Case Review: Risk Management Improves Nuclear New-Build Cost and Schedule Performance
The Problem:
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The average realized construction cost for US nuclear power plants has historically been three times the estimated cost (see figure). Significant cost overruns have continued to occur in more recent major nuclear projects; both Olkiluto 3 and Flamanville 3 projects have followed this trend.
In 2008, a US NSSS firm signed EPC contracts for three power plants at a value of over $30 billion. The firm recognized that it had significant cost and schedule overrun risk exposure based on these historical trends and decided to investigate the causes and take compensatory measures.
Figure R1: Showing nuclear project estimated to realized cost
The Approach:
Dr. Sola Talabi was hired to assist in establishing an advanced risk management program. The program's charter included identification of causes of cost and schedule overruns, documentation of the findings in a user-friendly database and development of a plan of action to prevent issues from recurring. As a result of this work, the NSSS firm has significantly reduced cost and schedule overruns on the three projects as compared to historical performance. Although the projects are not completed, all major procurements have been made and no significant issues are anticipated.
Figure R2: Showing nuclear project performance with and without advanced risk management