NUREG/CR-4025, Preliminary Review of Cost Analysis Contained in NUREG/CR-4025 Concerning Proposed Design Mods to Gessar

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Preliminary Review of Cost Analysis Contained in NUREG/CR-4025 Concerning Proposed Design Mods to Gessar
ML20136D345
Person / Time
Issue date: 01/31/1985
From:
NRC OFFICE OF RESOURCE MANAGEMENT (ORM)
To:
Shared Package
ML20136C160 List:
References
FOIA-85-361, RTR-NUREG-CR-4025 NUDOCS 8511210286
Download: ML20136D345 (3)
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__m 3-J PRELIMINARY REVIEW OF COST ANALYSIS CONTAIN NUREG/CR-4025 CONCERNING PROPOSED DESIGN TO GESSAR 1

JANUARY 1985 Prepared by:

Cost Analysis Group Office of Resource Management U.S. Nuclear Regulatory .

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PRELIMINARY REVIEW OF COST ANALYSIS CONTAINED IN NUREG/CR-4025 CONCERNING PROPOSED DESIGN MODIFICATIONS TO GESSAR The Cost Analysis Group (CAG) has performed a limited review of the cost analysis contained in NUREG/CR-4025 " Detailed Conceptual Design and Feasibility Study of Existing, New or Improved Mitigation Systems" relative to the GESSAR design modifications to mitigate against containment failure.

Our conclusion is that, although the estimates are potentially flawed in a number of ways, they do reflect a level of detail and analysis that should pennit their use as rough estimates of the costs involved. This conclusion is predicated on the recognition, as the authors themselves i'ndicate, that the cost analysis is a " preliminary assessment" and " scoping exercise." Thus, as long as the NRC employs these estimates in that context, we see no difficulty in acceptirig these estimates as reasonable. This conclusion is reinforced, in our minds, by(the the equation fact that i.e., point huge uncertainties estimates of 11 and 15,900exist manon rem the benefit avertedside are of assumed). Since costs must ultimately be contrasted with the benefits to produce a decision making measure, it appears that whether the costs are in the $6 to $10 million range, as this report envisions, or for illustrative purposes, an order of magnitude greater, should have little bearing on the final cost benefit balance. In our view, far more value could be derived by closer examination of the benefits than by fine tuning the cost side of the equation.

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Following are our specific observations on the cost analysis. It is important to stress that in many instances the draft report does not identify key assumptions or the more detailed calculations leading to actual quantification.

Thus, many of these comments are somewhat speculative. As a general comment, we would recomend that all underlying assumptions and cost estimating steps be explicitly presented and developed in the report itself.

Factors Contributing to a Potential Underestimation of Costs

1. The cost analysis appears to be limited to estimating the costs that would be incurred to install mitigating design features at the time a GESSAR unit is actually under construction. However, if the NRC did impose these new requirements on the GESSAR design, it would appear reasonable that the applicant (GE) would incur substantial upfront costs in design, engineering, and licensing activities to include these modifications into its standard design. These overhead costs should also be factored into the cost analysis. Although, we are not currently in a position to estimate these upfront overhead costs, it would appear reasonable to assume that they would be on the order of millions of dollars. More importantly, these are near term expenditures and thus would loom most important in a present worth context.
2. It would seem reasonable to assume that many of the modificati ns under consideration would require periodic maintenance, inspection, quality control checks, and interim replacement during the normal operating life of the reactor. It does not appear that these recurring expenses have been factored into the overall cost estimates.

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3. No allowance appears to have been made for contractors overhead and fee, liability insurance, and cost factors unique to nuclear construction.
4. There is no explicit indication whether the proposed equipment and facilities must meet seismic or safety grade requirements which could add

'significantly to material and installation costs.

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- 5. .No allowance appears to have been made for construction materia.ls and i equipment necessary to install the modifications (e.g. tools, cranes, etc.) ,

j 6. The data source for non-vendor quoted materials and equipment is not i provided. Similarly, the direct labor component for installation of all j materials and equipment is unknown. These references should be explicitly identified. An excellent data source developed specifically for new nuclear reactor construction does exist and should be consulted to check on the reasonableness of estimates-developed in this study. It is the Energy Economic Data Base maintained by United Engineers and 3

l Constructors under contract to the Department of Energy.

j. 7. Actual time to perform specific tasks is not evident as no discussion or a underlying assumptions on productivity factors is discussed.

.I Productivity factors at nuclear construction sites can be extremely low l if modifications involve safety equipment with high QA requirements, congested work space, etc.

8. Nuclear specific cost factors are most critical for modifications to operating plants or plants already under construction where radiation, down-time, and re-work considerations could add dramatically to cost estimates. In this regard, it is worth noting that in the introduction to chapter 4 the authors indicate that one Mark III containment is already in operation, and eleven others are under construction. . Although the NUREG/CR-4025 cost analysis is limited to new plants, it is unclear why a decision to alter the GESSAR design would not effect these units as well. If there is a high likelihood that these units might also be impacted, than the costs could be significantly understated.

Factors Contributing to a potential Overestimation of Costs

1. The report includes a 25". contingency allowance for all cost estimates.
2. The authors frequently adopt conservative (higher cost) design .

assumptions in estimating the costs to be brought forward to the value

' impact analysis. For example, with respect to containment heat removal (poolcooling)...

The present system is redundant and the capacity of each half might be increased with one unit driven by its own dedicated diesel to meet the power-out requirements... For value-impact analysis however, a completely new and separate heat removal system with dual dedicated diesel power... is used. (Page 4 - 25) 9

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