Cost Benchmarking Approach - Idaho National Laboratory
Transcript of Cost Benchmarking Approach - Idaho National Laboratory
3 October 2019
Cost Benchmarking Approach Nuclear Power Plant Decommissioning
Karl Sanderson
Head of Cross-Industry Insights
UK£124 Bn (UK£121 Bn last year)
~UK£3 Bn
per year
UK£ 5.7 Bn
income
2018-28
Industry Problem with Estimation P
rog
ram
me
/ P
roje
ct
Ma
turi
ty
Cost and Schedule Estimates
P10 P50 P80
Stage Gate
Inception
Short Listed Alternatives
Single Concept Selection
Final Investment Decision
End of Project (Actual Outcome)
Base
P10 P50 P80 Base
P10 P50 P80 Base
ATD
P10 P50 P80 Base
P10 P50 P80 Base Rebaseline
Original estimate out by: - up to a decade
- up to 10x the cost
What Good Looks Like P
rog
ram
me
/Pro
jec
t M
atu
rity
Cost and Schedule Estimates
P10 P50 P80
Stage Gate
Inception
Short Listed Alternatives
Single Concept Selection
FID
End of Project (Actual Outcome)
Base
P10 P50 P80 Base
P10 P50 P80 Base
ATD
P10 P50 P80 Base
Benchmarking at all Stages: - gauging opportunities & threats
- outcomes available to others
Global Nuclear Benchmarking Initiative
Organization for Economic Co-operation and Development (OECD)
Nuclear Energy Agency (NEA)
Working Party on Decommissioning and Dismantling (WPDD)
Decommissioning Cost Estimation Group (DCEG)
Benchmarking Task Group (BTG)
• UK Nuclear Decommissioning Authority coordinated the
Benchmarking Task Group during 2018
• Examined approaches from other industries, and past nuclear
industry alternatives
• European Task Group, Global Working Party
• NEA Report on benchmarking published May 2019
• Moving forward under new NEA Committee on Decommissioning
of Nuclear Installations and Legacy Management (CDLM) and
other related structures
Focus Areas for NEA Benchmarking Report
• Cost (and schedule)
• Nuclear Power Plants, but also temporary surface storage
and ultimate disposal facilities
• Projects, Programmes & Operations
• Learnings from other industries (e.g. Oil & Gas, Construction,
Shipbuilding)
• Barriers and their removal / enablers
• Recommending an approach;
o Database(s) and stewardship
o Interface with database(s)
o Commercial arrangements & legal compliance
o Additional services (e.g. forum and industry studies)
o Roadmap to implementation (years)
NDA Interest in Benchmarking
• Supporting a global initiative, ultimately providing access to
global data
• Eliminating ‘nuclear premium’
• Supporting Decision Makers in selecting the right strategies
and arranging funding
• Supporting Project Teams in optimizing execution plans
• Identifying the full scale of the potential liability (nuclear cost
provision) … then driving it down
• Safer management of the legacy (earlier and reliable
schedules)
• Complementary to other tools; Norms; Optimism Bias
Adjustment; Risk Management; Probabilistic Analysis
Benchmarking Journeys – Other Industries
The Starting Point NPP Decommissioning Now
Internal data
Little external data (e.g. construction only)
Little or no collaboration
No best practice model
Non-global, but growing global demand
Developing Capability
e.g. Construction Industry
Internal/External collection/sharing
Data capture and share
Government Policy requirements
Developing best practice
Global
Current Mature Practice
e.g. Oil and Gas industry
External sharing
Independent facilitation
Shared insight
Cost, Schedule and Project Performance/Maturity
Global
The Vision
NPP Decommissioning in the Future
External data capture & share
Independent verification/custodian
Strategic/Tactical Decisions supported
Support Service Menu
Global buy-in
Source: OECD NEA No.
7460 Cost Benchmarking for
Nuclear Power Plant
Decommissioning
Users of Benchmarking
• Set policy & regulatory framework
• Establish financing requirements
Authorities & Regulators
• Approve programs & projects
• Allocate funding
• Hold contingency
Executive Decision Makers
• Develop and execute decommissioning work Program & Project
Teams
• Engineer and execute specific scopes of work Supply Chain
Source: OECD NEA No. 7460 Cost Benchmarking for Nuclear Power Plant Decommissioning
Barriers to Benchmarking
The Over-arching Challenge for Barrier Removal
How those organizations and decision makers responsible for planned future
nuclear decommissioning can be engaged through benchmarking with those who have progressed similar decommissioning, and
thus have valuable cost data available
No incentive for industry engagement
The industry has commercial, cultural,
security risk concerns which prevent little more
than internal benchmarking, which adds insufficient value
No Investment in Organisation and
Facilitation
A dependency to collect and share cost data and, alignment of
approaches which use it, to enabling industry-wide added value to be
realised
Absence of Actual Cost Data
The lack of collected and shared actual cost
data with definitions which satisfy
boundary conditions sufficient to allow
reliance (with defined risk) on it
Obstacles to Normalisation
The inability to normalise mark (target)
to benchmark data because it lacks context and scope sufficient to
adjust it to align with the subject being estimated
Low Benchmarking Maturity
Benchmarking has low maturity or no track-
record of adding value in NPP
decommissioning, discouraging stakeholder engagement
Competition Law
The requirement for cooperation agreements
aligned to applicable competition law
Source: OECD NEA No. 7460 Cost
Benchmarking for Nuclear Power Plant
Decommissioning
Enablers of Benchmarking
Enablers
Collective and collaborative
industry buy-in to develop and
mature benchmarking An agreed and
lawful industry Strategy and Plan, to develop maturity
& prioritised to future demand for
project/activity type
Database for data collection
and sharing barriers
Collective Industry
Investment
Actual Cost Data contextualised with knowledge and confidence so that it can be
normalised
Independent organisation and
facilitation representing the
industry
Source: OECD NEA No. 7460 Cost
Benchmarking for Nuclear Power
Plant Decommissioning
NEA Recommendation & Implementation
Option F: Rich Functionality with Facilitated Member Group Collection/Sharing Arrangement + normalisation
Managed
collection,
sharing and
benchmark
service
Supports Removal of the Headline Industry Barriers to Benchmarking? Satisfies
Added Value
being
sought?
Relative
Order of cost
Ratin
g
Absence of Actual
Cost data
Obstacles
to Normali-
sation
Low Maturity No incentive for
Industry
engagement
No
investment
in
Organisatio
n/
facilitation
G G G G G G High A
Commentary:
Potential benefit in aligned stakeholder groups. Stakeholders trust in 3rd party data share and normalisation.
Selection of International Organizing
Entity
Mobilization [legal agreements and competition law assessment]
Implementation [database construction
and population]
Steady State &
Evaluation [delivery of
benchmarking service]
Source: OECD NEA No. 7460 Cost Benchmarking for Nuclear
Power Plant Decommissioning