Cost breakdown of a nuclear build
The ETI’s report demonstrates that European and North American plants incur significantly higher costs on impact the costs of supply chain, labour, project governance, project development, construction execution, political and regulatory context, equipment and materials.
Should improvements be made to these 8 key factors by nuclear build projects, the same report takes the view that there are realistic cost savings of at least 35% to be made. So there is clearly an incentive for nuclear builders to take notice of and execute such improvements, but what has prevented it from happening already?
With the well-publicised challenges of the Hinkley Point C project to draw upon in recent years, the UK government has prioritised cost reductions and learnings from this to be incorporated into future projects that are being touted to fill out its ambitious clean energy plan.
From the cost perspective, the factors the ETI lays out as being most important are also telling from a process perspective. These included the need to lay out factual and/or measurable indicators, in addition to establishing more clearly defined processes that are critical to plant completion, or ‘realisation’.
It should also be noted that the report states that while ‘contextual’ factors such as more experience in project delivery, less expensive and more productive labour, and more relaxed regulatory conditions could benefit developers in China, South Korea and Japan, “none of them would prevent an effective cost reduction programme from being implemented in new build markets such as the UK”. In other words, the cost and delivery differences between European and North American projects and those in other continents cannot be attributed to contextual factors alone.
So how could European nuclear build projects become more efficient from a process and cost point of view?
How enterprise architecture can help reduce nuclear build costs
With the complexity of the projects and the number of contractors, sub-contractors, staff, management layers, regulatory and political considerations to name just a few, a well crafted oversight strategy is clearly required.
Get a single source of truth to well-informed decisions and drive the projects
In Enterprise Architecture (EA) terms, this complex landscape could benefit from the ability to generate appropriate information sets for different stakeholders for the purpose of clear ongoing management reporting, mid-management oversight, and the monitoring of performance and timescales of the project’s many moving parts.
This need to manage and monitor such a range of risks, variables and different factions of a project is also integral to the role that enterprise architecture (EA) can play in a successful large-scale project delivery – the ability to provide a primary through-lifecycle reference and generate consistent views from a single source of truth could be the difference maker programmes of such scale.
From a cost-reduction perspective, the ETI’s report also emphasises that “fleet deployment by itself does not necessarily guarantee cost reduction unless developers implement a well-designed and intentional programme that incorporates multiple cost reduction opportunities by all principal actors”. With this, EA’s capability to build coherent transition plans, evaluate and prioritise specific projects, and foresee the impact of decisions in a complex environment could be invaluable to the nuclear sector’s ability to be agile and overcome in-project challenges.
Enhance collaboration and alignment
Yet as we have briefly established, it is precisely how to align and manage all these principle actors that is the main problem with delivering projects on this scale, and the recommendations underline this complexity. With the report identifying a total of 35 cost reduction opportunities for UK nuclear builds including a need to follow contracting best practices, the need to innovate new methods for developing alignment with labour around nuclear projects, and for government support to be conditional “based on systematic application of best practices and cost reduction measures”, the need for better and more effective alignment across the different silos of a project becomes all the more apparent. With the analysis and outputs generated from effective enterprise architecture tooling, this collaboration and alignment would be made all the more easier.
If you would like to explore the concepts introduced in this article in more detail you can listen to a presentation given at the recent Nuclear Decommissioning 2018 conference in Manchester, in which MEGA’s Simon Bobbitt outlined ‘modelling an enterprise, and what modelling gives us’. We’d be interested to know your experiences with modelling similar scale projects, and whether you agree that a greater focus on business modelling would generate positive cost outcomes for European and North American nuclear builds.
References
https://analysis.nuclearenergyinsider.com/nuclear-build-costs-could-fall-over-35-using-global-learni...
