ML20032D950
| ML20032D950 | |
| Person / Time | |
|---|---|
| Site: | Black Fox |
| Issue date: | 11/16/1981 |
| From: | Brown K PUBLIC SERVICE CO. OF OKLAHOMA |
| To: | |
| Shared Package | |
| ML20032D948 | List: |
| References | |
| NUDOCS 8111180546 | |
| Download: ML20032D950 (11) | |
Text
.
Og,hETED DIRECT TESTIMOtE &
pC I,)
1 IGIC R. BIUN 2
'81 NOV 16 P3d4 On BasIr w I
't ~ EECRETARY PUBLIC SEENICE CmPANY OF OKINDR
..i n s'.RVICE 4
WiCH 5
Q.
Please state your name, business address, and current position.
6 A.
My name is Kent R. Bruen. b?y business addrass is 11095 'Ibrreyana 7
lbad, San Diego, California 92121.
I am erployed by Managment 8
Analysis Ccupany (bmC), at that same address, as a Vice President.
9 Q.
hhat is the purpose of your testinony in this Cause?
10 A.
'Ite purpose of my testinony is to provide information on the 11 nethodologies utilized and results of an evaluation and update of 12 existing cost and schedule for the Blac!: Fox Station Nuclear 13 Electric Generating Facility. On August 28, 1981, Emc was retained (0 ~3 14 to prepare new cost and schedule data for the co-owners re-evaluation 15 of the project.
I have served as Program bbnager for that effort, 16 and it is in that capacity that I am presenting testinony in this 17 Cause.
It is my understanding that information from our study will 18 be utilized by Mr. W. R. Stratton, Senior Vice President, PSO, in 19 his revised testinony which will be presented later in this Cat.se.
20 Q.
Please summarize your relevant professional background and experi-l 21 ence.
22 A.
I have over fourteen years experience in the nuclear industry.
[
l 23
'Ihis experience includes management of a multiple-dise W e cen-24 sulting team suoporting nuclear projects, director of pr.' _n 25 planning and control, consulting on ntclear plant cost and schedule V-7 l
l 8111180546 811113
, PDR ADOCK 05000556 1 of 9 I
pop l
1 risks, project mnager for the design of radioactive waste nunage-2 tunt facilities, design of central pchur stations, and systes 3
engineering on various nuclear power plant projects. Ddubit IGB-1 4
nere fully delineates ny background and experience.
5 Q.
Please describe Management Analysis Ccepany.
6 A.
MAC was founded in 1975 to provide consulting services to the 7
utility industry.
Since that time we have served more t;un 8
seventy-five clients. Our primary business areas include:
9
- Project Management Ser rices 10
- Managerunt Infomation and Project Control Systems 11
- Strategic Planidng and Decision Analysis 12
- Cornorate Model Development 13
- Quality Assurance and Quality Control k
14
- Field Services 15
- Organization Development 16 MAC currently enploys in excess of one hundred forty full-time l
l 17 professionals and salaried personnel in locations throughout the 18 United States and at our headqturters in San Diegc, California.
19 Q.
h t stake does MAC have in the Black Fox Station Project?
20 A.
MAC has no stake in the outccme of decisions regarding the future 21 of the Black Fox Station Project. Our only imolvement in the 22 project prior to this evaluation was the sttriy of its cost and 23 schedule in late 1978 (late filed E:dlibit 220 in this Cause).
24 Q.
Please describe the task assigned you by the co-<hners of the 25 Black Fox Station.
a A
l i
i 1
2 of 9 l
(
1 A.
Due to the August 27, 1981, Nucl r Regulatory Comission's action 2
on regulations pertaining to pending Construction Permit accli-3 cations, the co-owners of Black Fox cotanissioned MAC to perform 4
a project-specific evaluation of the potential cost and schedule 5
exposure associated with the Black Fox nuclear project. 'Ihe results 6
of our evaluation, including the informtion presented today, will 7
be provided to the co-owners as input for their decision-mking 8
process regarding the future of the Black Fox Project.
9 Q.
Has MAC completed its evaluation of the Black Fox Project?
10 A.
No. MAC has, however, cmpletcd certain cost and schedule infor-11 mation for use by the co-owners. We worked to rigid time constraints 12 in order to produce the informtion which I will present in this 13 prceeeding. MAC's overall effort has not been conpleted. Tne
,+
l 1<
scope of our effort has been (end is) s3 ject to revision as the 15 co-owners review the data and identify additional informtion 16 required in their decision-mking process, which involves specific 17 business-related studies by each owner.
18 0
Please describe the mthodologies utilized in performing the ccst 19 and schedule evaluation for the Black Fox Station.
20 A.
MC has evaluated the Black Fox Station cost and schedule e>:posure 21 using probabilistic and comparative analysis techniques. 'Ihese 22 techniques are ccr:ronly utilized by MAC and others in the analysis 23 of cmplex projects subject to extended suchedules and considerable 24 uncertainty. This differs from the mthods used to perform 25 engineering cost studies. On the other hand, it is not a naked v
3 of 9
(
1 statistical approach since it uses project specific data.
2 Probabilistic techniques are based on the fact that the cost 3
and sdedule eccponents of a project are affected by murf factors 4
among which are regulatory envirorment, design status and labor 5
efficiency. 'Ihese factors result in uncertainty in the prediction 6
of the values of these cost and achedule cc:rconents to ranges of 7
uncertainty. 'Ihe uncertainties of the individual w.gnents 8
ccxrbine to produce overall cost and schedule uncertainty. NC 9
evaluated the ranges of uncertainty for the EFS ccqx:rnents and 10 developed i::plerrenting logic for use with a prolabilistic cx:cruter 11 prwram in the analysis of Black Fox cost and schedule.
12 13 Cb::parative techniques are based upon the use of information on 14 past industry perfor:rance and projections of future trends to 15 evaluate a specific project. Data on the project is cenpared with 16 industry data to assist in establishing ranges of uncertainties 17 for the major components of cost and schedule.
18 19 In performing this evaluation, we first identified the major 20 m.pnents of the Black Fox Station cost and schedule.
'Ihe 21 major cmponents considered were:
22
- Licensing Duration and Cbsts 23
- Project Remobilization Duration and Costs 24
- Material and rqaiptrant Costs 25
- Material Quantities L./
4 of 9
e
(
1
- Unit Rates for buterial Installation 2
- Construction Cost and Duration 3
- Architect Engineer 4
- Project tunagement Costs 5
- Plant Start-up Duration and Costs 6
Values for each of the components were established on the basis 7
of:
8
- Project-specific Input 9
- Evaluation of Industry Experience and Trends 10 WC evaluated the inout data and established the distribution of 11 values for use in analyzing project cost and schedule.
12 13 Project schedule analysis included develcpment of schedule elements
/
(
14 for the overall project.
Each major elemnt was evaluated for 15 overall duration and duration uncertainty. The elemnts were then 16 conbined to develop overall project duration and duration uncer-17 tainty.
18 19 Costs were evaluated in a manner similar to that applied to schedule 20 analysis. Major cost ccstponents were evaluated for uncertainty and l
21 their costs were integrated with the project schedule, escalation 22 was applied, and cash ficws for escalated costs were developed.
23 l
l 24 bEC is confident that with the techniques utilized, the results i
25 presented provide a good basis for use in evaluating decisions l
l
'\\. -
i 5 of 9
l'
(
I regarding future actions to be taken on the Black Fox Station.
2 Q.
Could you st=narine briefly the results of your cost and schedule 3
analysis for the Black Fox Station.
4 A.
Our assiennent was to produce "::est prubable" values of the cost 5
and schedule for Black Fox Station. In the process of evaluation, 6
we also developed other cases above and below the nest probable 7
values. In terns of our probabilistic analysis, the "nost probable" 8
values represent a case which has a 50-50 chance of being attained.
9 In other words, there is a 50 percent probability the value will 10 be exceeded and a 50 percent probability that the cost will be less 11 than that value.
12 13 In our analysis, we asstrned that the escalation rate through 14 ccupletion of the project would be 9 5 percent. The result pre-15 sented is a cash figure, without AFUDC. Mr. Stratton's testincny 16 will utilize an AFUDC rate in the corporate rodel as is 17 apprcpriate.
18 19 Our rest probable value for the cost of Black Fox Station is 20 S4.81 billion (cash) with on-1s.e dates of February,1993 and 21 Septenber, 1995. Exhibit IGB-2 provides the estimted cash 22 requirenents for the construction of the facility.
23 Q.
Mut is your cpinica regarding the ability to accurately estinnte 24 nuclear plant costs for a project in the status of the Black Fox 25 Station?
l.;
6 of 9
r.
1 A.
'Ihe current status of the Black Ebx Station rakes the estimating
(
2 of c mpleted project costs very difficult. Preparation of estirates 3
requires basic inforration upon which to base the estimate. The 4
nore corplete the infomation, the nere confident you can be in the 5
results of the estimate. Estirates evolve as the design develops, 6
construction permits are received, and as experience with actual 7
construction en the plant site is obtained.
8 9
Estirates are precisely what the label implies. They are an 10 infomed projection of future costs, based on current information.
11 Initial estimates developed in the planning stage of a project 12 Provide an " order of ragnitude" indication of projected final 13 costs. As project planning progresses and initial engineering
~
r 14 studies are empleted, nore accurate estirates are prepared.
15
" Definitive estirntes" and " project forecasts" follow as engineer-16 ing progresses, equipmnt purchase contrac'a are negotiated and 17 constrtction of major structures and equiprent is at least ten l
18
-percent ccr:plete.
l 19 l
l 20 In nujor projects where overall duration reaches and exceeds ten l
l 21 years, two additional elenents of uncertainty impact the ability l
l 22 to estimate project costs. These are escalation and accrued AFUDC.
23 As project duration is extended, the overall costs at completion 24 increase and so does their uncertainty due to these elments. We l
25 have evaluated the effects of escalation while Mr. Stratton will l
(;
7 of 9
r C. ')
I cover AFUCC.
2 3
'Ihe cumlative effect of these uncertainties makes definitive 4
single-value projections of project very difficult to make for 5
projects in the status of the Black Fox Station.
6 Q.
What were the results of your eva' cations of the owners' mst 7
exposure assuming they terminate the Black Fox Station project?
8 A.
As a part of our evaluation of the cost and schedule for the 9
Black Fox Station, we also estimated the owners' cost exposure.
10
'Ihat is to say, we estimated the costa as of January,1982, 1I and then evaluated a range of possible termination costs. We also 12 estimated the salvage credits that could be utilized to reduce the 13 net to be recovered.
In a similar fashion, ranges of the Black 14 Fox investment that are directly convertible to a coal-fired project 15 on the Black Fox Station site have been estimated.
16 17
'Ihe total of owners' cost epsure is a total of expenditures 18 to January,1982 including capitalized financing costs plus 19 contract terminations less salvage and conversion values. Our 20 total project analysis was confined to the cash construction 21 investment, each co-owner reserving financial analysis of the 22 conversion scenario to itself. Consequently, the figures do 23 not include capitalized financing costs.
24 25 We found that the owners' cash exposure ranges from $307 million s.,
8 of 9
b.~-
1 to $356 million with conversion to coal. 'Ihis assumes totd 2
project experditures of acproximately S321 million by January 3
of 1982, with contract termination costs ranging fnxn $51.9 million 4
to $88.3 million. cst recovery through salvage and conversion 5
ranges from S52.9 million to S65.6 rrillion.
6 Q.
Does this con:lM e your direct testimony?
7 A.
Yes, it does.
8 9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9 of 9
KENT R. BROWN EXHIBIT KRB-1 PROFESSIONAL OUALIFICATIONS tir. Brown has over 14 years experience including management of multi-disc 1pline con-sulting team supporting nuclear projects, Director of Project Planning and Control, consulting on nuclear plant cost and schedule risk, Project Manager for the design of radioactive waste management facilities, design of central pov:er stationr,
tne management of architect-engineer design contracts, systems engineering and mecnanical engineering on various nuclear power plant projects.
EXPERIENCE Vice-P resident Management of mul ti-discipline consul ting team responsible for nuclear project startuo management, project control, project policy and procedure develocment and general managemcat consul ting.
Responsible for management diagnostic of nuclear construction project including impl ementation of final recommendations.
Assisted utility personnel in develocment of utility home office organization staffing plans for long tem project support.
P roject Management - Project Manager for conceptual design of the above-ground f acli t tles ror tne Waste Isolation Pilot Plant.
Responsible for design effort including development of concepts, proj ect schedul es, budgets and manpower scheduling and budgeting.
Project leader on the installation of integrated cost and schedule control systems at several utilities.
Probabilistic Cost & Schedule Risk Analysis - Proj ect leader on probacili stic analyses of cost anc scnecuie risk for two nuclear power stations.
Each of tne analyses resul ted in significant redirection of the project efforts, including revisions to cost and schedule targets.
Manager of Architect-Engineer Studies for the gas-cooled reactor (HTGR) plant.
5tuales inciuceo cesign anc optimization ( technical and cost) of HVAC systems, ultimate heat sinks, alternate fuel handling and storage concepts, turbine plant alternatives and radioactive waste systems.
Responsible for scooing, budgeting, contract development and management and technical iriput.
Cost Analysi s/ Design Ootimization - responsible fer comparative cost analyses oetween water-cooiec anc gas-cooled reactors.
Responsible for liaison between A/E and reactor vendor during 1500 MW(e) HTGR optimization program.
Engineering - Department Manager in charge of engineer involved in front-end engineering of technical proposals for various HT'iR plant lesigns.
I System engineer responsible for design of nuclear trocess systems for the reference 1100 MW(e) HTGR and for the Fort St. Vrain HTGR.
Mecnanical/ Nuclear engineer responsible for PWR and BWR 'ower stations syste:r designs incl uding radioactive waste disposal
- systems, plant layout, design criteria, support systems and seismic analysi, review.
EMPLOYERS Mr. Brown has been employed by Holmes & Narver, Inc., General Atomic Company and l
Stone & Webster Engineering Corp.
EDUCATION l
B.S., Engineering (Mechanical), California State University at Long Beach.
l Post Graduate Studies at Northeastern Universi ty, University of Cali fornia at l
San Diego and San Diego State University.
AFFILIATIONS Member, American Nuclear Society Registered Professienal Engineer, Nuclear, California l
l 1092/E/1 r
i
The Corporation Commission of the State of Oklahoma cause No. 27068 EXHIBIT No. KRB-2 (PS0)
BLACK FOX STATION UNITS CASH FLOW
($ x 1,000's)
MOST PROBABLE CASE COMMERCIAL OPERATION IN 1993 and 1995 ESCALATION AT 9.5%/ YEAR, 1981.5 BASE 1150 MWe 1150 MWe Station Year Unit 1 Unit 2 Total S
3,038 1981 3,038 S
1982 6,500 6,500 41,589 1983 41,589 1984 151,740 24,380 176,120 1985 237,804 77,955 315,759 1986 261,505 85,720 347,225 1987 287,564 205,980 493,544 1988 316,222 249,936 566,158 1989 266,393 274,840 541,233 1990 232,016 302,230 534,246 1991 255,140 296,655 551,795 1992 174,187 213,890 388,077 1993 235,205 235,205 1994 243,875 243,875 1995 109,034 109,034 Subtotal
$2,233,698
$2,319,700
$4,553,398 Spent to Date S
212,200 S
44,000 S
256,200 Total
$2,445,898
$2,363,700
$4,809,598