclear industry clients to overcome the complex challenges that are inherent in the nuclear decommissioning sector. Recently, the Pcubed Energy team has been speaking with industry leaders to gather valuable insight at various Decommissioning and New Build forums, conferences, and issues groups. In this first of two articles, the team analyses the key risks facing the Nuclear Decommissioning sector in the UK and examines how programme and project management (PPM) can be used effectively to manage these risks. In part two, we will analyse and assess how PPM can be utilised to ensure success in Nuclear New Build.

United Kingdom's nuclear waste legacy has provided challenges for successive governments and generations, with timescales and costs increasing year on year. At the moment, the UK government spends approximately £3 billion per annum on nuclear decommissioning across 19 sites, encompassing:

Nuclear sites and facilities operated by the UK Atomic Energy Authority (UKAEA) and the former British Nuclear Fuels plc. (BNFL). This includes all the wastes, materials, and spent fuels produced between the 1940s and 1960s; and

The Magnox fleet of nuclear power stations designed and built in the 1950s, '60s, and '70s and operated on the government's behalf by BNFL. This includes all plant and facilities at Sellafield used for the reprocessing of Magnox fuel; and all associated wastes and materials.

The current civil nuclear legacy sites are identified in Figure 1.

Figure 1: Current civil nuclear legacy sites
Source: Nuclear Decommissioning Authority ›

What Nuclear Decommissioning Is

Nuclear decommissioning covers a wide range of activities, all related to the decontamination and removal of buildings and other structures as well as clean-up of contaminated land. Those activities include the processes of dismantling, decontaminating, and removing nuclear facilities at the end of their operational lives. The facilities include nuclear power stations, contaminated boilers, waste storage or reprocessing plants, and military sites.

Material is decontaminated, broken up and placed into storage containers (for example, 200l drums, 2/3m3 boxes, or various ISO containers). The waste is then transported via road, rail, or ship to a treatment plant. Here the waste is treated to ensure that there is no further risk of decontamination. For example, waste can be treated by encapsulating the material in concrete or by heating and adding chemicals to make the waste safe for transport and long-term storage. The waste is then placed in interim stores where it awaits final disposal at a proposed geological disposal facility (GDF). The full process can be seen in Figure 2.

Figure 2: The nuclear decommissioning value chain

United Kingdom's Decommissioning Delivery Model

Figure 3 shows an overview of the way nuclear decommissioning is managed and governed in the United Kingdom.

Figure 3: The UK decommissioning delivery model

The Department of Energy & Climate Change (DECC) sponsors the Nuclear Decommissioning Authority (NDA) to manage the UK's civil nuclear legacy. A key driver for DECC is the reduction of the overall nuclear liabilities estimate. The Shareholder Executive performs a governance function on behalf of DECC.

The NDA sets the decommissioning strategy and holds the contracts with the site license companies (SLCs). The SLCs hold the nuclear license for individual sites and have the legal responsibility for nuclear safety, security, and environmental protection. The Office for Nuclear Regulation, a division of the Health and Safety Executive, is responsible for all nuclear sector regulation; the Environment Agency is responsible for setting environmental regulation. Finally, parent body organisations (PBO) own the shares of the site license company for the period set out in the contract. PBOs can challenge and influence and bring expertise and resources, but they have no direct control over operations.

Challenges Facing the Nuclear Decommissioning Industry

To understand the significant challenges facing the UK nuclear decommissioning industry, Pcubed engaged leading industry experts in the nuclear decommissioning industry through an online survey to share their thoughts on three areas:

  • Key risks facing the sector;
  • The importance of programme and project management (PPM) and its maturity in the industry; and
  • Areas that require immediate support.

Respondents from the industry rated cost and schedule overruns as the highest risk facing the UK nuclear decommissioning industry. While the industry is mature, it faces a number of difficult challenges, such as a lack of information on the legacy facilities, which have contributed to cost and schedule overruns.

Figure 4: Challenges facing the UK nuclear decommissioning industry

As demonstrated numerous times previously, lifetime baselines have been revised, leading to cost and schedule increases. For example, a recent report by the National Audit Office (NAO), titled "Managing Risk at Sellafield" (PDF), highlighted the fact that total lifetime costs increased from £46 billion in 2009 to £67.5 billion. On top of that, 12 of the 14 major projects were behind schedule. Although the revised baseline was commended as being significantly better than the previous iteration, the NAO highlighted several areas of continued concern:

  • Insufficient information relating to programme risks;
  • Potential issues relating to the quantification of the risk for each project;
  • Project reporting and monitoring; and
  • The practice of construction beginning on capital projects before completion of design and before design risks were fully understood.

Respondents to our survey shared these concerns and highlighted the following areas where they felt there was a need for a high level of support:

  • Using lessons learned to improve project management (programme risks);
  • Risk management and issue resolution (quantification of project risk);
  • Information and communication management (project reporting and monitoring);
  • Programme brief and business case (construction beginning before design completion); and
  • Project framework development (all of the above).

Figure 5: Project and programme management activities requiring increased support

These findings are supported by the view that the majority of respondents to the survey (78%) assessed the project and programme management maturity in the UK nuclear decommissioning industry as rather low. Coupled with the fact that the overwhelming majority of respondents in the sector view PPM as either important or very important, Pcubed has deduced that there is a significant PPM skills and technology gap within the sector that needs to be addressed.

Figure 6: PPM maturity in the nuclear decommissioning industry and the perception of the importance of PPM

Addressing Risks Head On through PPM

By applying best practice PPM knowledge, experience, and tools culled from various sectors, organizations can manage and mitigate many of the challenges outlined above. By effectively controlling, governing, and assuring projects - especially those of a complex nature - these same organizations can avoid issues of cost and schedule overruns.

Take a fundamental area of concern: insufficient information relating to programme risks and potential issues relating to quantification of the risk for each project. The quantification and management of risk can be problematic. The effect, probability, and cost of a risk to a project, especially in the complex environment of the nuclear sector, can be difficult to quantify, especially the probability of the risk occurring.

However, the real difficulty lies in linking project risks together in order to assess the impact one set of risks could have over other projects - and in essence over a whole programme. Pcubed recommends the use of the quantitative risk assessment (QRA) methodology, which ensures that risk is identified and managed at both a project and programme level.

When using the QRA method, risks are identified and analysed at a project level (for example, design risks, abortive works, rework, supplier risk, etc.) as well as at a programme level (such as grouping of project risks, schedule delay and acceleration risk, stakeholder acceptance risk, and contract risk). Risk is then quantified in terms of impact on cost and by the percentage likelihood of occurring. Then when all risks are identified and quantified, the overall risk to the programme is clear and should be held in a central risk "pot." If projects (or the programme) require the risk figure attributed, they must make a submission to the risk board to be able to acquire the money to fund the work of mitigation.

Risk is managed centrally on an on-going basis where each risk is given a responsible owner who manages the mitigation actions and ensures that the risk is properly allocated.

Pcubed Advises:
Quantify the risk, set up contingency, give back money if the risk does not occur; this is a better approach than a finger-in-the-air 15% contingency.

In the area of project communications and monitoring, having fit-for-purpose reporting frameworks, processes, and systems is crucial to the success of any programme and project. The reporting schedule must be laid in a logical fashion, allowing reporting to feed into the programme from the bottom up in a cyclical fashion. For example, project teams must feed information into the project manager before the project manager reports on his or her project to the programme board. Reporting should be supported by processes in which everyone is aware of their responsibilities and knows what and when they need to report.

User-friendly reporting templates should be provided to gather the information required. The overall reporting process should be supported by a system that allows for quick and easy access, has a straightforward interface, captures all the necessary information, and avoids duplication. Most importantly, the people who use the system must be fully trained on how and why to use it, be clear on what data to provide, and should be managed throughout the process to ensure timely and quality data is submitted.

Pcubed Advises:
Good data supports effective execution and allows for correct decisions to be made.

Then there's the continual problem cited by the NAO of beginning construction on capital projects before completion of design and before the design risks have been fully understood. Key to successful major programme execution is a robust and rigorous checkpoint system, with the necessary controls to monitor the progress of projects, and the people with the right skills to be able to assure project data at each stage. It is essential that the necessary effort is put into the planning and design phase of projects. In Pcubed's experience, providing resource and funding for early stage analysis, scoping, and planning is key to ensure that projects are fully thought out, and changes in direction, fixes, etc. are minimised.

Having a rigorous business case checkpoint stage is key to ensuring that projects can be delivered on time, on cost, and with all necessary stakeholders on board. The business case team should include those with the right skills to write a business case, sourcing expertise from the business to support the assurance process as required. Having a fit-for-purpose business case process will ensure:

  • That the business case aligns to strategic priorities;
  • That all options are fully explored and considered, and the best value-for-money solution is chosen and fully designed and planned;
  • All procurement options have been considered (e.g. make vs. buy);
  • The financial case is fully explored and the total cost of the project is known and robustly challenged; and
  • The management team, the project plan, and governance process and procedures are agreed, and risks are captured and mitigated.

Pcubed Advises:
Investment in robust early definition prevents downstream failure. Pay now or pay later.

Nuclear decommissioning programmes and projects are inherently complex and face many diverse challenges. Recent issues have related to overspend and shifting project timelines and around ensuring that the project lifecycle is managed consistently and to best practice standards. The use of best practice PPM can help manage and mitigate many of these challenges, ensuring that nuclear decommissioning projects are delivered on time and to cost, that the reputation of the industry is not damaged, and that UK plc. is getting best value for money.

For further information on this article and Pcubed please contact Carl Dalby, Head of Business Development, at carl.dalby@pcubed.com.