ML20080S641
| ML20080S641 | |
| Person / Time | |
|---|---|
| Site: | Grand Gulf, Waterford, 05000000 |
| Issue date: | 01/31/1984 |
| From: | AFFILIATION NOT ASSIGNED, DECISION MANAGEMENT CO., INC. |
| To: | |
| Shared Package | |
| ML20080S627 | List: |
| References | |
| NUDOCS 8402290205 | |
| Download: ML20080S641 (800) | |
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{{#Wiki_filter:. . Decision management Company, Inc. ['g 23121 Verdugo Drive E Suite 200 E Laguna Hills, California 92653 5 714/855-6885 E Telex 703562
._, Y January 6,1984 Mr. Louis S Quinn State of Louisiana Public Service Commission One American Place, Suite 1630 Baton Rouge, LA 70825
Dear Mr. Quinn:
Decision Management Company, Inc. is pleased to submit the final report on our study of Louisiana Power & Light Company's Waterford 3 project and its contract for purchase of capacity and energy from the Grand Gulf Station. As we discussed, fifty copies of the report are submitted to your attention; the remaining fifty copies have been forwarded to LP&L. Tne report consists of five parts containing the following information: \ ]) ,f o Part I, Study Overview, contains the executive summary, a description of the study and a historical perspective of Waterford 3 / Grand Gulf and the nuclear power industry, o Part II, LP&L Policy Management, presents our evaluation of the role of LP&L's senior management in the Waterford 3 project and the Grand Gulf agreements, o Part III, Waterford 3 Project Management, examinas the methods used in planning and control of project work and resources and evaluates the roles of key protagonists, o Part IV, Waterford 3 Technical Functions, reviews the techniques used in the execution of Waterford 3 work and evaluates the performance of the key project participants. o Part V, Appendices, recapitulates conclusions and recommendations contained in various chapters of the report and presents a detailed analysis of some technical subjects. DMC, Inc. believes that the attached report provides conclusive and factual answers to the questions posed by the Public Service Commission. We are prepared to ['sj support these answers in public hearings before the Commission. Oh[o!oO$$j2 PDR
Mr. Quinn January 6,1984 Page two Mr. Quinn, DMC wishes to thank you for your cooperation und support throughout the ' duration of this study. We would also like to acknowledge the forthright attitude and professionalism of LP&L's management and staff. As a result, this assignment was both productive and enjoyable. We look forward to seeing you at the PSC hearings on January 16, 1984. We will also be available to discuss the results of the study with you and your staff at any convenient t!me. Sincerely yours, DECISION MAN AGEMENT COMPANY, INC. W~ Vojin Hadzi-Pavlovic s President VHP: Jag l f l O U
A REPORT ON O WATERFORD 3/ GRAND GULF < STUDY PREPARED FOR STATE OF LOUISIANA , PUBLIC SERVICE COMMISSION O Decision Management Company, Inc. 23121 Verdugo Drive Suite 200 Laguna Hills, California 92653 l l January,1984 O
O TABLE or cosTesTs L STUDY OVERVIEW A. Executive Summary B. Study Description C. Historical Perspective IL LP&L POLICY MANAGEMENT D. Introduction to Policy Management E. Strategic Planning F. Policy Control IIL WATERFORD 3 PROJECT MANAGEMENT G. Introduction lo Project Management H. Project Management ( J. Budgeting, Estimating and Cost K. Scheduling L. Project Monitoring and Reporting IV. WATERFORD 3 TECHNICAL FUNCTIONS M. Introduction to Technical Functions N. Licensing l P. Engineering l Q. Procurement ! R. Contract Management S. Construction T. Quality Assurance U. Start-Up Effort and Operational Preparedness V. APPENDICES W. Recapitulation of Conclusions and Recommendations X. List of General Arrangement (GA) Drawing Revisions ,mn Page i
LIST OF FIGURES O) B-1 Program Work Breakdown B-2 Program Methodology Overview C-1 Cost Escalation From 1967 to 1983 C-2 Total Number of Key Regulatory Documents Issued From 1967 to 1983 E-1 Energy / Demand Forecasting System E-2 Comparison of Utility Industry Conditions in the 1960s and 1970s E-3 LP&L Actual and Forecast Peak Loads (MW) E-4 Forecest/ Actual Load Ratios E-5 LP&L System History E-6 Site Suitability and Site Performance F-1 Composition of LP&L Company's Board of Directors F-2 Energy Cost - Generation Mix Relationship H-1 Managing Within a Changing Environment H-2 Idealized Weighting of Relative Project Management Control H-3 Ebasco Prob.et Organization Chart, November,1976 H-4 Ebasco Project Organization Chart, June,1978 H-5 Ebasco Project Organization Chart, July,1983 H-6 Ebasco Corporate Commitment to LP&L and Waterford 3 [3 H-7 LP&L/Ebasco Project Management Interface
!,V! H-8 H-9 Ebasco Project Team Leaders Project Planning and Control Principles-Construction Phase H-10 Project Planning and Control Principles--6 tart-up/ Operation Phase H-11 Project Team Development Psychology H-12 Project Organization & Responsibilities H-13 LP&L Staffing Evolution Total H-14 LP&L Staffing Evolution G.O. Nuclear H-15 LP&L Staffing Evolution QA l II-16 LP&L Staffing Evolution Plant Staff H-17 LP&L Staffing Evolution Summary H-18 LP&L Project Organization 1971 H-19 LP&L Project Participation 11 - 2 0 LP&L Project Organization, March,1974 H-21 LP&L Project Organization, February,1976 H-22 LP&L Project Organization, March,1979 r
H-23 LP&L Project Organization, April,1981 H-24 LP&L Project Organization, November,1981 H-25 LP&L Project Organization, July,1982 l H-26 LP&L Project Organization, October,1983 H-27 LP&L Project Organization, October,1979 l H-28 Southern California Edison Company Concrete Placement Productivity l H-29 Southern California Edison Company Rebar Productivity l H-30 Southern California Edleon Company Structural Steel Productivity l H-31 Southern California Edison Company Small Pipe Productivity l ,r] . H-32 Southern California Edison Company Large Pipe Productivity
.Y l
l Page ii _ _ _ _ _ __ __ _ _ ____ _ __
i.lST OF FIGURES (Continued) ! H-33 Southern California Edison Company Pipe Support Productivity H-34 Southern California Edison Company Cable Tray Productivity H-35 ' Southern California Edison Company Conduit Productivity H-36 Southern California Edison Company Cable Productivity H-37 Southern California Edison Company Conductor Termination Productivity H-38 Independently Verified Productivity Figures .
- H-39 Construction Duration: Construction Starts to Commercial Operation H-40 Construction Cost Per Kilowatt Includirg AFUDC H-41 Cost Growth Comparison Including AFUDC (percent)
H-42 Idealized Weighting of Relative Project Management Control H-43 Non-dimensionalized Characterization for Regulatory Requirements J-1 ~ History of Waterford 3, Budgets & Expenditures J-2 Cost / Schedule Preparation & Review Flow Chart J-3 Cost Report Preparation & Review Flow Chart J-4 ~ Budget History for Waterford 3 J-5 Sample Cost Report Variance Analysis J-6 Professional Experience of Key Ebasco Cost / Schedule Personnel J Propose Variance Analysis Tracking Format J-8 LP4L Internal Audit Organization & Waterford 3 Approach J-9 LP&L Summary of Waterford 3 Audits J Current LP&L Cost / Schedule Organization J-11 Evolution of LP&L's Waterford 3 Budget O J-12 LP&L Budget Composition-Q~ J-13 J-14 Sample Budget Development Form Sample Budget Development Form i J-15 Overall Budget Variance Analysis ' J-16 B4 Estimate Comparison J-17 Nuclear Power Plant Cost Growth J-18 ' Growth of Engineering & Construction Manhours
-J-19 Cost Growth & Breakdown 1 J Change in Composition of Capital Cost J-21 Waterford Cost Attributable to Major Regulatory Changes J-22 Budget / Schedule Summary, September,1983 J-23 Budget Cash Flow, September,1983 i J-24 Waterford 3 Manpower Destaffing J-25 LP&L Budget Variance, September,1983 i- J-26 LP&L Variance Breakdown, September,1983
, J-27 Ebasco Budget Variance, September,1983 - J-28 Cost Comparison of Waterford 3 & Contemporary Plants J-29 Cost Comparison of Waterford 3 & Contemporary Plants K-1 Nuclear Industry Learning Curve K-2 Milestone Schedule E-3 Project Schedule K-4 Ebasco Drawing Schedule
.K Ebasco Procurement Schedule K-6 Contractor's Schedule K Work Area Schedtile
.K-8 Cost / Schedule Plan Preparation and Review Flow Chart '
K-9_ Summary Chronology of-Scheduling Tools ' K Evolution of Construction Schedule
.K-11 Schedule Growth Comparison K-12 Construction Duration: First Concrete to Commercial Operation i'
P a g e iii
LIST OF FIGURES (] (Continued) V Construction Duration: First Concrete to Commercial Operation (First K-13 , Nuclear Units) K-14 Construction Cost Per Kilowatt Including AFUDC K-15 Current Waterford 3 Schedule K-16 Listing of Plants Gelected for the Study K-17 Schedule Performance of PWR Power Plant Projects with Construction Permit Received Between 1/1/1973 and 12/31/1975, Ranked by Duration from PSAR filing to Fuel Load K-18 Schedule Performance .of PWR Power Plant Projects with Construction Permits Received Between 1/1/1973 and 12/31/1975, Ranked by Duration from CP Date to Fuel Load Date K-19 Schedule Performance of PWR Power Plant Projects with Construction Pennit Received Between 1/1/1973 and 12/31/1975, Ranked by Duration from First Concrete Pour to Fuel Load K-20 Waterford 3 Completion Scenarios L-1 Need for Cost / Schedule Integration L-2 Evolution of Project Controls L-3 Engineering Phase Report / Responsibility Matrix (R/RM) L-4 Civil Construction Phase L-5 Bulk Quantity Installation Construction Phase R/RM L-6 Start-Up Construction Phase R/RM L-7 Start-Up System / Area Phaue R/RM C\ L-8 Overall Project Accomplishments (',)' L-9 Time-Phased Progress Chart Services Cost Update L-10.1 L-10.2 Project Changes L-11 Production and Productivity Curves L-12 Project Quantity and Manhour Report L-13 Piping Installation Contract Status L-14 Potential Project Cost Sunmary Report L-15 Excerpt From MTS Report L N-1 Licensing Process Overview l N-2 Construction Permit Licensing Process N-3 Licensing Organization Overview l N-4 Ebasco Licensing Organization l N-5 LP&L Licensing Organization N-6 Nuclear Licensing Staff-Experience Summary l N-? Ebasco SAR Change Process P-1 Waterford 3 Site Plan P-2 Isometric View of the Reactor Coolant System P-3 Ebasco Services Inc. Engineering Department Organization P-4 Engineering Project Team P-5 Evaluation of Changes to Waterford 3 General Arrangement Drawings P-6 Design Approval P-7 Drawing Logic (g P-8 Specification Logic tU/ Q-1 Average Hourly Earnings Increase Since 1972 Q-2 Producer Price Increases Since 1970 Q-3 Design / Procurement Review & Approval Process Pageiv
LIST OF FIGURES ( ) (Continued) R-1 Contract Administration Organization R-2 Procedure Support Matrix R-3 Field Job Order Activities S-1 Construction Organization Transition Cycle S-2 Site Construction Organization (SCO) - Civil Construction Phase S-3 SCO - Bulk Installation Phase S-4 Start-Up Phase Construction Organization S-5 Ebasco Construction Start-Up Reorganization S-6 System-Event Phase Organization S-7 System-Area Phase Organization S-8 Waterford 3 Labor Distribution S-9 HVAC Production & Productivity S-10 Contract for Payments - Labor S-11 Field Payroll T-1 Overall Waterford 3 SES QA Organization T-2 LP&L QA Section Organization T-3 LP&L Quality Assurance Organization Staffing T-4 Experience of LP&L QA Personnel (~% U-1 Waterford 3 Start-Up Functional Proces t, ) U-2 Status of Waterford 3 Start-Up as of August,1983 V U-3 Initial Waterford 3 Start-Up Organization U-4 Waterford 3 Start-Up Group & Other Project Groups U-5 Start-up Status as of May 1,1980 U-6 Start-up Status as of October 31, 1981 U-7 Start-up Status as of January 31, 1982 U-8 Start-up Status as of July 31, 1982 U-9 Nuclear Operations Functional 0 ganization Chart U-10 Start-up Status as of October 30, 1982 U-11 Start-up Status as of April 30, 1983 U-12 Start-up Status as of November 13, 1983 U-13 Recommended Project Status Report U-14 LP&L Nuclear Operations Organization U-15 Waterford 3 Plant Organization U-16 Nuclear Services Organization U-17 Quality Assurance Organization U-18 Security Staff Responsibilities O Page v
PARTI l STUDY OVERVIEW PAGE CHAPTER A - BXECU'nVE SUMBIARY
- 1. Objectives 1
- 2. Conclusions 2
- 3. Recommendations 10 CHAPTER B - STUDY DESCRIP'nON
- 1. Background 1
- 2. Principles and Scope 1 Figures 7 O CHAPTER C - HISTORICAL PERSPECTIVE Figures 22 I _,. _ - . - . . _ _ . _ _ . _ . _ _ _ - . . . . . , , _ , _ . . - . _ , - . , , . . . , _ _ _ , . . , . . . , _ . _ , , _ , , . , _ _ . - . _ . . , _ . . - - _ , . _ _ _ . , - - _ . - ,
c Chapter A id EXECUTIVE
SUMMARY
Louisiena Power & Light Company (LP&L) filed an application in January,1983, for an increare of some $700 million in its electric rates and charges. Two of the most significant causes of this rate increase request are the expected in service status of its Waterford 3 generating station and the commercial operation of the 1 Grand Gulf Unit No.1 of Middle South Energy, Inc. (MSE), from which LP&L has f contracted for capacity and energy. Since originally planned, the estimated total , cost of these units have increased substantially. To assist in making a decision on LP&L's rate increase request, the Louisiana Public Service Commission (LPSC) authorized a study on April 18, 1983, to investigate the cost increases of the Waterford 3 project and the contract for the purchase of power from the Grand Gulf unit. The study was performed by Decision Management Company, Inc. (DMC) between July and December of 1983. 1.0 Objectives The Louisicna Public Service Commission requested that the study ccncentrate on titree major areas, with emphasis on answering specific questions in these areas. The objective .of this report is to provide answers to the LPSC's questions. The (' ; major areas and specific questions are as follows: V A. Analyre and review the past and present construction cost estimates of the Waterford No. 3 unit.
- 1. Is the estimated total cost of Waterford 3 reasonable and prudent and not the result of defective or incomplete planning and monitoring of contractor charges?
- 2. Can Waterford No. 3 be in service as scheduled?
B. Analyze and review LP&L's management capability.
- 1. Did LP&L have sufficient managerial expertise to properly monitor the construction of the Waterford No. 3 from a technical and financial perspective?
- 2. Does LP&L have the requisite managerial and technical expertise to successfully license Waterford No. 3?
- 3. Does LP&L have the requisite expertise to successfully operate Waterford No.3?
(A) 4. Does LP&L have proper procedures in effect today, as well as in the past, to ensure that the terms of its contracts for construction of Page A-1
Waterford No. 3 are being met and that it has not borne costs properly assessable to contractors? C. Analyze and review the circumstances surrounding the decision of LP&L to contract with Middle South Energy, Inc. for purchase of capacity and energy from the Grand Gulf unit.
- 1. Was 5P&L's decision to contract for purchase of capacity and energy from the Grand Gulf unit rather than build capacity reasonable and prudent at the tune of the contract?
- 2. Did LP&L need future capacity from the Grand Gulf unit when the contract was confected?
- 3. From an overall assessment, was LPaL's management decision in entering into the contract reasonable? .
In addition, the LPSC requested that recommendations be made in three areas. Therefore, the objectives of the study are further extended to provide recommendations regardiro the following subjects:
- 1. Should any portion of the cost of the Waterford No. 3 unit be deemed to be imprudently incurred and, if so, how much?
- 2. Should LP&L augment its management and technical capability in order to succesafully complete, lice'c:, and operate the Waterford No. 3 unit?
- 3. Management competence in regard to ary facet of the Grand Gulf agreement.
This report describes the results of the study and documents DMC's answers to questions and concerns identified by the Louisiana Public Service Commission. We are prepared to support our conclusions e.ad recommendatio.w in public hearings before the LPSC. 2.0 Conclusions Our study of the Waterford 3 project and Grand Gulf related agreements supports the summary conclusions shown below. The conclusions are presented in the form of answers to the questions posed in the Commission's Request for Proposal. The answer to each question is followed by a brief discussion of findings and determinations which support DMC's conclusions. O Page A-2
f , c
' QUESTION' A1 f
ls the' estimated total cost of Waterford No. 3 reasonable and prudent and not the result of defective or incomplete planning and monitoring of contractor charges? i. CONCLUSION Whue the total estimated cost of Waterford No. 3 ($2.65 billion) cannot be termed reasonable in absolute terms, it is below the average cost of nuclear power plants
. built in' the. same period. The cost was primarily due to circumstances beyond LP&L's control, reflecting the difficulties of constructing these plants during the 1970s and early 1980s, and was not the result of gross mismanagement, inefficiency or lack of care on the part of LP&L.
i L DBCUSSION According -to a recent industry report, the estimated cost, approximately $2,400/kw, of ~Waterford- 3 is near the average of '48 nuclear power plants presently under construction. ' DMC believes,'.. however, that the very current- estimated ecst of Waterford _3 is more up-to-date than those reported for other nuclear plants in the ,
- report, thus indicating that the cost is most likely trelow the industry average.
1 .; The current _ estimated cost- of Waterford 3 is over eleven times greater than the s Loriginal' estimate ($230 :hillion), and almost four times higher than the estimate
- prepared after- the issuance of the Construction Permit ($710 million). This type of ;
} . cost -escalation was-typical of nuclear projects being built throughout the 1970s and Jwas' primarily due' to two causes beyond the control of a utility company--namely, o changing regulatory requirements and changing economic conditions. While it is difficult to estimate the~ exact Impact of these two causes,. they are considered the main' reasons for cost increases. DMC believes that in the-' absent:e of these - two causes,..the cost of Waterford 3 would be.significantly below that currently estimated. The.~ methods _ and procedurcs -used by LP&L .to' plan and monitor. the costs of LWaterford 3- were. adequate and reflective of those used by industry throughout the
' duration of the project. In' addition, personnel. responsible for employing these 1 methods and procedures appeared to be dedicated and well-qualified. Further, LP&L executive. management has devoted extensive attention and shown continual concern
' fcr project costs. .
l'
- QUESTION 1A 2
~
~Can Waterford No. 3 be in servlee as scheduled?
, s -CONCLUSION DMC concludes that, barring unforseeable developmenta, the remaining schedule of
_ project completion activities .is reasonable and achievable, and that Waterford 3 can ! Page.A-3
be placed in service as presently scheduled. DMC also believes, however, tnat the schedule is sensitive to factors both within and outside of LP&L's control. It is therefore imperative that LP&L's management attention be focused on resolving open licensing issues and minimizing the risk of delays due to NRC decisions; instituting actions to minimize the need for system retesting; and optimizing the use of available start-up personnel. DECUSSION Waterford 3 is currently scheduled to begin loading fuel by March 31,1984, (with a two month management contingency), and to begin commercial operation in November, 1984. There are a number of activities that must be completed to obtain an Operating License and to begin loading fuel. The most important of these activities, many of which are on the critical path, can be grouped into one of the three areas: licensing, start-up testing and sy, tem transfer. Licensing o There are approximately 12 "open" licensing issues that must be resolved by the NRC before issuance of an Operating License. None of these issues, however, are considered major; they could be resolved by the NRC in a timely manner. o Four conditions concerning emergency planning were established by the ASLB to be fulfilled by LP&L before an Operating License could be issued. DMC was informed by LP&L that these four conditions have already been met. Start-up Testing: o Retesting of a number of systems over the past year has impacted the project schedule. These retests have, in general, been the result of a high turnover of test engineers, failure of equipment parts and design modifications due to pre-operational testing. LP&L has taken positive actions to prevent the continuation of these causes. o LP&L has experienced a shortage of qualified start-up engineers to support its schedule over the past year, thus resulting in an extension of certain testing, activities. The shortage of experienced and qualified start-up engineers has been a problem throughout the nuclear industry. LP&L has, therefore, revised its start-up schedule in an effort to optimize its available manpower. System Transfer: o The third major area of concern, and on the critical path, is system transfer to the plant staff. In mid-1983, LP&L decided to increase the number of systems to be transferred 60 days prior to fuel load from 48 to 116. It was believed that this would be more cost effective and wc?.W provide better assurance of both systera completion and plant staff preparation. Page A-4
m
' QUESTION B1 Did LP&L have sufficient managerial expertise to properly monitor the construction of the Waterford 3 from a technical and financial perspective?
CONCLUSION LP&L's expertise in the areas of technical and financial management was adequate in comparison to the ut!!ity industry as a whole. The better than average Waterford 3 cost and schedule performance supports our conclusion that LP&L has monitored the construction more effectively than en average utility building its firet nuclear unit during the same period. The company's performance, however, was below the level achieved by more experienced nuclear utilities. DECUSSION LP&L's role in the monitoring of Waterford 3 construction at the outset of the project was passive; This posture was primarily due to LP&L's prior successful experience with Ebasco and the prevailing regulatory and economic conditions. As the regulatory and economic climate changed, the company increased the Waterford -3 staff. While LP&L's staffing levels, generally, were below the G industry's norm, its project team consisted of qualified personnel capable of (j monitoring Waterford 3 construction from a technical and financial prospective. However, a larger number of such experienced personnel would have facilitated a more detailed project monitoring and, at the same time, allowed LP&L to build up its operations staff at a slower, more reasonable pace. It should be noted that a larger project staff does not necessarily lead to better performance and lower cost. The current cost data show that both some of the most expensive and some of the least expensive units are being built by utilities
' employing large staffs. The most expensive of these plants involve companies constructing their first nuclear unit; the most economical ones are being built by experienced nuclear utilities. Clearly, the overriding difference between these projects is not in the size of the utility company's project staff, bot in its experience with nuclear power plant construction.
QUESTION B2 Does LP&L have the requisite managerial and technical expertise to successfully license Waterford 37 CONCLUSION
,m LP&L has the requisite managerial and technical expertise to successfully license
( )_ Waterford 3. In the past, the company had certain deficiencies in this area, but it U has improved its posture to an above average level. Page A-5
DECUSSION Licensees' managerial and technical capabilities and performance are monitored by the NRC's Systematic Assessment of Licensee Performance (S ALP) Board and documented in SALP reports. On August 30, 1983, the SALP Board reviewed LP&L's performance during the period from July 1,1982, to June 30,1983, and concluded that the attentiveness of LP&L's management to resolution of licensing issues is evident. The Board also noted that LP&L had weaknesses in the area of training during the rating period, but the changes made near the end of the rating period resulted in significant improvements. The excellent results recently achieved by the Reactor Operator License candidates supports this conclusion. Since August 30, 1983, LP&L has further enhanced its management and technical expertise. Through interviews with LP&L's executives and Waterford 3 management, DMC, Inc. gained a high degree of confidence in their ability to successfully license the project. In addition, we were informed by a member of the NRC staff that in an informal survey, LP&L was rated close to the top of utilities approaching commercial operation. QUESTION B3 Does LP&L have the requisite expertise to successfully operate Waterford 3? CONCLUSION LPaL has the requisite expertise to successfully operate Waterford 3. Its present readiness to load fuel and begin commercial operations is adequate. DECUSSION During the period from 1978 to 1981, LP&L's operational readiness was criticized by the Nuclear Regulatory Commission, the Advisory Committee on Reactor Safeguards (ACRS) and company-hired consultants. The key points of criticism addressed LP&L's low staffing levels of operational manpower in general and significant shortage of nuclear-experienced personnel in particular. !!ecommended improvements included revisions of the company's organizational atructure, redesign of its salary structure and recruiting methods, and a significant increase in staffing levels and nuclear experience. LP&L's response to this criticis:m was initially slow. Its reluctance to implement required changes was rooted in the magnitude of the change itself. To implement the above recommendations, LP&L had to forego some of the key principles of its business philosophy: a lean operating staff, promotion from within the company and other long standing recruiting, personnel and compensation policies. A decision to make such a redirection required time and significant consideration. In late 1981. LP&L decided that required changes must be made, and began a major recruiting campaign. This effort resulted in a letter from the ACRS in April,1982, which stated that LP&L was ready for Waterford 3 operation. The additional technical and management strengths added in mid-1983 rendered LP&L one of the best prepared utilities to load fuel and commence commercial operations. Page A-6
QUESTION B4 Does LP&L have proper procedures in effect today, as well as in the past, to ensure that the terms of its contracts for the construction of Waterford 3 are being , met and that it has not borne costs properly assessable to contractors? CONCLUSION LP&L's proecrement, contract admini::tration and other procedures intended to assure adherence to contract terms and conditims were proper and effective in the past, as -well as today. The company has (on a temporary basis) borna some costs proper'y assessable to contractors. Recovery of those costs has been and is currently being sought through negotiated settlements and litigation. DISCUSSION Waterford 3 Nuclear Steam Supply System (NSSS) and Turbine / Generator (TG) contracts were negotiated by Middle South Services, Inc. (MSS). The contract for Architect-Engineer / Construction Manager's ( AE/CM) services was negotiated by LP&L. All three contracts were obtained at prices favorable to LP&L and at terms and conditions better than the industry standard. I Procurement of materials, equipment and construction services was accomplished by Ebasco Services, Inc. In accordance with its standard procedures and LP&L [v-,} direction. LP&L monitored the procurement process, rewewed bid documentdion
'and authorized all contracts. DMC's analysis of sample contracts indicates that ,
LP&L achieved a reasonable degree of control and that the procurement practices for Waterford 3 were above the industry's norm. Waterford 3 contract administration took place at two levels: Ebasco administered contracts related to the construction effort and LP&L managed the AE/CM contract and oversaw Ebasco's contract administration activities. All of the contract administration procedures used on Waterford 3 are similar to methods used on other nuclear power projects. LP&L's -firm posture and aggressive enforcement of contract terms and conditions is above the industry's norm. QUESTION C1 Were LP&L's decisions reasonable and prudent in contracting for purchase of capability and energy from the Grand Gulf rather than building capacity at the time of the contract? CONCLUSION i DMC concludes that the LP&L decision to contract for the purchase of power from the Grand Gulf, instead of constructing new capacity, was reasonable and prudent. O DMC believes that, at the time, this decision was in the best interests of LP&L's customers, in terms of providing the most economical and reliable supply of electric
;
- power, and was in accord with the newly established policies to utilize economies of scale and to' provide base load generation by means of nuclear and coal fired units.
Page A-7
DECUSSION Louisiana Power & Light Company (LP&L) is ore of four operating companies of Middle South Utilities, Inc. (MSU). Planning for future generating capability for the operating companies is coordinated through the Middle South Operating Committee, consisting of membership from each of the operating companies and Middle South Se vices. The objective of this approach is to utilize economies of scale to ensure reliable and economical power supplies to all operating compcnies. In 1971, Mississippi Power & Light (MP&L) and New Orleans Public Service, Inc. (NOPSI), two other operating companies of MSU, were planning two identical nuclear units on separate sites to meet their power needs of the late 1970s. After further study, it was decided that both units could be constructed more economically at the MP&L site at Port Gibson, Mississippi. At the same time, further study indicated that MP&L and NOPSI could not finance the projects in a conventional manner. To help solve the financing problem of these units and to further strengthen the coordination for power planning for the entire MSU system, the MSU Doard of Directors decided in 1973 to form a separate generating company called Middle South Energy, Inc. (MSE). Its charter was to undertake the construction, financing and ownership of certain future base load generating units including Grand Gulf, a two unit power plant at the Port Gibson site.
'Ihe relationship between the operating companies and MSE was defined in the Availability Agreement of 1974. Under this agreement, the operating companies agreed to purchase power from Grand Gulf and to reimburse MSE for its operating expenses, depreciation nnd interest charges. Payments to MSE for Grand Gulf power were based, in general, on the amount of power each operating company required to meet its load responsibility.
In 1974, LP&L decided to enter into the 1974 agreement to purchase power from the Grand Gulf to help meet future load requirements, rather than construct a new generating facility. This decision was based on the following considerations: o LP&L was already committed to the construction of three other nuclear units. The financial strain caused by these projects made it impossible to finance additional units on its own. o Nuclear power for future base load capability appeared to be a prudent option, especially in view of recent problems LP&L was having in securing future gas contracts. o Commitment by MSU to enhance the supply and reliability of power to its entire system through MSE. o Commitment by MSU to utilize economics of scale and provide a mechanism for financing large new construction projects in the most effective manner through a single entity, MSE. Pege A-8
- _ =_
( . QUESTION C2 Did LP&L need future capacity from the Grand Gulf Unit when the contract was confected? CONCLUSION DMC concludes that the future capability from the Grand Gulf Project was needed when the contract way confected in 1974, both to meet increases in load and to ensure future fuel supply. ' Forecasts made for future increases in peak demand at that timc were still strong, based on a continuation of the healthy growth of the 1960s and early 1970s, as was the case for mest other areas of the country. Extreme decreases in load growth, both actual and projected, did not begin to take place on the LP&L system until after the Iranian oil embargo of 197C. DMC believes the effects of that crisis could not have been anticipated as early as 1974, when the Grand Gulf contract was confected. DISCUSSION In 1974, when LP&L entered into s contract to purchase power from the Grand Gulf, it was planning to meet its power demand requirements for the early 1980's.
'Ihe company intended to meet these new demands primarily with existing capability
[7g and with new cap #ility additions, which consisted of 3 nuclear units-Waterford 3 Q and St. _Rosalie 1 & 2. Based on the forecasted growth in peak demand and the 3 planned nuclear units, LP&L's reserve margin in the early 1980's was forecasted to be between -4.9% and
-14.0%, considerably below an acceptable level. As a result, LP&L needed to either reduce its peak demand through means such as conservation, or to plan to further
~ increase 'its power resources through the. construction of additional generating capability or through the purchase of additional power.
LP&L investigated conservation but did not regard it as a viable option. Its [ industrial consumers were considered already energy efficient and the gains l predicted through additional conservation measures in the residential market were l not substantial in lowering the peak load demand. In addition, LP&L wanted to ensure an adequate supply of fuel for its future generating capability, especially in light of its recent difficulties with natural gas pc con tracts. By moving toward a base load capability consisting mainly of nuclear "~ and coal units, rather than gas fired units, LP&L believed it could establish greater assurance in its future supply of fuel. This further strengthened the need for Grand Gulf power. p-l Page A-9
QUESTION C3 From an overall perspective, was LP&L's management decision in entering into the contract reasonable? CONCLUSION DMC's overall assessment is that LP&L's manageraent decision in entering into the contract ' purchase of capacity and energy from the Grand Gulf station was reasonable and made in the best interest of its consumers. DECUSSION The reasons underlying our conclusion regardinst Question C3 are discussed in answers to questions C1 and C2. In summary, LP&L's management decision is reasonable because: o In 1974, when the Availability Agreement was executed, LP&L needed this capacity and power, both to meet the projected future power demand and to ensure future fuel suppli. o LP&L's options to build additional capacity were limited; at the time, Grand Gulf offered the rc.ost economical and reliable supply of electric, power. o The concept of utilizing economies of scale and providing a mechanism for financing large generating stations through MSE is reasonable; LP&L management did not have any reason for objecting to or disagreeing with this concept. 3.0 Recommendations DMC's conclusions presented above form the basis for the following recommendations. The recommendations are presented in a form of answers to questions posed by the Commission in RFP section II-D. QUESTION D1 Should any portion of the cost of the Waterford No. 3 unit be deemed to be imprudently incurred, and, if so, how much? RECOMMENDA' LION Waterford 3 costs should be deemed prudent and not a result of LP&L's mismanagement or inefficiancy. DMC recommends that these costs be included into the rate base, and that LP&L continue its efforts to recover costs which may have ! been incurred due to under-performance of contractors. Page A-10
DECUSSION Waterford 3 cost and schedule performance are above the average performance of
. \'
O) projects constructed during the same time period; overall performance of LP&L management compares favorably with the industry norms. DMC, Inc. believes that
, failure to recognize the above average results achieved on Waterford 3 would be unreasonable and counterproductive.
Waterford 3 is in the final phases of completion, and there are all indications that it will become operational in accordance with the current schedule. The total project cost is extremely sensitive to schedule delays. LP&L's ability to properly finance the remaining activities and to continue recruiting efforts will eliminate one of the major exposures to potential future delays. QUESTION D2 Should LP&L augment its management and technical capability in order to successfully complete, license and operate the Waterford No. 3 unit? RECOMMENDATION LP&L's present capability to successfully complete, licerse and operate Waterford 3 is adequate. The company should continue with its recruiting efforts and take measures daigned to minimize turnover of personr.el. , f^\ DECUSSION lN ' In the wake of the Three Mile Island accident and quality assurance problems identified on some nuclear power projects, the requirements and demand for
- l nuclear-experienced personnel exhibited a quantum leap. Because the number of
- experienced personnel is a function cf time, this event caused the demand to
- l. outstrip the supply by a significant margin; the imbalance fueled a fierce
. competition among utility companies.
LP&L's efforts to build up an experienced management and technical team have l been extremely successful. 'Ihese efforts should be continued in the coming months. l L QUESTION D3 What are DMC's recommendations concerning LP&L's management competence with
. regard to any facet of the Grand Gulf agreement?
RECOMMENDATION l DMC, Inc. concluded that LP&L management acted competently with regard to all
' facets of the Grand Gulf agreement. We are aware that the LPSC decision regarding Grand Gulf will take into account decisions reached at FERC proceedings, conclusions of other LPSC's advisors and other relevant facts. DMC recommends
'g 4 .that from the standpoint of LP&L's management competence, the rate increase O request be regarded as justified.
- l. Page A-11
DECUSSION In answering Question C3, DMC, Inc. concluded that LP&L's decision to enter into the Availability Agreement and the System Agreement was reasonable and prudent. During the late 1970, erratic changes in load growth gave rise to concerns regarding the equitability of the above agreements. To eliminate deficiencies, LPAL initiated discussions on the permanent allocation of Grand Gulf capacity and revision of the System Agreement. In 1980, the company accomplished its goal of fixing the shares of ownership of Grand Gulf; this result was beneficial to LP&L and its customers. Durir.g the proceedings which led to the present agreements, LP&L management defended the company's interests and, where appropriate, voted against decisions detrimental to the company. Some decisions made in conjunction with Grand Gulf, did not favor LP&L's positions. Within the circumstances which existed during the past decade, and within the Middle South Utilities System setting, it would be unrealistic to expect that all decisions favor a single company. 9 O Page A-12 I
Chapter B
\ l V STUDY DESCRIPTION
1.0 Background
Louisiana Power & Light Company is obligated to furnish and maintain adequate, efficient and reasonably priced electric service to its customers in 46 Louisiana parishes. To meet these obligations, LP&L decided to construct Waterford 3, a pressurized water reactor nuclear generating plant of the 1100 MW class. In addition, the company entered into an agreement with Middle South Energy, Inc. (MSE) for the purchase of capacity and power from the Grand Gulf station. In early 1983, Louisiana Power & Light (LP&L) filed an application for an incressa of some $700 million in its electric rates and charges. By statute, the State of Loulslana Public Service Commission must render a decision on this application no later than January 21, 1984. Two of the most significant causes of this rate increase request are the expected in-service status of Waterford 3 and the commercial operation of the Grand Gulf. Since originally planned, the estimated total cost of these units have increased substantially such that they are now estimated to cost approximately $2,400 per p)
\'
kilowatt of capacity. The Public Service Commission of Louisiana is responsible for regulation of the State's utilities and determination of rates to be paid by utility customers. The Commission is concerned with the accuracy, prudence and reasonableness of LP&L's cost estimates for Waterford No. 3; whether LP&L has prudently monitored the cost of this project; and whether LP&L has the technical capability to successfully license and operate the plant. The Commission is also concerned with the prudence of the contract for the purchase of power from the Grand Gulf station. Pursuant to the above, on April 18, 1983, the Commission authorized the hiring of a consultant to assist in answering these concerns. Decision Management Company, Inc. (DMC) responded to the Commission's Request for Proposal on May 23, 1983. Following evaluation of the proposal and a presentation to the Commission in an
' open session held on June 20, 1983, DMC was selected to perform this study.
2.0 Principles and Scope Decision Management Company, Inc. performed a broad overall review of the management decisions, methods and cost incurred in the construction of the Waterford 3 project from its inception to date. In addition, DMC, Inc. analyzed the
-circumstances related to LP&L's decision to purchase capacity and energy from Middle South Energy's Grand Gulf plant.
(V l The study was conducted in accordance with principles presented to the Public 4 Page B-1
Service Commission during the open session held on June 20, 1983. Those principles required that:
- a. The study be accomplished in accordance with an agreed-to plan, and in a manner which minimizes disruption of ongoing LP&L work.
- b. The study be accomplished professionally, independently and without taking advantage of the benefits of hindsight.
DMC's scope of work consisted of three work packages and ten tasks shown in Figure B-1. In November,1983, the scope was expanded to address schedule, budget and organizational changes which occurred in September of this year. Da study was accomplished in accordance with the procees shown in Figure B-2. De ten tasks identified in Figure B-1 are outlined below. TASK 11 The objective of Task 11 was to accomplish an effective program start-up. Its scope of work included the following activities. o Development of study procedures, o Meetings and telephone conversations with the PSC staff and LP&L representatives, and o Organization of and participation in a Program Start-up Conference. The above activities achieved an effective program start-up, opened lines of communication among its participants, and set the course toward the attainment of study's objectives. TASK 12 The objective of Task 12 was to develop thorough and effective study performance plans. These plans were developed to optimize program results and resource utilization, whila minimizing disruptien of Waterford 3 project work. Study plens were submitted to the PSC staff and LP&L for review on July 7,1933, and finalized shortly thereafter. These plans included a Program Work Breakdown Chart (Figure B-1), a schedule, a time-phased budget and an initial list of documents required for the study. TASK 13 The goals of Task 13 were to assure timely, professional and high quality performance of the study work; to track and report program status to the PSC, LP&L and DMC, Inc.; and to direct program effort toward attainment of the study's objectives. Page B-2
O ~ Those objectives were accomplished through continuous monitoring of study progress and reporting of its status to the Commission and LP&L on a bi-weekly basis. TASK 21
. The analysis of the Waterford 3 project involved a review of LP&L's, Ebasco's and other companies' documents containing confidential information. During the course of the study, DMC, Inc. conducted interviews and prepared a number of working papers, reports and other documents. Safeguarding of the confidential nature of all i information was the objective of this task. 'Ihis objective was accomplished through
! ti.e implementation of the documentation control procedure discussed in Task 11.
'Ihe documentation control procedure was implemented at the outset of the study and used throughout its duration.
TASK 22
.During the study, DMC reviewed a number of project documents and comparative data from other nuclear projects. The objectives of this review was to familiarize program team members with Waterford 3 / Grand Gulf historical records; to gain an understanding of management methods and decisions; to compile pertinent comparative information; to develop a factual data base for project evaluation; and to establish required documentary evidence.
TASK 23 To supplement the understanding of cost escalation factors and related management methods and decisions, DMC, Inc. conducted a series of management interviews. Interviews were held with LP&L, Ebasco,'and other major contractors' personnel knowledgeable of the Waterford 3 / Grand Gulf history, management methods and decisions and other relevant facts. Persons interviewed included members 'of the LP&L and MSU Board of Directors, LP&L and Ebasco executive management and Waterford 3 project and plant management. In addition, telephone conversations
- were held with the NRC officials to solicit their observations regarding Waterford 3.
TASK 31 To determine the quality of methods and systems, to evaluate performance of organizations or personnel, or to measure anything at all - one must have a frame of reference against which to measure. 'Ihe frame of reference for this study was
~ developed through identification and correlation of events, conditions, regulations, decisions, project status data and other factors depicting industry / project environment during the past 13 years.
This frame- of reference was used as a base for our evaluation, and as a mechanism for the elimination of the benefits of hinds'.ght. Page B-3
TASK 32 'Ihe unit of measurement for this study is represented by criteria which were used in assessing the effectiveness and prudence of management methods, decisions, and actions. These criteria were developed in accordance with principles preseated to the Commission in the open session held on June 20, 1983. Detailed criteria used in the evaluation of specific technical and management subjects are presented in corresponding chapters. These detailed criteria were developed from the following generic standards:
- a. Management methods were regarded as appropriate if they were reasonably well developed throughout the project life cycle, as compared with the industry norm,
- b. Management decisions were regarded as prudent if they were based on reasonable data, and made in a logical manner in light of available alternatives.
- c. Management actions were regarded as impmdent if they involved gross incompetence or if they were found to be malfeasant (that is, if an incorrect course of action was deliberately taken).
TASK 33 Information collected during this study (tasks 22 and 23) was taalyzed in light of circumstances which existed from 1970 to date (task 31). Conclusions regarding adequacy of methods and prudence of management decisions / actions were made within the context of these circumstances through the application of criteria discussed in task 32. TASK 34 The results of our evaluation of the Waterford 3 project and Grand Gulf agreements are documented in this report. The report consists of five parts, nineteen chapters and two appendices. Where applicable, chapters are further subdivided into sections and subsections adoressing specific subjects, issues or decisions. The material in most sections / subsections is presented under headings of DESCRIPTION, DISCUSSION, and CONCLUSIONS. DESCRIPTION includes statements of f acts DMC, Inc, learned through documentation review and interviews. While writing these str.tements, we endeavored to exclude our opinions and to limit the presentation to information supplied to DMC by LP&L, Ebasco, contractors and the NRC. Page B-4
E i. DBCUSSION . includes .DMC's evaluation of ' acts described earlier in light of l
. f I
-$ : . circumstances which existed at the time. Where appropriate, A -
specific events, circumstances or conditions are identified and described. In contrast.to DESCRIPTION, statements included under l DISCUSSION . reflect DMC's opinions as to the significance of facts with regard _to issues of management competence and prudence. CONCLUSIONS include. statements specifying. the results of our evaluation. In addition, DMC's recommendations regarding daireable improvements are given where appropriate. Dis presentation method was adopted in order to assure clarity and the distinction F of. facts from' professional opinions. - This method will also minimize the potential - for controversy, as it enables the reader to review the facts independently and
< arrive at his own conclusions.-
i The ten tasks' described above and future participation in the PSC's public hearings, constitute a completion of DMC,.Inc.' obligations regarding this study. 4 - 3.0- Acknowlec%ements ,
- An~ independent audit is possible only if the auditor is afforded the necessary 4
latitude to seek and interpret information.and make independent conclusions. For l-an audit to b'e effective, the auditor's professbnalism must be taken for granted; 7.g . and he -must be freed from the burden of' over-formalization. DMC, Inc. wishes to acknowledge the positive' attitude of the Louisiana Public Service Commission in regard to the above matters. The latitude given to DMC enabled us to conduct this study free of unnecessary burdens, and to review issues ,
- .at hand in greater depth than would.otherwise have been possible.
DMC also wishes to acknowledge the cooperation' and assistance proffered by the !. Louisiana' Power .& Light Company staff during the execution of this study. Without H : their open 'and cooperative attitude, the study could not have been completed as , ! efficiently and effectively as .it '.was. This cooperation -was extended in a professional and forthright manner, and at no time was any effort made to withhold information requested by. DMC or to' influence the outcome-- of' the study. The overview' presentations and the interviews with-LP&L and Ebasco personnel were
~
' also arranged and conducted in a most efficient manner.
4.0 Limitations - The study was limited by a few factors which may distort some of the conclusions and recommendations made by Decision Management Company, Inc. Limiting factors 1 such as these should be taken into consideration while reviewing our conclusions and i recommendations. E %ese factors include the following: l'bo , p Page B-5 , u
, . - - -,a - - - , - -,,,-- ,,,- -,-.m. 4. --,.. ,,...r,_ -,-_,,_,.,---,~.-~.-,-,,,_..~r--r---
o The Waterford 3 and Grand Gulf history covers a period of over thirteen years, with millions of work hours, and billions of dollars. These monumental endeavors were evaluated utilizing a three phase process: Survey - a brief overview of events, methods and decisions constituting Waterford 3 / Grand Gulf history; Review - performed to gain an overall understanding of the key events, methods and decisions; and Detailed Analysis - an in-depth evaluation of major issues underlying DMC's conclusions and recommendations. While DMC believes it identified all of the key issues, a slight possibility exists that some issues may have been unidentified. o The Waterford 3 / Grand Gulf study included a review of a massive amount of data. Some of these data were readily available in LP&L files; some had to be compiled and/or prepared especially for this study. While LP&L made a significant effort to fulfill our data requests promptly, some documents were received in later phases of the study and could not be subjected to a detailed review. o Waterford 3 is in the final phases of completion; Grand Gulf agreements are before the Federal Energy Regulatory Commission (FERC) awaiting the FERC's decision. This dyn'imic environment created a " moving target" effect on this study. As a result, DMC's conclusions are not exclusively based on stable data. Despite the above limitations, DMC believes that this report is accurate and complete. As described in section B-2, we have endeavored to present the results of the study in a manner which clearly differentiates between facts and professional opinions. We believe that this approach provides objectivity and will maximize the usefulness of this report. O Page B-6
1
?
I. i 6 E f f > w l I FIGURES ! I i t i e l F l i i l t 1 1 'i Page B-7
FIGURE B-1 PROGRAM WORK BREAKDOWN HISTORICAL ANALYSIS OF THE ' WATERFORD 3/ GRAND GULF STUDY l l WORK PACKAGE 1: WORK PACKAGE 2: WORK PACKAGE 3: ORGANIZATION FACT DATA AND MANAGEMENT CATHERINC EVALUATION TASK 11: STUDY , TASK 21: DOCUMENT , TASK 31: FRAME TEAM ORGANIZATION CONTROL OF REFERENCE TASK 12: STUDY , , TASK 22: , TASK 32: EVALUATION PLANNINC DANTATION REVIEW CRITERIA TASK 13: , TASK 23: , TASK 33: P;;OJECT PERFORMANCE CONTROL MANAGEMENT INTERVIEWS ANALYSIS I TASK 34: STUDY ! u REPORT g l l l [ e
\
l l
ORGANIZE, PLAN FIGURE B-2 AND START-UP THE STUDY PROGRAM METHODOLOGY OVERVIEW it IDENTIFY REVIEW SIGNIFICANT + PROJECT - FACTORS DOCUMENTS CONDUCT
-e MANAGEMENT -=
INTERVIEWS U COLLECT ESTABLISH
--* COMPARATIVE -o FRAME OF DATA REFERENCE 7----_-----,
EVALUATE D ATA & l TESTIFY l DOCUMENT IF REQUESTED l CONCLUSIONS g BY CLIENT l l L.-_ _ _ _ _ _ _ _ _ .1 1 4 i O O - O
t ) Chapter C v HETORICAL PERSPECTIVE This chapter outlines the history of the nuclear power industry, the Waterford 3 project and the Grand Gulf agreements. The discussion is focused on key events which influenced the course of industry development. Many of these events had either direct or indirect effect on Waterford 3. To avoid repetition, both the Waterford 3 / Grend Gulf and the industry-wide events are discussed in chronological order. 1940s Nuclear technology was developed during the early 1940s in conjunction with the Manlattan Project and other government military programs. In 1946, the Congress passed the Atomic Energy Act and placed nuclear technology under the control of a civilian agency, the Atomic Energy Commissioal (AEC). In addition to managing the ongoing programs, the AEC was charged with development of commercial aspects of nuclear energy. 1950s The growth of the commerefal nuclear power industry began in the earlj 1950s. In 1954. Congress amended the Atomic Energy Act to include national policy goals for commercial development of nuclear j , j energy. During the early 1950s, nuclear technology underwent rapid
) development, and several experimental reactors wee installed and successfully operated. The research focused on gaining better understanding of controlled nuclear fission, conversion of fission energy into electricity and development of concepts for protection of public health and safety.
During the early 1950s, the AEC began to direct greater attention to development of power reactor concepts. As a result of this effort, the Experimental Breeder Reactor 1 (EBR-1) was developed. The EBR-1 was the first nuclear reactor to produce a small amount of electricity, (about 0.75 MWe). In 1951, the first substantial amount of electric power was generated by the Submarine Thermal Reactor 1 (STR-1) in 1953. During the same time period, the Joint Committee on Atomic Energy (JCAE) and AEC were actively encouraging private interest in power reactor development. Although the Atomic Energy Act of 1954 permitted ownership and operation of nuclear reactors, it did not address tha issue of liebility in the event of an accident. This problem was recognized as a serious roadblock to full private industry participation in nuclear power development. i ! v' Ithe AEC was later renamed Nuclear Regulatory Commission (NRC). Page C-1
r In 1957, Congress passed the Price-Anderson Act which limited industry's liability in the event of a nuclear accident to $560 million. In 1957, the first U.S. reactor to be tied to the electric network began operation at Shippingport, Pennsylvania. This reactor used ordinary water, maintained under high pressure, as a coolant to carry heat from the nuclear reaction. This thermal energy was converted in heat exchangers to steam, which was and used to turn a turbine / generator. 'Ihis design was referred to as the Pressurized Water Reactor (PWR); similar design concepts are used on Waterford 3. A number of other reactor designs were considered in the AEC's Power Demonstration Reactor Program (PDRP). Besides PWR, the Boiling Water Reactor (BWR) received the industry-wide commitment. The largest of the Demonstration Reactor =, the 200 MWe Dresden 1, which started operation in 1960, was a BWR. Together, PWR and BWR designs became knowr. as Light Water Reactors (LWRs). 1960s Several power reactors conceived during the 1950s were in various phases of design, construction, Ed operation in early 1960s. From several design concepts, utilizing different reactor technologies, the test results favored the two light-water technologies, namely PWR and BWR. Early operating data indicated that in order for nuclear power plants to be cost competitive with coal fired plants, the larger units must be constructed. With the exception of Dresden, early nuclear plants were subsidized by grants from the AriC. By 1963, utilities began ordering and building large nuclear plan % without any government funding. This development was precipitated by NSSS vendors who offered to construct and license nuclear power plants at a fixed cost subject to change only for inflation. During the next two years, seven fixed price " turnkey" contracts were awarded by U.S. utilities. Under those contracts, a plant was constructed and turned over to the utility for operation af ter it had met all regulatory requirements, including the testing and liceming processes. The first such order was placed by the Jersey Central Power & Light Company for the Oyster Creek Nuclear Plant. During this period of relative economic and regulatory stability, the confidence of government and industry in nuclear power grew, believing that it would play a major role in meeting the future energy needs in the United States. However, the NSSS suppliers lacurred considerable losses and discontinued offering " turnkey" nuclear power plants. Soon afterwards, NSSS suppliers stopped providing the engineering Page C-2
_ ~ l ( ) and construction services limiting their scope to the nuclear reactor
'd and associated equipment required to produce steam.
In 1965, utilities, encouraged by the results achieved by Dresdcn and other early plants, began ordering nuclear power plants for which the NSSS suppliers no longer provided price guarantees. Utilities engaged various A/Es and cms for the engineerirg! and construction services and had to assume responsibilities for scope ecst estimates and schedules based on the experiences of earlier turnkey plants, with adjustments for inflation. Another source of price comparison was the data based on fossil-fuel power plants. Stable engineering and construction processes were in place for the design of the fossil units. The prevailing assumption among the utilities at that time was that the data for fossil power plants was applicable to the nuclear power plants. The average construction duration of early nuclear power plants, completed before 1970, was less than 50 months. The total installed cost of these plants averaged less than $200/kw. Both the government and the industry predicted rapid growth of nuclear generation based on favorable compt: ? sons with fossil-fuel plants. Based on the past experience with nuclear and fossil-fuel plants, the gm AEC published the report WASH-1150 in 1970, which projected a ( ) 1975 cost for nuclear plants to be $240/kw and for coal-fired plant
'd $195/kw. The report concluded that nuclear plants appeared to be economically competitive with fossil-fired plants in many areas of the United States. A number of analyses concluded that the larger the size of a plant, the lower the cost of power. As a result, in 1968, NSSS auppliers were supplying plants six times larger than the largest then in operation. Thus, the stage was set for rapid growth of large siro nuclear power plants.
t Some indications that delays in schedule and eventual cost escalation could occur in the future surfaced in the late 1960s. The fifty-one new NSSS orders placed in 1966 and 1967 exceeded the AEC's capacity to process CP applications and resulted in delays in the issuance of Construction Permits. In addition, the rapid growth of the industry began creating a shortage of experienced engineering and construction personnel and led to constmetion delays. However, those delays were considered temporary it: nature, attributable to
" growing pains" of the emerging new nuclear industry.
In a summary, the 1960s were the decade of nuclear power inoustry's rapid growth. This growth was made possible by the
, stable environment characterized by the following attributes: 'I
_/ o Load growth was steady; each decade utilities experienced a doubling of demand for power.
.Page C-3
o Power plants were constructed within a period of approximately four years; this short construction duration made load growth projections even more certain and predictable. o Energy costs were kept stable by a competitive international market, stable regulatory policies, and availability of fuel options (oil / gas, nuclear and coal). o Engineering / construction experience gained in fossil plant construction and early nuclear units allowed the industry to forecast schedule and cost with a great degree of success; it was widely believed that this experience could be applied to the nuclear power plants planned in the late sixties. o Economic conditions were stable; availability of capital, materials / equipment and labor were subject to few constraints, o The regulatory environment was stable; changes in codes and regulations were slow and orderly. o environmental concerns were being addressed on a project by project basis; the licensing process was short and straightforward; intervention was practically nonexistent. The above conditions combined to <:reate a " bandwagon" effect in the nuclear power industry, as an ever growing number of utilities placed NSSS orders. By the end of 1969, 102 nuclear power plants were in various stages of design, construction and operation. 1970s The stable environment of the 1960s underwent profound changes during the ensuing decade. These changes altered virtually every assumption related to forecasting of energy demand and development of new generating facilities (see Figure E-2). More importantly, they caused significant scope changes, schedule delays, productivity losses and cost overruns in all nuclear power projects conceived in the late sixties and beyond. The following paragraphs provide a brief outline of events which impacted power plant construction during the decade of the 1970s. ECONOMIC CONDITIONS The change in ecknomic conditikns in the 1970s was a result of many factors and influences. One of the predominant factors was the oil embargo and the cubsequent increase in the cost of oil. As a consequence of the high cost of oil, the cost of other fuels became unst ble and escalated; inflation increased and the emt of Page C-4
)
capital grew; manuf acturers of capitnl goods realigned their ( ,' ope ations to better serve the booming oil industry; and shop space for certain commodities became extremely scarce. The unprecedented growth of the nuclear industry resulted in sharp competition for qualified engineering and craft labo'r. This situation was aggravated by competition from the oil industry. As a result, manpower shortages developed on many projects and turnover of personnel increased exponentially. In accordance with the law of supply and demand, the cost of both materials and labor escalated to unprecedented levels. This escalation provided additional inflationary factors, further increasing the cost of capital. Cumulative results of the unstable economic conditions are shown in Figure C-1. SOCIO-POLITICAL CONDITIONS The early seventies witnessed rapid growth of opposition to nuclear power and increased environmental awareness. The National Environmental Policy Act enacted in 1969, and related court decisions, prolonged the plant licensing cycle. Opponents fought the _ industry both at hearings and in court. As a result, project j schedules were delaysd and, in time, the original project plans V rendered unuseable. REGULATORY ENVIRONMENT Maturing technology, experience with operating plants, accidents (such as the Browns Ferry fire, Mark II events and Three Mile Island) and socio-political conditions gave rise to a tremendous crowth of codes, standards and regulations. An exhaustive analysis, or even a listing, of regulatory changes and their effects on power plant costs would expand the volume of this report beyond acceptable limits. The following is a partial list which includes some of the key regulatory documents:
- a. Appendix A to 10CFR50 (General Design Criteria)
- b. Appendix B to 10CFR50 (QA Requirements)
- c. NRC Regulatory Guides
- d. NRC Standard Review Plara
- e. National Environmental Policy Act
- f. ASME Section III
- g. IEEE Standards
- h. ANSI Standards
- /' l. ASME/ACI Standards f j. AWS Standards
- k. NRC Branch Technical Positions Page C-5
- 1. NRC I&E Bulletins
- m. NRC NUREGS Figure C-2 provides a summary of the key codes, standards and regulations issued between 1970 and 1973. The codes, standards and regulations listed above were issued to enhance public safety and the quality of the environment. They were issued over the period of more than ten years and were often implemented retroactively on plants in verious stages of design and construction. While the need for and the quality of those codes may be beyond argument, their retroactive implementation on ongoing projects caused major changes in scope, schedule delays and cost increases.
The Waterford 3 project was designed, procured and constructed during the 1970s and early 1980s. The following pages present a brict summary of industry-wide and project- related events and conditions during that period. O O Page C-6
7m - i s ,,-
) _
CHRONOLOGY OF KEY EVENTS DURING 1970 NUCLEAR INDUSTRY I WATERFORD 3 / GRAND GULF LEGELATION JULY Ebasco Services, Inc. selected as Waterford 3 Architect-Engineer. Waterford 3 proposal Congress enacted mandatory Anti-Trust review (Section 103, schedule issued. Commercial Licenses) of the Atomic Energy Act. This act slowed down the licensing process while the AEC and the o Construction Permit (CP) date 3-1972 Department of Justice established a review mechanism and o Commercial Operation (CO) date 1-1977 guidelines. SEPTEMBER Waterford 3 announced REGULATIONS ESUED NOVEMBER Waterford 3 Budget approved o Regulatory Guides (RGs) 4 o Addenda to Part 10 CFR 50 7 o Eng. & Const. cost (E&C) $199 million o Total regulatory documents 11 o AFUDC $ 31 million o Total Cost $230 million DECEMBER Construction Permit Application and o Through 1969 (93*- 6**) 87 Preliminary Safety Analysis Report submitted o During 1970 (14 - 1) 13 to the AEC. o Total 100 Number of Nuclear Plants in Operation 16 Note: IIereinafter, Waterford 3 will be referred to
- ordered as "W3", and Grand Gulf as "GG".
** subsequently cancelled (1)U.S. Commercial Nuclear Power, March,1982.
DOE /EIA-0315 Page C- 7
CHRONOLOGY OF KEY EVENTS DURING 1971 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF DEGULATIONS ISSUED MARCII W3 Schedule Revision 1 issued o CP date 7-1972 o RGs 17 o CO date 1-1977 o Addenda to-10 CFR 50 6 o Total 23 JULY Joint committee of NOPSI and MP&L formed o Cumulative since 1970 34 to begin engineering design of 2 identicsl units to be installed at different sites. MAJOR STANDARDS / REGULATIONS AUGUST Bechtel Corp. retained as GG Architect-o 10 CFR 50, Appendix A formulated and refined General Engineer Design Criteria governing commercial power plants. , o ASME Section III was issued replacing ANSI B31.1. It required strict control and tracability of material o E&C cost $246 million utilized in construction of nuclear power plant o AFUDC $ 43 million components. Stricter control of workmanship during o Total . cost $289 million construction (weld inspection and documented QA). Design loads expanded to include seismic and pipe DECEMBER W3 Status rupture loads. o Engineering 7% complete MAJOR COURT DECEIONS Calvert Cliffs decision directing the AEC to implement NEPA requirements on all Construction Permit applications. This decision resulted in delays in the issuance of Construction Permits and, generally, lengthened the licensing process. REACTOR ORDERS o Through 1970 100 o During 1971 (21 - 10) 11 o Total 111 Number of Nuclear plants in operation 21 Page C- 8 O O O
f f~'s ,a (' s~ (w CHRONOLOGY OF KEY EVENTS DURING 1972 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ISSUED JANUARY MP&L/NOPSI nuclear units announced o RGs 19 FEBRUARY GG Environmenta impact Study started o Addenda to 10 CFR 50 1 o Total 20 MARCH Waterf ord 3 site preparation activities o Cumulative since 1970 54 initiated MAJOR STANDARDS / REGULATIONS W3 schedule revision 2 issued JUNE o ANSI N45-2 established a series of standards which set o CP date 3-1973 forth both general and detailed technical provisions for o CO date 9-1977 all safety activities to ensure the quality of nuclear power plants. JULY Site work terminated because of licensing o The AEC issued a letter outlining pipa rupture analysis uncert es requirements which define how pipe rupture locations are AUGUST NOPSI withdrew the Alligator Point site from to be determined and how to protect the plant against pipe ruptures. further consideration. REACTOR ORDERS SEPTEMBER W3 Budget Forecast No. 3 issued I o E&C cost $293 million o Through 1971 133 o During 1972 (38 - 18) 20 o AFUDC $ 57 million o Total 131 Total coct $350 million NOVEMBER GG Construction Permit Application filed Number of nuclear power plants in operation 27 4 DECEMBER W3 Status o Engineering 42% o Procurement 12% j Page C- 9 2 4
CHRONOLOGY OF KEY EVENTS DURING 1973 NUCLEAR INDUSTRY WATERFORD 3 / CRAND GULF REGULATIONS ISSUED MARCH MSU Board agreed to examine Grand Gulf financing difficulties o inspection & Enforcement Bulletins (I&EBs) 6 APRIL W3 schedule revision 3 issued o Addenda to 10 CFR 50 3 , o Total 53 o CP date 5-1974 o Cumulative since 1970 107 o CO date 11-1978 MAJOR STANDARDS / REGULATIONS JUNE MSU Board decided to form a generating o Regulatory Guide 1.46, Protection Against Pipe Whip Inside Centainment OCTOBER W3 Budget Forecast No. 4 issued o " Rainbow Books" - NRC's guidance regarding the o E&C cost $361 millinn implementation of QA requirements. o AFUDC $ 84 million o Total cost $445 million OTIIER EVENTS DECEMBER W3 Status o Oil embargo o Engineering 65% RE ACTOR ORDERS o Procurement 28% o Through 1972 131 o During 1973 (38 - 15) 23 o Total 154 Number of nuclear power plants in operation 36 yage C- 10 0 0 0
(y (. \ t
) > 1
' ,) NJ l
%)
CHRONOLOGY OF KEY EVENTS DURING 1974 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ISSUED FEBRUARY Middle South Energy Inc. organized as a wholly owned subsidiary cf MSU. o RGs 30 c I&EBs 18 APRIL St. Rosalie announced. o Addenda to 10 CFR 50 8 o Total 56 Favorable ASLB decision regarding W3 safety o Cumulative since 1970 163 and environmental issues. CAJOR STANDARDS / REGULATIONS MAY GG site preparation initiated. State of Mississippi issued Certificate of Public o 10 CFR 50, Appendix K, specified features of acceptable Convenience and Necessity for GG. ECCS evaluation models. JUNE SEC approved organization of MSEI o 10 CFR 50, Appendix I, established limits of radiation exposure. This appendix and associated regulatory SEPTEMBER GG Construction Permit issued. requirements became known as ALARA. NOVEMBER W3 Anti Trust review completed. o Reg. Guide 1.75, Physical Independence of electric W:; Construction Permit issued. systems, involved design of the reactor protection systems and engineered safety systems, separated to DECEMBER W3 schedule revision 4 issued ensure that common mode failure will not occur. o Fuel Load (FL) date 11-1980 LEGELATION o CO date 4-1981 The Energy Reorganization Act dissolved the Atomic Energy W3 Budget Forecast No. 5 issued Commission and established the Nuclear Regulatory Commission (NRC) and the Energy Research and Development o E&C cost $560 million Administration (ERDA). o AFUDC $150 million o Total cost $710 million REACTOR ORDERS W3 status o Through 1973 154 o During 1974 (34 - 24) 10 o Engineering 70% l o Total 164 o Procurement 42% l Number of nuclear plants in operation 14 Page C- 11 m
I CHRONOLOGY OF KEY EVENTS DURING 1975 NUCLEAR INDUSTRY WATERFORD 3 / GRAND CULF DAJOR STANDARDS /REGULNITONS JULY LP&L Revised pipe rupture criteria based on o Revision 2 of Regulatory Guide 1.70 requiring new requirements for pipe rupture protection. conformance of nuclear power plant S ARs to the hiain steam, feedwater and safety injection Standard Format. had to be re-routed in order to satisfy pipe rupture and pipe rupture restraint requirements. o Standard Review Plans (SRPs) for every significant subsection of Regulatory Guide 1.70. SRPs provided the DECEMBER First concrete was poured on Waterford 3. criteria and design basis for every safety related system in the plant. W3 Status OTIIER EVEN1B o Engineering 97% o Procurement 63% Construction 2.9 % o Fire at Browns Ferry nuclear power station. This event increased fire protection awareness and resulted in W3 schedule and budget did not change. numerous regulatory requirements, o Existing criteria for electric cable separation between and within redundant safety systems underwent large
- hanges.
REGULATIONS ISSUED o Regulatory Guides 37 o Standard Review Plans 246 o I&E Bulletins 12 o NUREGs 2 o Part 10 of CFR 28 o Total 335 o Cumulative since 1970 488 REACTOR ORDERS o Through 1974 164 s o During 1975 (4 - 4) 0 o Total _. . 164 Page C- 12 Number of nuclear plants in operation 53 9 9 9
l i
<..., w a CHRONOLOGY OF KEY EVENTS DURING 1976 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ISSUED APRIL W3 schedule revision 5 issued 7
o Regulatory Guidts 46 o FL date 10-1980 o Standard Review Plans 3 o CO date 2-1981 o I&E Bulletins 7 o I&E Circulars 6 SEPTEMBER W3 Budget Forecast No. 6 issued o NUREGs 2 o Part 10 of CFR 26 o E&C $625 million o Total 90 o LP&L $ 25 million o Cumulative since 1970 578 o AFUDC $165 million o Total $815 million REACTOR ORDERS DECEMBER W3 status o B rough 1975 164 o During 1976 (3 - 2) 1 o Engineering 78% o Total 165 o Procurement 73% o Construction 17% Number d nuclear plants in operation 57 i a Page C- 13 i
CHRONOLOGY OF KEY EVENTS DURING 1977 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ESUED JUNE SEC approved sale of bonds to finance Grand Gulf. o Regulatory Guides 47 o I&E Bulletir 9 SEPTEMBER Consultant's report requested by LP&L issued. o I&E Circulars 17 o NUREGs 3 NOVEMBER Ebasco responded to criticism in consultant's o Part 10 of CFR 20 report, o Generic Letters 6 o Total 102 DECEMBER W3 status o Cumulative since 1970 680 o Engineering 91% REACTOR ORDERS o Procurement 8' % o Construction 36% o Through 1976 165 o During 1977 (4 - 4) 0 o Total 165 Number of nuclear plants in operation 65 Page C- 14 O O @
D p) t (v) (v) CHRONOLOGY OF KEY ' EVENTS DURING 1978 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ESUED MARCH W3 schedule revision 6 issued o Regulatory Guides 40 o FL date 5-1981 o Standard Review Plans 183 o CO date 10-1981 o I&E Bulletins 15 o I&E Circulars 19 JUNE GG Operating License application filed o NUREGs 6 o Part 10 of CFR 13 AUGUST W3 Budget Forecast No. 7 issued o Generic Letters 31 o Total 307 o E&C $ 794 million o Cumulative since 1970 987 o LP&L $ 74 million o AFUDC $ 241 million REACTOR ORDERS o Total $1109 million o Through 1977 165 Ebasco Project Manager transf erred to o During 1978 (2 - 0) 2 Waterford 3 site. o Total 167 DECEMBER W3 status Number of plants in operation 68 o Engineering 97% o Procurement 88% o Construction 56% 4 l i Page C- 15 l
CHRONOLOGY OF KEY EVENTS DURING 1979 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ISSUED SPRING LP&L study on alternative approaches to I o Regulatory Guides 20 o Stendard Review Plans 11 AUGUST W3 Budget Forecast No. 8 issued o ILL Bulletins 47 c- I&E Circulars 25 o E&C $ 860 million o I&E Information Notices 39 o LP&L $ 89 million a NUREGs 10 o AFUDC $ 280 million o Part 10 of CFR 9 o Total $1229 million o Generic Letters 58 o Total 219 SEPTEMBER W3 schedule revision 7 issued o Cumulative since 1970 1206 o FL date 9-1981 REACTOR ORDERS o CO date 2-1982 No new reactor orders were placed in 1979. DECEMBER W3 status Number of nuclear plants in operation 70 o Engineering 97.6% OTIIER EVENTS o Procurement 95.4% o Construction 74.4% o At the Three Mile Island (TMI) nuclear plant a combination of equipment and operator factors resulted OTIIER EVEN'IE in an incident which caused substantial damage to the reactor core. As a result, public awareness was raised o Consultants report on LP&L manngement of and nuclear opponents increased their efforts. Nuclear W3 construction power plant licensing and regulations were disrupted and a de facto moratorium on the issuance of new o Project slowdown due to financial and construction and operating licenses was imposed. licensing reasons MAJOR STANDARDS / REGULATIONS o NRC report indicating under-experienced staffing of W3 o I&E Bulletin 79-14 requiring "as built" verification of safety related items. o New industry standards and regulations were being developed to address TMI " lessons learned". Page C- 16 O O O
r~ h CHRONOLOGY OF KEY EVENTS DURING 1980 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF-REGULATIONS ESUED MAY A 50% cutback of the W3 craft work force o Regulatory Guides 13 o Standard Review Plans JUNE " Memorandum of Understanding Allocating o I&E Bulletins 36 Capability of. Grand Gulf #1 and # 2 . was - o I&E Circulars 26 signed. o I&E Information Notices 47 . o NUREGs 10 AUGUST W3 schedule revision 8 issued o Part 10 of CFR 6
- o Generic Letters 60 o FL date 10-1982 Total o 198 o CO date 4-1983 o Cumulative since 1970 1404 4 W3 Budget Forecast No. 9 issued Number of nuclear plant in operation 72 o E&C $1011 million OTHER EVENTS o LP&L $ 135 million o AFUDC 4 346 million o Industry-wide shortage of experienced personnel o Total $1492 million MAJOR STANDARDS / REGULATIONS DECEMBER W3 status i o NUREG 0737 was issued defining TMI action plan o Engineering 97.7%
requirements for new Operating Licenses. o Procurement 96.3% o Construction 81.9% i o R egulatory Guide 1.97 R2 was issued outlining instrumentation requirements for assessing plant and environmental conditions during and following an accident. Page C- 17 i
CHRONOLOGY OF KEY EVENTS DURING 1981 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ISSUED FEBRUARY W3 schedule revision 9 issued o Regulatory Guides 9 o FL date 1-1983 o Standard Review Plans 273 o CO date 7-1983 o I&E Bulletins 6 o I&E Circulars 14 JUNE Second amet.dment to Availability Agreement o I&E Information Notices 38 signed. o NUREGs 13 o Part 10 of CFR 21 JULY Reallocation Agreement filed with the SEC. o Generic Letters 40 o Total 414 AUGUST ACRS meeting; outcome favorable, o Cumulative since 1970 1818 W3 Budget Forecast No.10 issued. Number of nuclear plents in operation 72 o E&C $1118 million MAJOR STANDARDS / REGULATIONS o LP&L $ 171 million o AFUDC $ 285 million o 10 CFR 50 Appendix R was issued and fire protection o Total $1574 million requirements increased dramatically. This led to a major increase in the amount of sophisticated automatic DECEMBER W3 status detection and suppression systems, o Engineering 96.4% o Quality assurance breakdown on Diablo Canyon related o Procurement 96.7% to interchange of drawings for units 1 and 2. Unrelated o Construction 93.9% quality assurance breakdown on Zimmer affected constniction activities. These two events increased QA awareness in the industry. Page C- 18 O -- O O
1 v i
\v)
CHRONOLOGY OF KEY EVENTS DURING 1982 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ISSUED FEBRUARY W3 Budget Forecast No.11 issued c Regulatory Guides 8 o E&C $1259 million o I&E Bulletins 7 o LP&L $ 230 million o I&E Information Notices 62 o AFUDC $ 319 million o NUREGs 4 o Total $1808 million o Part 10 of CFR 16 o Generic Letters 31 MARCH ACRS meeting was held; outcome was o Total 128 favorable. o Cumulative since 1970 1946 APRIL Public hearings were completed for all matters except the Emergency Brochure. MAY LP&L's QA construction organization rejected four systems submitted during start-up for systems turnover. AUGUST W3 schedule revision 10 issued o FL date 5-1983 o CO date 1-1984 W3 Eudget Forecast No.12 issued o E&C $1406 million o LP&L $ 291 million o AFUDC $ 360 million o Total $2057 million OCTOBER Cold Ilydrostatic testing completed. DECEMBER W3 status W3 Start-up 64% complete Page C- 19 ne
CHRONOLOGY OF KEY EVENTS DURING 1983 NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF REGULATIONS ISSUED JANUARY W3 schedule revision 11 issued o Regulatory guides 3 o FL date 7-1983 o I&E Bulletins 5 o CO date 3-1984 o I&E Information Notices 49 o NUREGs 1 FEBRUARY The last item on the public hearings egenda, o Part 10 of CFR 14 Emergency Brochure, was completed, o Generic Letters 27 o Total 99 MARCH W3 Budget Forecast No.13 issued o Cumulative since 1970 2047 o E&C $1464 million o LPAL $ 303 million o AFUDC $ 396 million o Total $2163 million Consultants report on adequacy of total design process. The report was based on an "in-depth" review of the design of major safety systems. A few deficiencies were reported but, in general, the report was positive, noting adequacy of procedurcs and compliance with NRC requirements. APRIL The ASLB reached a f avorable decision regarding the W3 operating license. The PSC authorized the Waterford 3 / Grand Gulf study JULY The DMC study commenced. Page C- 20 8 G G'
O O O CHRONOLOGY OF KEY EVENTS DURING 1983 (continued) i NUCLEAR INDUSTRY WATERFORD 3 / GRAND GULF i I SEPTEMBER W3 schedule revision 12 issued o FL date 3-1984 o CO date 11-1984 W3 Budget Revision 14 issued o G&L $1645 million o LP&L $ 496 million j o AFUDC $ 508 million ' o Total $2649 million OCTOBER SALP Board "teport issued NOVEMBER Project statui o W3 Start-up 83.4% complete. i i i i l . Page C- 21 l 1 l l
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FIGURE C-2 i TOTAL NUMBER OF AE( REGULATORY DOCUMENTS ISSUED BETWEEN 1970 AND 1983 i
=================================================================================================================================
GEGULATORY DOCUENT FEAR OF ISSUE ALL TYPE 1,970 1,971 1,972 1,973 1,974 1,975 1,974 1,977 1,978 1,979 1,980 1,981 1,982 1,983 YEARS *
======================= ====== ====== ====== ====== ====== ...... ====== ====== ====== ====== ====== -===== ====== =.==== ====== ;
RESULATR f 6UIDES 4 17 19 44 30 37 46 47 40 20 13 9 8 3 337 STANDARB REVIEW PLANS 246 3 183 11 273 71o I&E BULETINS 6 18 12 ' 7 9 15 47- 36 6 7 5 168 IE CIRCULARS 6 17 19 25 26 14 107 I&E INFORMATION NOTICES 39 47 38 62 49 235 NME6s 2' 2 3 6 10 10 13 4 1 51 PART 10 0F CFR 7 6 1 3- 8 28 26 20 13 9 6 21 16 - '14 1 78 GENERICLETTERS 6- 31 56 60 40 31. 27 25?
==================- ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
All RE6ULATIONS/ TEAR 11 '23 20 53 56 325 90 102 307 219 198 414 128 99 '2,045
=================---------=============------------ =----- = -- -- ===========---------========================. ... ---===== -
ALL RE6ULATIONS/CUMLTVE 11 34 54 107 163 488 578 '680 987 1,206 1,404 1,818 1,946 2:045 2,045
========================,==========================================================================-----=========================
' PERCENT OF BRONTH/ TEAR 0.54% 1.12% 0.98%: 2.59% 2.74% 15.89% 4.40% 4.99% 15.01% 10.71% 9.68% 20.24% 6.26%- 4.84%100.00%
====================================s-==============================================================================a:===========
CUMULATIVE GROWTH. 0.54% 1.66% 2.64% 5.23% 7.97% 23.86% 26.26% 33.25% 48.26% 58.97% 68.66% 88.90% 95.16%100.00%100.00%
=============================================================================------ -=. -__=======================----- =========
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1
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O LP&L POLICY MAN AGEMENT PAGE CHAPTER D - INTRODUCTION TO POLICY M ANAGEMENT
- 1. Policy Management Functions 1
- 2. Evaluation Criteria 4 CHAPTER E - STRATEGIC PLANNING
- 1. System Planning 1
- 2. Waterford 3 Initiation 8
. 3. Grand Gulf Decision 18 l Figures 25 CHAPTER F - POLICY CONTROL f ! 1. Senior Management Involvement in 1 l Waterford 3 Control
- 2. Evolution of the Grand Gulf Agreements 5 l 11 t Figures l -
1 0 - l
Chapter D ( \ G/ INTRODUCTION TO POLICY MANAGEMENT Part II of the-Waterford 3 / Grand Gulf Study report consists of three chapters: D
- Introduction to Policy Management, E - Strategic Planning, and F - Policy Control. In these chapters, the role of LP&L's senior management in the Waterford 3 project and the Grand Gulf contract is examined. Their purpose is:
- a. To describe Louisiana Power & Light Company's policy management functions-strategic planning and policy control;
- b. To analyze and review the circumstances surrounding the decision of LP&L to contract with Middle South Energy, Inc. for the purchase of capacity and energy from the Grand Gulf Unit with specific emphasis on:
- o. The reasonableness and prudence of contracting for, rather than building, capacity at the time of the contract, o Whether the capacity was needed when LP&L entered into the contract, and o Whether the management decision to enter into the contract was
( j reasonable; - %./'
- c. To examine the roles and responsibilities of LP&L's officers and its Board of Directors in planning, controlling, and directing the Waterford 3 project and Grand Gulf contract; and
- d. To document DMC's conclusions regarding the adequacy of policy management methods and the propriety of key decisions.
The following sections present a generic overview of policy management functions and define criteria for evaluation of LP&L's strategic planning and policy control activities. 1.0 Policy Management Function = Planning and control of major capacity additions takes place at several levels of a
~
utility company's management hierarchy. These levels of planning and control can be classified into two major categories: policy management and project management.' The purpose of Section D-1 is to outline the policy management functions / methods - which form the basis for successful completion of major generation projects, f3- Policy management represents the too level of corporMe planning and control. Its
) objective is to assure that the direction of individual projects, organizational units Page D-1
and people is consistent with the direction of the company. This objective is accomplished through a process of strategic planning and policy control. Strategic planning includes setting of corporate and project goals and development of policies defining management procedures and limits of discretionary authority. Policy control includes audits and reviews necessary to determine the status of work and the effectiveness of policies, and to direct appropriate corrective actions. The following is a brief overview of policy management functions we would consider mandatory on any major project. PLANNING Strategic Planning activities can be grouped into five policy management functions: System Planning, Project Initiation, Strategy Development, Organization Design anel Project Mnbilization.
- a. The System Planning fiinction entails activities necessary to determine future power needs; to plan the addition of new generation, transmission and distribution facilities necessary to meet future needs as economically as practicable; and to perform other functions designed to assure the continuance of reliable electric service. Once the need for a new facility is determined, the Project Inittstion functicn is activated.
- b. The Project Initiation function begins with evaluation of the technical and economic feasibility of the project. If the project is found to be feasible, its key parameters are identified and documented. These parameters include project scope (facility type, size and major characteristics, project site, etc.), major milestones and cost.
- c. The Strategy Development function focuses upon selection of methods to carry the project to its completion. S trategy considerations address all aspects of the project including, but not limited to, the following:
o Organization / management strategy o Procurement strategy o Project execution strategy 4 o Risk management strategy o Financial strategy
- d. The Organization Design function begins with a determination of the mix of external and internal staff, and the assignment of basic responsibilities. Organizational structure, charters, and working relationships are defined next. Organization design is completed with the development of a formal Organization Manual, which documents the project organization, responsibilities and standards of performance.
Page D-2
L (7 ) c. The Project Mobilization function includes assignment of key
'('~' members to the project management team and initiation of primary procurement. Primary procurement entails solicitation of bids and issuance of contracts for A-E and CM services and long lead equipment / materials (such as the Nuclear Steam Supply System or boiler, Turbine / Generator, and similar items).
The results of strategic planning functions are compiled into a Project Management Plan. This document provides policy guidelines for project execution and management. CONTROL The Policy Control activities fall within two policy management functions: Monitoring and Correctiva Action. Their purpose is to assure that senior management is cognizant of the project status, and to provide for their involvement in major decisions throughout the project life cycle.
- a. The Monitoring function has two objectives: to provide senior management with a concise image of project status, and to assure that data upon which this image is based are valid.
The first objective is accomplished through development of summary reports depicting the following information:
./~T
( ) o Status of schedule, cost and technical accomplishments versus project plans. o Major variances, their causes, and alternate courses of corrective action, o Forecasts of technical, cost and schedule status at completion. The second objective is accomplished through a system of sudits and managemerit reviews. Audits are perfemed to assure accuracy of project status data, adequacy of implementation of project strategy, and proper operation of systems. Management reviews are conducted to consider effectiveness of systems, performance of organizations and changes in the key assumptions and environment of the project.
- b. The Corrective Action function involves revision of strategic plans, organizational structures and management systems, as well as other administrative actions necessary to improve project performance. Strategic plans are revised when the (n)
'L/
key project planning assumptions experience significant change. The organization and systems are revised if they are Page D-3
found to be ineffective. Administrative actions are taken when performance of organizations or key managers is below acceptable thresholds. All management actions are formally documented in corrective action plans, and their implementation is closely monitored. The strategic planning and policy control functions, outlined above, establish policy level direction for a project. While their scope and implementation methods vary from one utility company to another, each function must be performed satisfactorily in order to achieve adequate project results. The manner in which Louisiana Power & Light Company established and maintained this policy level direction is examined in Chapters E and F. The evaluation was accomplished in light af oriteria defined in the following section. 2.0 Evaluation Criteria The previous section provided a generic overview of policy management functions which should be performed on a major project starting today. The adequacy of LP&L's policy management methods and the propriety of key Waterford 3 / Grand Gulf decisions were evaluated in light of the common industry practice in the early 1970s, and the evolution of this practice over the intervening time period. Questions addressed in our evaluation include the following:
- 1. Were LP&L's policy management techniques used at the outset of Waterford 3 o adequate in light of project needs?
o reasonable in comparison with common industry practice?
- 2. Did LP&L staff and senior management (officers and the Board of Directors) o properly identify the need for new generating capacity?
o evaluate build / purchase options and select the most appropriate alternative? o evaluate all types of fuels available and select the most appropriate alternative? o select a site well suited to the type of facility LP&L intended to construct? o develop strategic plans appropriate for management of a project of the complexity and mhgnitude of Waterford 3? o develop an organization appropriate for management of a project such as Waterford 3 and staff it with qualified personnel? Page D-4
7_ p- 3. .Did' LP&L senior management have, throughout the project life cycle,
- t. / information which G'
~
o accurately depicted the status of the project and performance of LP&L contractors? o provided for early identification of problems and definition of their downstream impact? o provided an explanation of the causes of problems, delays and overruns? o~ was similar in type, frequency and accuracy to information available to other utility companies during the same time period?
- 4. Did LP&L senior management take actions required to
_o reevaluate project feasibility / economy? o determine the effectiveness of management methods, the adequacy of the-
~
project organization and the' performance of the company's management personnel?
- 5. Was the .ovolution of LP&L's policy management techniques and the n involvement of its senior management in the Waterford 3 project and Grand Gulf contract reasonable in IIght of common industry practice?
(J) The followijg two chapters document DMC's findings _ and conclusions regarding the
-adequacy of LP&L's policy management.
'T b A b Page D-5 ,
l Chapter E L' STRATEGIC PLANNING Louisiana Power & Light Company, one of the four operating companies of Middle I~ South Utilities, Inc., provides electric utility services to forty six Louisiana Parishes. The company is obligated to furnish and maintain these services in an etfective manner, with a great degree of reliability, and at a reasonable cost. To meet its public utility obligations, LP&L must attain the following objectives: o Anticipate future power requirements early enough to take appropriate actions to satisfy them. o Construct new generating, transmission and distribution facilities in a timely and economical manner. o Operate its f acilities safely and maintain them properly to avoid decreasing the quality and reliability of service. Attainment of the above objectives is, clearly, a demanding task. Its successful accomplishment, however, can be facilitated through implementation of certain management techniques. The technique used to determine future power needs and to set the course towards their fulfillment is often referred to as strategic p)
\
Planning. The following' sections discuss LP&L Company's strategic planning methods and decisions, and present related findings and conclusions. 1.0 System Planning The system planning issues evaluated during this study include LP&L's load s forecasting methodology and peak load forecasts underlying the Waterford 3 and Grand Gulf decisions. 1.1 LP&L Load Forecasting Method DESCRIPTION At the time when the decision to construct Waterford 3 was made and through 1978, LP&L's peak load forecasts were developed in accordance with the following procedure:
- a. Energy forecasts were developed by LP&L's Consumer Services Department. They were prepared separately for the following customer groups:
o Industrial o Commercial o Residential Ox o Government and Municipal o Resale Page E-1
r The forecasts were based upon the past load growth trends in - LP&L's service area, as well as the company's knowledge of the following factors: o Near term economic activity o Growth potential in LP&L's service area o Estimates of future social and economic conditions o Specific new major industrial loads
- b. Energy forecasts for various customer groups were summed to produce the total internal annual sales excluding Middle South System pool transactions; this total was added to company use and unaccounted for losses to compute LP&L's total annual energy requirements (in kwh).
- c. The next step in load forecasting entailed the development of an estimate of future annual load factors and peak load forecasts. The peak load forecasts were then compared with an extrapolation from the energy forecast of historical peaks computed by means of regression analysis, and their validity confirmed,
- d. Because the peak load forecasts discussed in paragraph (c) assumed normal (average) weather conditions, LP&L evaluated their sensitivity to weather extremes. This analysis defined potential variances in the system peak load which could occur during unusually cold winters and hot summers.
Until 1967, the above procedure was used to forecast LP&L system peak loads six years into the future. In 1967, because of the growing lead time for power plant equipment, materials and services, the company began preparing ten-year forecasts. In 1976, LP&L started the development of a state of the art computerized econometric modeling system. This system became operational in 1978. Figure E-1 depicts the load forecasting process flow in force since 1978. DISCUSSION Forecasting of future peak loads was a relatively simple task prior to the 1970s. The electric utility industry operated under favorable conditions; decisions were made within a stable environment and based on a wealth of firm da^a. Specifically: o Load growth was steady; each decade utilities experienced a doubling of the demand for power. O Page E-2
.- .. - = . _ - .
7 o Power plants were constructed within a period of approximately four years; this short construction duration O- negated the need for long term load forecasting. o Energy costs declined or remained stable because of a competitive international market, stable regulatory policies, the availability'of fuel options (oil / gas, nuclear and coal), and economies of scale, o- Engineering / construction experience gained in fossil plant construction and early nuclear units allowed the industry to i- forecast schedule and cost with a great degree of success; it
, was widely believed throughout the industry that this experience could be applied to the nuclear power plants planned in the late sixties for commercial operation in the 1970s.
o Economic conditions were stable; availability of capital, materials / equipment and labor were subject to few constraints. o The regulatory environment was stable; changes in codes and regulations were slow and orderly. o Environmental-concerns were being addrecsed on a project by
;\ .
project basis; the licensing process was short and straightforward; intervention was practically nonexistent. In the stable environment of the 1960s, sophisticated load projection techniques were not required. However, during the ensuing decade this stable environment underwent profound changes. As indicated in Figure E-2, these changes altered virtually every assumption related to forecasting; as a result, the peak load projections became unreliable and extremely sensitive to a great many variables. In response to this unprecedented situation, several industries began development of- more sopt.isticated forecasting techniques. One of the leading techniques that emerged from this effort is referred to as econometric analys!s. The objective of econometric analysis is to forecast the future value of a given variable. Its key precepts include o Development of a mathematical model simulating the variable under considerulon and the parameters / conditions influencing its future value; 4
- U o Analysis of the model for numerous combinations of i g
parameters / conditions, and their influence on the variable; and Page E-3
o Determination of the value of the variable for the most probable range of relevant parameters / conditions. In order to accurately forecast peak power demands for the economic conditions which have evolved since the mid-1970s, LP&L has refined its forecasting methodology and developed an econometric analysis system. The system is comprised of a set of analytical and structural models designed to provide a forecast of future energy sales (in KWh by customer class) and peak megawatt demand. Three models comprise the system. The first is an economic and demographic model of the area LP&L serves. The output of this model is an outlook for the local economy. The second is a set of model components which translate the outlook for the economy, assumptions concerning local weather conditions, energy prices, energy supply constraints and technological factors, into the exp eted future consumption of electricity by the major user classes: residential, commercial, industrial and other. The third model within the system calculates the expected peak demand based on the contribution to peak demand of the weather-sensitive components and the base loed requirements of the user classes. While the use of econometric analysis does not guarantee the accuracy of forecasts, its implementation by a utility company must be regarded as prudent because it reficcts the company's interest in enhancing its forecasting ability. CONCLUSIONS Decision Management Company, Inc. evaluated Lo&L's load forecasting techniques in light of criteria defined in Section D-1 and against the background outlined above. Based upon this analysis we have determined the following:
- a. The company's load forecasting techniques, used at the outset of the Waterford 3 project were virtually identical with the common industry practice.
- b. LP&L monitored the need for enhancement of its forecasting techniques and revised them as necessary to include technological enhancements and to address changes in economic conditions.
- c. LP&L's senim management was actively involved in determining the need for new generation construction, and in directing evolution of the load forecasting methodology.
Based upon the above considerations, DMC, Inc. concludes that LP&L's forecasting methodology was reasonable throughout the project duration. Page E-4
1.3 Waterford 3 / Grand Gulf Load Foreensts O Decision Management Company, Inc. reviewed the peak load forecasts underlying the decision to build Waterford 3 and to enter into the Grand Gulf agreement. Our aeterminations and conclusions are presented below. DESCRIP110N . Figure E-3 presents a summary of LP&L peak load forecasts and ; actual peak loads from 1965 to 1983. The horizontal axis shows the years during which forecasts were prepared; the vertical axis depicts years for which peak loads were forecast. Two forecasts which are of special interest to this study are the 1970 forecast , of the 1977 peak load and the 1974 forecast of the 1983 peak load,
- a. In 1970, when the decision to build Waterford 3 was announced, LP&L forecasts indicated that the company would require 4,740 MW of installed capacity in order to meet the 1977 peak load. At the same time the company had 1887 MW of installed capacity, and its construction plans called for an additional 2360 MW to be installed before 1977. Therefore, in 1977, without Waterford 3 the company would have had total owned capability of 4247 MW, 493 MW below the peak load forecast for that year. Me 1165 MW from Waterfktd 3 would :
enable the company to meet the projected peak load and maintain a reserve margin of approximately 14A J b. In 1974, when LP&L decided to enter into the Grand Gulf contract, the company's forecasts indicated that the 1983 . peak' load would reach 7690 MW. At the same time, the company had 3817 MW of installed capacity, and its construction plans called for an additional 2795 MW to be , installed by 1983. Therefora, _in 1983 the company would have had a total 6612 MW of capacity,1078 MW below the peak load forecast for that year. In 1984, with the addition of St. Rosalie 2, LP&L capability would increase to 7812 MW. The above two forecasts formed the basis of LP&L's decisions to build Waterford 3 and to enter into the Grand Gulf contract. t Following is our analysis of the propriety of these decisions. ] DBCUMION Data contained in Figure E-3 were used to compute the Forecast / Actual Ratios (F/AR) shown in Figure E-4. The ratios were computed by dividing the forecasts for a given year oy the i actual peak load experienced in that year. The result of this operation is a number representing a measure of the accuracy of c the company's forecasting of future load growth. The most important F/ARs are those computed from the earliest available forecast. These earl!*nt F/ARs are shown below. Page E-5 t
Year Forecast Made Lookahead F/AR In For Period 1965 1966 2 years 1.00 1965 1967 3 years 1.01 1965 1968 4 years 0.97 ! 1965 1969 5 years 0.92 s 1965 1970 6 years 0.98 1966 1971 6 years 0.98 1967 1972 6 years 0.95 1967 1973 7 years 0.98 1967 1974 8 years 1.04 1967 1975 9 years 1.08 1967 1976 10 years 1.08 1968 1977 10 years 1.09 1969 1978 10 years 1.34 1970 1979 10 years 1.47 1971 1980 10 years 1.66 1972 1981 10 years 1.59 1973 1982 10 years 1.63 The analysis of the above table clearly Indicates the following; o Prior to 1968, LP&L was able to forecast future peak loads with a great degree of accuracy. During that period, the maximum variance between forecast and actual peak was less than 10% of the actual peak load. Most forecasts made for years prior to 1973 were low. o In 1969, the accuracy of LP&L's forecasts showed significant deterioration. During the ensuing five years, the earliest forecasts overestimated LP&L peak loads by at least 34%. Closer analysis of the data shown above reveals two ressons for the abrupt change in forecasting accuracy. DMC, Inc. confirmed these reasons through additional documentation review and interviews with LP&L management. The first reason lies in LP&L's load growth pattern. As indicated by Figure E-5, the rate of LP&L's load growth was accelerating throughout the 1970s. The following table shows the actual load growth (averaged over the period of ten years) and the corresponding values used in LP&L's forecasts: O Page B-6 l
- . - ~. . . _ ___ _ _ _ _____. - _ _ _ _ _ . _ _ _ _ _ _ _ _
PERIOD AVERAGE FORECAST FORECAST
% GROWTH YEARS % GROWTH l 56-65 10.8% 66-71 12.3%
i 57-66 11.8% 67-76 11.2% 58-67 12.4% 68-77 11.1% 59-68 13.5% 69-78 13.1% 60-69 14.1% 70-79 12.7 % 61-70 14.1% - 71-80 12.7 %
'Ihe above figures indicate that LP&L consistently underestimated the growth 'of its system prior to 1969. In addition, du-ing the period from 1965 to 1968, LP&L's industrial load doubled from (approximately) 200 MW to 400 MW, and there were indications that this robust growth would continue. The company responded to this l
situation in 1969 by increasing its load growth force-t froni 11.1% to 13.1% per annum. DMC, Inc. believes that, within the circumstances which existed in 1969 and the early seventies, this ' 7 decis'on was reasonable and proper. We futhermore find that the company's forecasts were genuine, and were not a fabrication designed to justify unnecessary generating capacity. The second reason for deterioration _ of LP&L's forecasting accuracy + is-clear from the graph depicting LP&L's actuai peak loads (see Figure E-5).. First, the rapid increase in industrial loads anticipated in 1969 failed to materialize. Furthermore, following , L( the recession of 1979,' LP&L's overall load growth slowed down to a trickle. These two. factors combined to make the forecasts
- underlying the Waterford 3 and Grand Gulf deciclons erroneous and -
unrealistic. DMC, Inc. believes these inaccuracies were caused by events beyond LP&L's control. w CONCLUSIONS Decision Management Company, Inc. evaluated LP&L's peak load ! - forecasts which prompted the decisions to build Waterford 3 and to purchase capacity and power from the Grand Gulf station. Based upon' this analysis we have determined the following:
- a. Louisiana Fower & Light Company's decisions to build l
Waterford 3 and to enter into the Grand Gulf contract were based on reasonable forecasts of future , power needs.
- b. These forecasts clearly indicated the need for additional gene; *'s; capacity and justified LP&L's i decision to build three nuclear units (Waterford 3 and j i
St. Rosalle 1 and 2) and to enter into the Grand Gulf - ' agreement.
~ Based upon the above considerations, DMC, Inc. concludes that LP&L's decisions to construct Waterford 3 and enter into the Grand Gulf Agreement were reasonable, prudent and made in the best interest of its consumers.
Page E-7
- _ _ _ _ _ . _ - _ . _ . . ~ . _ _ . _ . - . _ . _ . . . _ . _ ._.__ _ __.. __ _ , _ _
2.0 Waterford 3 Initiation Project initiation functions evaluated during this study include: the sites study and I selection of the Waterford 3 site; feasibility study, selection of the nuclear ! alternative and decision to construct Waterford 3; and other strategic planning functions and decisions. 2.1 Sites Study DESCRIPTION In 1967, Louisiana Power & Light Company and New Orleans Public Service Inc. retained Ebasco 3wvices to evalua'e the characteristics of 18 sites for future installation of large generating units, and to select those sites which merited further study. Each site was to be considered for both nuclear and fossil (coal and gas) fueled plants. The study scope of work included a determination of the folloivirg site characteristics: o Seismelogy of the area o Access by highway, rail and water o General population density (1960 Census) o Probable foundation conditions o Site advantages and disadvantages o Site suitability for nuclear, coal and gas fired units o Recommendations as to which sites merit further study and which are preferable for nuclear, coal and gas fired units. o Preparation of a study report 4 In order to eliminate bias, the study did not consider transmisalons and land costs. Ebasco Services concluded that out of eighteen sites,11 would merit further study at some point in time. With ragard to site suitability for the various types of generation, the report stated that: o 4 sites are suitable for nuclear, oil or gas fired plants, o 1 site is suitable for a nuclear or gas fired plant, O Page E-8 _ _ _ _ _ _ _ - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ . l
o 3 sites are suitable for coal or gas fired plants, and o 3 sites are suitable only for a gas fired plant. Ebasco recommended that for the immediate future, LP&L consider the Welham, Little Gypsy, Nine Mile Point, Laurel Ridge and Waterford Plantation sites. Their order of preference for various types of generation is shown in Figure E-6. The report suggested that the decision regarding site acquisition be made promptly because, if not developed for power generation, the desirable sites would be acquired by other firms and developed for other uses in the not too distant future. This suggestion was proven correct when one of the recommended sites, Laurel Ridge, was sold during the course of the study. Of the four remaining sites, 'only two, Welham and .Waterford, were well suited to all types of generation and, therefore, preferred by LP&L. The company decided to purchase the Waterford site because of its proximity to gas fields; because it required shorter transmission lines than Welham; and because it was held by caly two owners, thus minimizing the complexity of the land acquisition process. DBCUWRON The nuclear reactor siting at the time of the Waterford 3 decision q was founded upon the Atomic Energy Act of 1954, The Act stated
. that it represents:
"an interim guide to identify a number of factors considered by the Commission in the evaluation of reactor sites and the general criteria used at this time as a guide in approving or disapproving proposed sites."
Sdection and approval of the Waterford 3 site was plarned and accomplished in accordance with the above principles and in light cf experience gained in siting of earlier reactor plants.
'Ihe site selection process for nuclear and fossil fuel power planti:
has undergone significent changes between 1967 and today. The major factors which contributed to these changes included the following: o Increased environtrental awareness of the general public and contention of environmental issues by special interest groups. c Enactment of 'the National Environmental Protection 4t [NEPA) in 1969, and resulting formalization of the plant Liting 1 process. Page E-9
o Enactment of several federal laws influencing plant siting decisions, such as the Coastal Zone Management Act, Endangered Species Act, Fish and Wildlife Coordination Act, National Illstoric Preservation Act and Wild and Scenic Rivers Act. o Promulgation of ASC/NRC regulations, such as General Design , Criteria, Standard Review Plans and Regulatory Guides. o Enactment of a wide range of state legislation and regulations affecting plant siting, licensing, construction rind operation. o Federal and state legislation and related court decisions such i as the Calvert Cliffs Decision of 1971. o Developments in state-of-the-art geology, meteorology, socio-economic studies and other site selection related disciplines. Because of the above factore, the plant alting process of today differs significantly from that practiced in the late 1960s. Current site selection studies place far greater emphasis on environmental and socio-economic issues. Evcluation of various site characteristics breve increased both in scope and depth. Recommendations regarding site suitaMlity are now developed based on numerical weighting of site parameters, not on adjectival comparison of site characteristics. In summary, the site selection techniquer used today include significant enhancements over the methods used at the time the Waterford 3 site was selected. Ilowever, application of these new techniques was neither possible in 1967, nor would it have necessarily resulted in the selection of an alternate site. Present reactor siting methods are still the subject of a national debate. DMC, Inc. believes strongly that these methods would be significtatly enhanced by inclusion of an analysis relating cost and benefits of environmental enhancements. This cost / benefit analysis would establish a factual basis upon which to decide: o whether environmental effects of constructing a plant at the alternative sites have been carefully studied, o whether the proposed site meets the requirements of the NEPA and other applicable regulations, and o whether the cort of implementing environmental protection mcatures is reasonable and acceptable to the rate payer. Page E-10
l~ CONCLUSIONS Decision Management Company, Inc. evaluated LP&L's site selection methods and decision to build a plant at the Waterford Plantation.
'] Based upon this analysis we have determined the following:
- a. Techniques used to evaluate available sites and select the Waterford Plantation were adequate in light of project needs and virtually identical to the common industry practice.
- b. LP&L senior management was actively involved in the site selection process (site acquisition was ratified by the Board of Direetcis).
- c. The Waterford 3 site was reviewed by the AEC/NRC, found acceptable in light of the Atomic Energy Act, the NEP A and other applicable regulations; and accepted for construction of a nuclear power plant.
Based upon the above considerations, DMC, Inc. concludes that LP&L's site selection methods and decisions were adequate and prudent. The evolution of LP&L's plant siting methods is not within the scope of this study. We recommend, however, that all future LP&L plant (3 siting activities / decisions include a cost / benefit analysis as outlined in this subsection. () 2.2 Feasbility Study and Waterford 3 Decision DESCRIPTION In 1968, Louisiana Power & Light Company and New Ocleans Public Service Inc. commissioned Eberco Services to develop an estimate of the cost of natural gas and coal which would result in the same total production cost for the gas and coal fired plants u for a nuclear power plant. The study was comprehensive and included a comparison of gas / coal / nuclear plants in the optimum size range (1100 MW) and an alternate range (750 MW). The study's scope of work included: o Preparation of an inquiry specification for a Nuclear Steam Supply Syster (NSSS) and nuclear fuel for a 1000 to 1100 MW unit (issued to General Electric, Combustion Engineering, Westinghouse and Babcock & Wilcox). o Preparation of an inquiry specification for a coal firec and gas fired. steam generating unt of comparable size to the nuclear unit (issued to Combustion Engineering, Babcock & Wilcox and
.[m L,)) Foster Wheeler).
Page E-11 ;
o Preparation of Plot Plans (assuming a site similar to Little Gypsy), General Arrangement Drawings and Project Outlines for all three plant types in the 1000 to 1100 MW range. < o Analyses of proposals for NSSS and coal / gas fired boilers. o Preparation of project investment estimates for a Boiling Water Reactor (BWR) plant, a Pressurized Water Reactor (PWR) plant, a Coal Fired plant and a Gas Fired plant. o Computation of net station heat rates and annual fuel consumntion for the above units at 80% and 60% ennual capacity factors, o Calculation of the total unit production cost in mills per kilowatt-bour. o Development of the study report. The study report concluded that a gas fired plant would be the most economical alternative if natural gas could be obtained for
$0.30/mBTU or less, dependent on the capacity factor for the nualcar and coal fired plant. Since coal could not be delivered to the New Orleans area for under $0.23/mBTU, and because of breakeven cost sensitivity to plant capacity factors, the study did not offer a clear recommendation regarding the difference between the nuclear and cosl alternatives.
DISCUSSION During the decade of the 1960s, selection of the type of plant to meet future power needs was based, almest exclusively, on technical and economic factors. The issues considered included the following fac^ ors: o Developments in the field of power production systems and equipment and commercial availability of the new te.ehnology. o Most economical unit size acceptable in light of the system size, reliability and maintenance requirements, o Availability and cost of various types of fuels; utility i compan!# ability to negotiate long term supply contracts; and l reliability of fuel supply. f The decisien as to what type / size of plant to build was arrived at by identifying the combination of technology, fuel type and unit size which resulted in the lowest total cost per kilowatt-hour. The decision to build a nuclear plant at Waterford Plantation was Page E-12
/] made based upon consideration of the above factors. At the time,
/ LP&L management had at its disposal the following facts:
- a. Technology: Both nuclear and coal / gas fired power generation technologies were commercially available.
- b. Unit Size: Both nuclen and coal / gas fired plants were economical in the 1100 MW range; an 1100 MW unit was acceptable in light of the size, reliability and maintenance requirements of Middle South Utilities' system.
- c. Fuel Availability: The natural gas supply was believed to be unreliable because of curtallments which began in the late 1960s and worsened in the early 1970s. Both nuclear fuel and cual were available at the time, however low sulfur coal was not regarded as an attractive option because of the long distance between the mines and LP&L, and related transportation costs and uncertainties.
- d. Environment: Coal fired generation was considered to be slightly riskier than nuclear because of:
o environmental concerns regarding sulphur emission and strip-mining of low sulphur coal, (V~] o the appareat success of nuclear technology, as witnessed by 16 operating plants and numerous NSSS orders. and o the fairly stable regulatory environment.
- e. Economy: The cost of a gas fired installation wr.s the lowest of the three alternatives considered by LP&L; however, because of fuel price instability and the uncertainty regarding supply availability, it was not considered as a viable option.
Economic advantages between nuclear and coal fired plants were not clearly discernible. Based upon the above factors, Lensiana Power & Light decided to construct Waterford 3 - an eleven hundred megawntt nuclear power
-- plant. The project was announced on September 16,197b.
CONCLUSIONS Decision Management Company, Inc. evaluated the feasibility study and the circumstances underlying the decision to build Waterford 3. Based upon this analysis we have determined the following:
.,3 a. Techniques employed by Ebasco Services in developing the Nuclear-Fossil Plant Comparison were virtually identical with -(\ ') the comrron industry practice.
k Page E-13
- b. The study did not consider oil fired generation; in light of the subsequent 1973 oil embargo and the resulting high degree of instability in the price and availability of oil, omission of this alternative was not detrimental to LP&L consumers.
- c. The study did not provide clear proof that a nuclear plant would be more economical than a coal fired plant. Instead, it presented a range of values within which the nuclear plant would result in lower electricity costs.
- d. Orders for nuclear reactors were growing at an unprecedented pace; there was a general concensus in the industry and the government that nuclear plants would be supplying a continuously increasing share of U.S. power needs -- i.e., that they would most probably be more economical than coal fired plants.
- e. LP&L load forecasts clearly indicated the need for new generating capacity.
Based upon the above ecnsiderations, DMC concludes that Louisiana Power & Light Company's decision to build Waterford 3 was appropriate, prudent, and made in the best interest of LP&L's consumers. 2.3 Other Strategic Planning Activities DESCRIPTION At the time the Waterford 3 decision was made, LP&L had extensive experience with the development of new generating facilities. The company had successfully completed several gas fired power plants, and was in the process of designing and constructing new oil and gas fired units. Because of the success on its earlier projects and the absence of problems on the then current endeavors, the company concluded that its approach to power plant construction was appropriate for its future projects, including Waterford 3. The above conclusion was based on the following reasoning: o Nuclear power plants completed during the 1960s were constiveted and managed using methods similar to those used on fossil fuel fired stations, o Nuclear power technology was regarded as stable and well developed. The success of units completed dursag the 1960s offered tangible proof f. hat the risk and exposure involved in fossil and nuclear plant construction were about equal. Page E-14 L
o Waterford 3 cost was estimated (in November of 1970) to be b . approximately $230 million. 'lhis (in terms of $/kw) cost was I consistent with the cost of LP&L's major fossil-fired units. The LP&L approach to construction of fossil-fueled plants did not require development of formal' strategic plans for project financing, execution and management. Strategic planning responsibilities were, to a great extent, delegated to the Architect-Engineer. LP&L's
. involvement in this effort was relatively minor and limited to key
- decisions and/or authorizations, such as: '
o Selection of an Architcet-Engineer and Construction Manager o Review and approval of key design concepts o Authorization of studies and selection of alternatives ! These responsibilities did not require a large number of personnel; they. were accomplished by a small project staff with ad-hoc > assistance from LP&L's functional organizatform. 4 Strategic planning of the Waterford 3 was done in accordance with the above principles. In summary: 1 N o Formal strategic plane were not prepared; the plant was to be
- designed and constructed as any other LP&L facility - in accordance with the company's standard operating practi~s; o Involvement of LP&L's sents management in Waterford 3 initiation. was at approximately the same level as in its fossil-fired units; o Involvement of 'LP&L's Board of Directors in Waterford 3 was
'- limited to ratification of the site purchase agreement and approval of project budgets; o LP&L did not nake crganizational changes nor hire additional personnel; during the early years, its participation in Waterford 3 was very limited. DBCUSSION The philosopny of a large majority of utility companies until the mid-seventies was that their primary business objective was the production,~ distribution and sale of electric power - not the design
'and construction of power generation facilities. The responsibility l
- for the latter job was -usually assigned to an engineering and/or
- construction firm. While ihis approach was prevalent, some utility d companies developed in-house capabilities and acted as their own I Page E-15
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1 Architect-Engineer (AE) and/or Construction Manager (CM). Both approaches to plant engineering and construction were reasonable and adequate. The decision as to which approech to adopt was a function of the utility company's size and the intensity of its construction program. As a general rule, large utilities were more likely to do some or all of the engineering / construction management with its own work forces; other companies opted to hire an experienced AE/CM. The AE/CM was usually hired to act as the utility company's Agent. The AE/CM's job was to safeguard the client's interest; to design, procure and construct a plant which would meet client-defined requirements and performance characteristics; and to complete the project on schedule and at a minimum cost. He relationship between the utility and its AE/CM was based on a great degree of mutual trust and close personal ties among the top executives. His relationship was developed over a long period of tim e. Because of these close ties and the professional engineering code of ethics which restricted competitive bidding, the AE/CM was assured that it would be awarded all future contracts by its client (s), provided its performance on the ongoing projects was adequate. The promise of future work provided assurance to the utility that its AE/CM would safeguard the client's interest to the best of its ability. The above environment, combined with stable economic, regulatory and labor conditions virtually eliminated the need for formal strategic planning. We believe that LP&L was reasonable in assuming that the strategy which worked well on its earlier projects would be appropriate for Waterford 3. Selection of Ebasco as the Waterford 3 Architect-Engineer is discussed in Chapter Q. For purposes of this chapter, it suffices to say that at the time of Ebasco's selection, its experience included four domestic _ nuclear power plants, (Robinson and Millstone projects had been completed, St. Lucie and Vermont Yankee were in progress) and several overseas nuclear projects in Japan, Spain, Italy and Taiwan. In addition to this, Ebasco had completed several major test facility projects for the AEC (now NRC) at the national reactor testing station in Idaho. The more notable of these were the Advanced Test Reactor Project and the Power Burst Facility. CONCLUSIONS Decision Management Company, Inc. evaluated LP&L's strategy development, organization design and project mobilization techniques, and analyzed the involvement of the senior management in strategic planning of the Waterford 3 project. Our conclusions and Page E-16
recommendations regarding these subjects are as follows: N a. The strategic planning techniques used on Waterford 3 were identical to the common industry practice. From today's viewpoint, these techniques were inadequate in light of project needs. We believe, however, that this deficiency could not have been predicted in the early 1970s. Consequently we find that LP&L's management exercised reasonable judgment and acted prudently.
- b. Louisiana Power & Light Company's involvement in strategic planning and project mobilization was commensurate with the common industry practice. While LP&L's project team was unusually small, 'its size did not reflect negatively on the quality of the key strategic decisions,
- c. Involvement of LP&L's Board of Directors in strategic planning was commensurate with the common industry practice. The Board was kept informed of the key management decisions, but its role in the decision making process was, generally, passive.
There is no reason to believe that the Board's more active participation in.the strategic planning would have changed any of the key decisions. n(
\ '
Based upon the above. considerations DMC, Inc. concludes that LP&L's. methods, involvement and decisions regarding Waterford 3 strategy development, organizational design and project organization were appropriate and prudent. These methods and levels of involvement would not be appropriate in today's conditions and environment, and should be revised acccedingly. DMC, Inc. recommends that -LP&L consider and implement the following enhancements: o Develop and document' a formal Strategic Planning System; an outline of functions that should be included in this system (as a minimum) is presented in Subsection D-2. c- Develop a clear definition of responsibilities, authority and accountability of. and interfaces among the MSU, MSE and LP&L's Board of ' Directors / senior management, project management and prime ccatractors. The above recommendations should be implemented as soon as practicable, and in no event later than the initiation of Waterford 3 retrofit program. [.v Page E-17
3.0 Grand Gulf Decision The purpose of this section is to evaluate the initial decision of the Louisiana O Power & Light Company to anter into the Grand Gulf agreement. The evolution of ' the agreement is discussed in Section F-2. DESCRIPTION Generating capacity that would eventually become known as Grand Gulf #1 and #2 was originally conceived as two identical nuclear units at different sites. Planning for that capacity was initiated in 1971 by the Middle South Operating Committee. At the time, the key parameters of the MSU system were as follows: o Installed capacity consisted of approximately 7500 MW of gas and oil fired plants. o Peak demand was approximately 7000 MW and the overall system reserve was about 7%. o Over the previous four years MSU's peak load had grown at 14% per year; load growth for the next decade was forecast at above 9% per year. l Based upon the annual load growth of 9%, MSU expected the 1980 load to exceed 15,600 MW, thus requiring (at least) 17,000 MW of generating capability. MSU's installed capacity of 7500 MW and the ongoing generation expansion of 6000 MW would not be sufficient to meet the projected 1980 peak load. Consequently, additional generation capacity had to be installed within the 1978-1980 time frame. The MSU Operating Committee considered the above factors in light of generations needs and the construction programs of the operating companies. At the time, LP&L and AP&L were committed to installing about 3,000 MW of nuclear capacity, whereas MP&L and NOPSI existing and planned generation was exclusively oil and gas fired. Because of the Operating Companies' recent experience with gas curtailment and the difficulties in obtaining long term fuel contracts, the Committee recommended that nuclear units be committed to meet the 1980 generation needs. In mid 1971, a joint committee of MP&L and NOPSI was formed to begin the planning of two identical nuclear units. The MP&L unit was to be installed at Port Gibson (Grand Gulf site), and NOPSI's unit at a location in eastern New Orleans known as Alligator Point. In August of 1971, MP&L and NOPSI retained Sechtel as architect-engineer for these projects. A month later, the MSU Operating Committee recommended that MP&L's and NOPSI's units Page E-18
d' be constructed for 1979 and 1980 operation, respectively.
\
The Grand Gulf project (Mr&L's unit) was announced in January, 1972. Bechtel Corporation proceeded with the preliminary design effort and prepared an order of magnitude estimate for Grand Gulf and the NOPSI nuclear station. These estimates (issued in June 1972) indicated significantly higher costs for the NOPSI unit, primarily due to poor subsurface conditions at the Alligator Point
- site. In July 1972, the Operating Committee considered this 4
information and expressed its concerns over the cost disparity and potential capacity shortfalls due to regulatory or construction delays
- which could result from constmetion at two separate sites.
. In August 1972, NOPSI withdrew the east New Orleans site from further consideration as a location for the 1979-1980 nuclear unit. At the September 1972 Operating Committee meeting, MP&L raised ' concerns that it could not finance one, let alone two, nuclear units. However, MP&L indicated it would undertake construction i management of a second unit at Grand Gulf if joint financing could i
- be arranged. The Operating Committee considered this situation in light of the following factors:
o' The Port Gibson site was sufficiently large to accommodate l
- two nuclear units o The NOPSI and MP&L units were of the same design i
o Bechtel was the architect-engineer and constructor on both units o Construction of two units on the same site was likely to be far less expensive than construction at two sites in different states o Neither MP&L not NOPSI had the financial capabilities necessary.to finance two nuclear units at Grand Gulf p o Grand Gulf capacity was needed to meet energy demar.d by the ! end of the decade l l Based _ upon these considerations, the Committee concluded that Middle South Utilities should construct two nuclear units at the
- - Grand Gulf site, but that the project could not be financed in a l conventional manner.
l In March of 1973, the Middle South Services Board of Directors agreed to examine Grand Gulf financing difficulties, and to consider
\_/ alternate options for the ownership and financing of future system L
Page E-19 t w g- n- - - -- , m ,,e
genercting units. The Board agreed that for financial planning purposes, all future base load units of the MSU system would be considered as owned by a separate generating company. The decision to form a generating company subsidiary was made in June I of 1973. Middle South Energy, Inc. (MSE) was organized in February 1974. l Its charter was to undertake the construction, financing and l ownership of certain base load generating units, including the Grand Gulf Station. MSE was organized to enable the operating companies in acquiring required base load capacity that no one operating company could finance on its own in that time frame. Its relationship with operating companies was defined in the Availability Agreement dated June 21, 1974. Under this Agreement, MSE agreed to finance and own Grand Gulf Station for the benefit of the Middle South System; to make its power available to the operating companies; and to become a party to the System Agreement. The operating companies agreed to purchase power from Grand Gulf, and to reimburse MSE, as a minimum, for its operating expenses, depreciation, and interest charges. Payments to MSE were to be made in accordance with the MSU System Agreement or any other agreement st.bstituted therefor. At the time, the System Agreement provided that during the time periods when an operating company's generating capability was less than its capability responsibility, it would be responsible for payment in proportion with its deficiency to the sum of deficiencies of all operating companies. Shortly after the MSE was organized, the state of Mississippi issued a Certificate of Public Convenience and Necessity and preliminary site work was started. In September 1974, a construction permit was issued by the AEC, and the Grand Gulf construction effort began. DISCUSSION Louisiana Power & Light Company's decision to enter into the 1974 Agreement for purchase of power from the Grand Gulf project was analyzed to answer the following two questions: o Did LP&L have reason to believe that additional capacity would be required to meet the power demand of the early eighties? r o Did LP&L consider all options available to it for meeting power demand in the early eighties? The answer to the first question can be obtained from analysis of the company's projections of generating capacity, and the peak loads in 1981 through 1984 shown in the following table: Page E-20 u _ _ _ _ - _
1 1. 1981 1982 1983 1984 Fossil Units. 4247 4247 4247 4247 Waterford 3 1165 1165 1165 1165 St. Rosalie 1 1200 1200 1200 St. Rosalie 2 12,QQ Total -Capacity 5412 6612 6612 7812 Peak Demand 6270 6950 7690 8459'
- Reserve (MW) -858 -338 -1078 -647 Reserve (%) -13.7 -4.9 -14.0 -7.6 r
'This forecast was not available in 1974; the figure shown is 10%
above the 1983 peak load. Data in the above table show clearly that LP&L forecasted the need for additional power throughout the early eighties. Even with its ambitious construction program, the company was projected to be in ' a negative reserve position throughout this time period and therefore one of the primary users of the Grand Gulf output. In interviews with LP&L management, DMC was informed that the purchase of power from : Grand Gulf was the only practical option y available to the company. Other options were not deemed practical i because of the following reasons: o Construction of new facilities was not a viable option because LP&L was already committed to construction of three nuclear l
- units. The financial strain caused by these projects made it impossible for the company to finance additional units on its own.
-o Conservation was not regarded as a viable option because LP&L's industrial consumers were already energy efficient, and
- the gains achieved through conservation effort in the residential consumer market would be ineffective and its results l unstable. l The above analysis indicates that LP&L had reason to believe that Grand Gulf' power would be needed to meet the need of its L consumers,-and that the company considered alternative means of [. meeting the projected need. 'Ihis reasoning was reinforced on June l 25, 1975, when LP&L announced that it was cancelling its plans to construct: the St. Rosalie nuclear generating station. The company [- stated that the decision to cancel the project was brought about by p anticipated regulatory delays and escalating costs, which had nearly
' f, dI doubled over the period of only one year.
L Page E-21
LP&L reacted very strongly to perceived causes of the St. Rosalie cancellation, and gave notice regarding the impact of these events on the future cost of el 20tricity. LP&L's President made the following remarks at ft.e time:
"Much of the added cost (from $1.2 to $2.3 billion in one year) can be laid to the 'no growth' environmentalists and the bureaucratic red tape of those federal agencies involved in regulating the building of nuclear facilities.
As an example, take the added cost involved in going ahead with our first nuclear unit at Waterford. When announced in September,1970, estimated cost of the Waperford unit was $230 million. Ilowever, rulings and requirements of the Atomic Ejargy Commission and the Justice Department were largely responsible for delays in stcrting construction until November,1974, when a construction permit was finally issued. These delays, coupled with the increased requirements of the Environmental Protection Agency, have tripled the cost of the plant to an estimated $700 million (to rise to.more than $800 million in 1977), and have resulted in a four-year delay in the time schedule. Unfortunately, such cost increases must eventually be made up in the amount our customers pay for their electricity." Based upon the above considerations, DMC, Inc. believes that LP&L's options for securing needed capacity were limited. Consequently, the remaining issue to be addressed in this analysis is whether the Availability Agreement of 1974 was equitable to LP&L and its consumers. The Availability Agreement for financing Grand Gulf was built upon the System Agreement of April,1973. The objective of the latter was to establish a contractual basis for the planning, construction and operation of the individual companies' systems and facilities, and to equalize certain costs associated with the construction, ownership and operation of such facilities, as they are used for the mutual benefit of all of the companies. The operating companies within the Middle South System recognized that economies of scale require the planning, construction and operation of bulk power supply facilities to be done on a system-wide basis. The System Agreement required operating companies to own or contract for the generating capability necessary to serve their own customers, and to provide forecasts of future peak loads to the Operating Committee. The Committee reviewed the operating companies' forecasts annually and updated the generation addition plan for the entire MSU system. When this I Page E-22
~ plan indicated the need for new facilities, the Operating Committee
~( would recommend that a new generating unit be considered by one of the operating companies based on the companies' needs for capacity and economic considerations. The new unit was usually sized based on the MSU system demand. This approach allowed the operating companies to install larger units and thus capitalize on economies of scale. Excess capacity temporarily not needed by the company owning the new unit was shared and paid for by the other operating companies until the owner company's needs increased.
'lhe -Availability Agreement expanded the above concepts to include MSE, a company with generating capacity and without load responsibility. . Since MSE's capacity was to be developed for the benefit of the operating companies, these companies agreed to pay for this capacity regardless of whether or not it was needed et the time it came on line. MSE was to be reimbursed by operating companies who needed this capacity in accordance with the following cost distribution methods:
o Charge operating companies requiring MSE capacity in proportion with capacity required to the overall MSE capacity, o Deduct charge: and capacity accounted for in the above step from the total charges and the overall MSU capacity. A o Distribute remaining charges among all operating companies in proportion with their generating responsibility to the overall system generating responsibility.- DMC, Inc. believes that the Availability Agreement did not favor any one of the operating companies. Under certain circumstances however, this agreement would have resulted in inequitable cost distribution. The potential inequity of the cost distribution resulted from the System Agreement which MSE and the operating companies would be a party to. The System Agreement used the last unit installed by a party to the agreement as the participation unit with which to equalize capability among the companies. Since MSE had no load, the MSE capacity would always be equalized to that of the deficient
' companies. As the companies added owned capacity, their position relative to one another would shift from "short" (deficient) to "long" and vice-versa. . . Thus, the short companies, in the early years of the Grand Gulf 1 unit would find themselves paying relatively high costs for Grand Gulf capacity only to lose that capacity later when they became long. The companies that were originally long would qg[ benefit .by obtaining the Grand Gulf capacity later when they
( v became short at a lower price than in the early years. Page E-23
To overcome this problem, the operating companies decided to permanently allocate .the Grand Gulf capacity. This permanent allocation removed the inequity, since the company that paid the high front costs of Grand Gulf in the initial years would retain that espacity in the later years when it would be less costly. Revisions to the Sptem Agreement which effected permanent allocation of Grand Gulf capacity, are discussed in Chapter F. CONCLUSIONS Decision Management Company, Inc. evaluated the circumstances surrounding LP&L's 1974 decision to contract for purchase of power from the Grand Gulf station. Based upon that analysis, we have determined the following:
- a. LP&L had every reason to believe that Grand Gulf power would be required to meet the needs of its customers,
- b. LP&L considered all available options to meeting the power demand of the early eighties. Grand Gulf power purchase agreement was the only feasible option available to the company.
- c. The Availability Agreement did not f avor any of the MSU operating companies,
- d. The cost allocation method _ contained in the 1974 Availability Agreement was inadequate. Since this agreement is no longer in effect, this determination is moot.
Based upon the above considerations, DMC, Inc. concludes that LPAL acted prudently and in the best interest of its customers with r respect to the 1974 decision to purchase power from the Grand Gulf station. O l Page E-24
FIGURES 9 i Page E-25
w v FIGURE E-1 V ENERGY / DEMAND FORECASTING. SYSTEM MCIPAL US MACRO DATA ECONOedC MODEL j
~- 645TORICAL Lpat LP&L O
HiSTOR.Ct.L l ECONCMIC EENGY & 1P&L thC. ECONOutC ; FORECASTING DATA,# LUS
- LP8L MODEL fM A METERL ENERGY Mm3
? MODEL ' WODEL l
I l LPEL - TYPICAL a - l MARG 8NAL PielCES W
-9 I 4 h LPat WEATHER -
DA1A ENERGY CO W Ekv0LON iW X. RAMS CUSTOMEN D AT A- ~ A/C SAT., ETC. KNOWN
#410HT FIGURE PROVIDED BY LP&L RA%E TOAD DEVELOP-MENTS
FIGURE E-2 COMPARISCN OF UTILITT INDUSTRf CONDITIONS IN THE 1960's and 1970's FACTORS AFFECTING CONDITIONS AND ENVIRONMENT CONDITIONS AND ENVIRONMENT PLANTCONSTRUCTION IN 1960s IN 1970s AND BEYOND
===-----=---------- =================....__.======= ====--- ------- ================
LOAD GRONTH Steads; Power demand doubled Erratic; Function of changins in, artroximatelse a decade, ecoaonic, mcio-rolitical ann resulators conditions. PROJECT Arrroximatels 4 sears. Arrrorinatets 9 searsi le sears DURATION for nuclear riants. COSTOfFUELS Stable due to cowetition Erratic; Manipulated as inter-and resulators polics. national cartels and chanses in resulators polics.
. ... .... ....- ...... ...........-- - =........___.
PP0JECTCOST Derendable; Based on a wealtn dishls ur.derendable; Subject to FORECASTS of historical data and stable rapid ls chansins economic economic, socio-rolitical and conditions and environmental re9ulators environments. codes and resulations. SCHEDULE FORECASTS Dependablei Based on known dignis underendable; Suoiect to durations and constraints, deless due to intervention, and stable lead times. resulators processes, ccurt decisions, resulators changes and poor availability of materialss etuirnent, labor and car.tal. AVAILABILITYCF Aw la surris of qualified Inadequate due to growth of TRADE LABOR sanrover available. nuclerr industrv and coeretition from other industries. AVAILABILITY OF Awle surris of qualified Inadequate due to nuclear ENGINEERIN6 LABOR sanrower available. Industrs stowth and coeretition from other industries. AVAILABILITYOF Adequatei Delivers schedules Extremels poor; Shor space for MATERIALS & fire and bid costs reasonable certain toenodities vars EQUIPMENT due to sharp cowetition limitedi Deliveries late and bid between manufacturers. tests nigh due to ' seller's urket'. AVAILABILITf/ COST Steadels available at Surris unstaole due to erratic 0F CAPITAL reasonable interest rates, econoss and nish intPrest rates. LICENSIN6 PROCESS fairls straishtforward and Loos and complex; relativels short. Hawered bs intermition and court decisions. PEGULATORYCHANGES Practicalls nonexistent. Numerous and frequent. ENVIRONMENTAL Addressed on a plant-bs-Plant formalprosrassandatedDsICA CONCERNS basis, and court decisions.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = ==- -------m=-----------
73
-(> \
!' FIGUREE-3 LP&L (xTUAL AND FORCAST PEAK LOAM 02
===================================================================================================.....==========
YEAR O F- FORECAST 1965 1964 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 2978 1979 1980 1981 1982 1983
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== **=== ===== ===== ===== ===== ===== =====
ACTUAL LP&L PEAK LOA 05 942 1140 1284 1498 1779 1872 2096 2389 2563 2692 2883 3180 3515 3852 4091 4078 4256 425?
===== ===== ===== ===== ===== ===== =2=== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
FORECAST LP&L PEAK LUAD5 F 1965 995 0 1966 1150 1150
'R 1967 1300 !## 1320
- E 1968 1960 1460 1460 1480 i C 1969. 1645 1645~ 1650 .1650 1710 l A 1970 1840 1840 1840 1840 1915 2050 l
5 1971 2050 2050 2050 2115 2310 2310 l T 1972 2280 2280 2422 2605 2605 2500 1973 2516 2516 2742 2936 2936 2770 2770
, ft 1974 2793 2793 3113 3310. 3310 3070 3070 3070 i [N A =1975 3100 3100 3533 3730 '/30 3400 3400 3400 3000 i
" )D '1976- 3441 3441 4010 4205 4205 3770 3770 3770 3330 3215 E 1977 3820 4550 '4740 4740 4180 4180 4100 3696 3394 3438 1978 5163 5342 5342 4600 4600 4400 4102 3682 3874 39f4 I' 'F 1979 6020 6020 5100 5100 5100 4554 3995 4200 4421 4220 0 1980 6787 5650 5650 5450 5055 4335 4552 4447 4156 3857
.R 1981 6270 6270 6270 5108 4381 4613 4822 4664 4337 4130
-s
. 1982 6950 6950 5670 4752 4977 524! 4934 4458 4356 4274 f '1983 76Yo 6293 5111 5373 5400 5166 4553 4605 4640 4082 E 1984 6986 5520 5798 6119 5454 4452 4732 4844 4319
'A 1985 5961 6257 6556 5781 4824 4799 5098 4396
- R 1986 6723 6975 6122 5024 5191 5255 4466 1987 7459 6443 5245 5295 5335 4565 S 1988 6800 5425 5402 5492 4737
-H 198?- 5592 5516 5652 4909
- 0. 1990 5660 5762 5023 W 1991 5895 7138 N 1992 5247
===== ===== ===== ===== ===== ==*== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
"S?
j t _. fM
.f
\
/
t
\ d --
t
O FIGUREE-4 FORECAST / ACTUIAL LOAD RATIO 5
=========------- ===== =====================-==============================================================
YEAR OF FORECA5i 1965 1966 19(/ 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1922
===== ===== ===== ===== =,=== ===== ===== ===== ===== ===== ===== ===== ===== ===== ===== ----- ===== =====
FORECAST / ACTUAL RATIOS F 1965 1.0s 0 1966 1.00 1.00 R 1967 1.01 1.01 1.03 E 1968 0.97 0.97 0.99 0.99 C 1969 0.92 0.92 0.93 6.93 0.96 4 1970 0.98 0.98 0.93 0.98 1.02 1.10 S 1971 0.98 0.98 0.98 1.01 1.10 1.10 T 1972 0.95 0.95 1.01 1.09 1.09 1.05 1973 0.98 0.98 1.07 1.15 1.15 1.08 1.08 ft 1974 1.04 1.04 1.16 1.23 1.23 1.14 1.14 1.14 A 1975 1.08 1.08 1.23 1,29 1.29 1.18 1.18 1.18 1.04 8 1976 1.08 1.08 1.26 1,32 1.32 1.19 1.19 1.19 1.05 1.01 E 1977 1.09 1.29 1.35 1.35 1.19 1.19 1.19 1.05 0.97 0.98 1978 1.!4 1.39 1.39 1.19 1.19 1.19 1.06 0.96 1.01 1.04 F 1979 1.47 1.47 1.25 1.25 1.25 1.11 0.98 1.03 1.08 1.03 0 1980 1.66 1.39 1.39 1.39 1.24 1.06 1.12 1.09 1.02 0.95 R 1981 1.47 1.47 1.47 1.20 1.03 1.08 1.13 1.10 1.02 0.97 1982 1.63 1.63 1.33 1.11 1.17 1.23 1.16 1.05 1.02 1.00
===== ===== ===== ===== ===== ===== ===== ===== ===== ====r ===== ===== ===== ===== ===== ===== ===== =====
0
r i FIGURE E-5 LPBL SYSTEM HISTORY b(~s MW p." I 7,000 _. I v (..r I 6,000 I O
,i I
d i r--- I ., 3 8 5,000 I E I I
- . , M i .-
( 4,000 ._ [-*
/
, ./
3,000 g
/ \
2,000 _
, / A - EARLIEST FORECAST B- ACTUAL PEAK LOADS j C- LP&L CAPABILITY D- WATERFORD 3 (ORIGINAL SCHEDULE)
- - E- WATERFORD 3 (1974 ESTIMATE) s F- ST ROS ALIE I FIGURE PROVIDED BY LP&L G- ST ROSALIE 2 y . . . .' .
. . . i 65 67 69 71 73 75 77 79 81 83 85 87 89
' F 6G - 68 70' 72 74 76 78 80 82 84 86 88 90 yE R 1965 66 19 67 68 70 72 74 76 78 80 YhR
' 69 71 73 75 77 79 81 FORECAST l . . . . . . .. . .
FIGURE E-6 SITE SUJTABILITY AND SITE PREFERENCE Site Suitability and Preference Site No. Site Name Nuclea r Coal Gas I North Side, lac Des Allemands 7 No 11 11 North Side Lake Maurepas 6 No 10 I11 Southeast Side Lake Maurepas 4 No 8 IV Northeast Shore Lake Pontchartrain , (near the Rigolets) No No No V South Shore Lake Pontchartrain No No No l Adjacent to Chef Menteur VI Chef Menteur No No 9 V1I Alligator Point, Lake Borgne No No No VIII Proctor Point, Lake Borgne No No No IX Be rtrandville 5 5 5 X Stanton Plantation No 4 4 XI Gulf Shipside No No 6 X 1I Waterford Plantation 3 3 3 Z Z 4 XIII Laurel Ridge X1V Welham 1 I 2 XV Ninemile Point Station No 7 1 Market St. Station No No 7 XVI XVII Michoud Station No No No XVIII Little Gypsy Station No 6 1 FIGURE PROVIDED BY LP&L O O O
Chapter F POLICY CONTROL As described in Chapter D, policy control includes functions of the Board of Directors (BOD) and executive management which are necessary to assure that direction of individual projects is consistent with corporate objectives. The purpose of this Chapter is to evaluate Louisiana Power & Light Company's policy control activities with regard to Waterford 3 and the Grand Gulf agreement. The emphasis of Section 1, which concerns Waterford 3, will be placed on actions of LP&L's Board of Directors, and its relationship with LP&L executive management. Section 2 will focus on Grand Gulf related decisions made during the period from 1979 to 1982. 1.0 Senior Management Involvement in Waterford 3 Control DESCRIPTION Louisiana Power & Light Company is an operating company of Middle South Utilities, Inc. (MSU). The company is a separate corporate entity headed by a Board of Directors which is autonomous with respect to LP&L's affairs. The composition of LP&L's BOD during the period from 1970 to 1982 is shown in Figure F-1. As indicated by the figure, i.ts size ranged from eight to twelve members. At least 50% of the 9 membership was represented by outside directors; the remaining members, including the Chairman, were drawn from LP&L. YSU and sister companies' management. New members of the LP&L Board of Directors are elected in accordance with the following procedure:
- a. When a seat on the BOD becomes vacant, the Chief Exccutive Officer (CEO) of the company begins the process of identifying and formulating a list of possible candidates who might be chosen to fill the vacancy. The CEO uses many methods and sources to obtain information on possible candidates. He might, for instance, ask company management to compile a list of influential, respected business and professional people in the area; he may, himself, have personal knowledge of such individuals, and/or he may ask existing Board members to recommend individuals for consideration. The CEO may also utilize these same sources to develop lists of possible candidates from a given geographic area, or with a given area of individual expertise, if it is felt that a particular area or expertise should be represented on the Board.
- b. Once the CEO selects the possible candidate, he may discuss O his/her accomplishments, background and other relevant Page F-1
information with some or all of the Board members.
- c. The CEO then makes a recommendation to the Board of Directors. His recommendation is considered, discussed and a decision is made to elect the candidate.
Louisiana Power & Light Company's Board can be called into session by the President, any Vice President, or any two members of the Board. The Board's primary functions include the following: o Consideration of construction undertakings o Review of monthly operations reports o Review of LP&L's financial status and assessment of its financial capability o Review of the Audit Committee findings o Review and approval of all applications to the Securities and Exchange Commission u P.eview and evaluation of the performance of the Chief Executive Officer and senior management o Approval of LP&L's annual construction budget o Implementation of corrective actions From 1970 to 1979, the Board's involvement in Waterford 3 was limited to the key financial decisions. These decisions included approval of the initial budget, revisions thereto, and ratification of the site purchase. All other key decisions (such as AE/CM selection, NSSS/TG purchase, etc.) were made by LP&L executive management. The Board of Directors was kept informcd of these decicions but did not have to take any formal actions. Waterford 3 budget requests wert. presented for the Board's approval as a block within LP&Us annual budget. DMC was informed during the interviews that additional detailed informatior. w;.s available upon request; in general, however, budget requests were presented by LP&L excautives. The Directors ciscussed/ questioned reasons for cost increases and, if satisfied with the answers, ratified the proposed budget. As the cost of Waterford 3 escalated, so did the Board of Directors' concern. These concerns were heightened by developments regarding personal responsibility of Directors for actions (or lack thereof) of Page F-2
the Board and the company. In 1979, after the Three Mile Island incident, the Nuclear' Regulatory Commission challenged all levels of corporate management. to become more actively involved in nuclear construction and operation. Louisiana Power & Light Company responded to the above stimuli by instituting monthly presentations of Waterford 3 status. These presentations were' prepared by LP&L's executive and project management and given to the Board, corporate management and staff. A typical presentation to the Board addressed the following subjects: o Project budget o Potential cost increases o Project status o . Bulk quantities estimate and status o Start-up systems release status o Licensing cetivities and issues T
.s o Project manpower o Cost comparison with other projects o - Contractors' performance .
Monthly review meetings . increased the Board's understanding of nuclear plant. construction / operation in general, and Waterford 3 status and problems in particular. This increased knowledge was reflected in the budget review.and approval process.- For example, on August 18, 1980, tne Board of Directors considered the following information in conjunction with the proposed budget revision: o Total project cost estimate (approved estimate, currcat estimate, variance and to4 ate expenditures) o- Explanation of urlances (by cost category and underlying cause)~ o Comparison of Watert'ord 3 cat per kilowatt of capacity with costs of other plaats of the same vintage o Material variances (valves, piping, cable, insulation, conduit, etc.) g Page F-3
o The estimated cost of responding to NUREG 0660 requirements (by cost category) o The estimated future cost growth related to unresolved generic safety issues and licensing developments o Variances between the 1979 and 1980 estimates by contract and underlying cause o Variances in construction indirect costs DMC was informed that members of the Board reviewed the above subjects and questioned executive and project manag. ment extensively as to the cause of problems and the corrective action taken. The proposed estimate was approved unanimously. LP&L's Chief Executive Officer has formed a Board-level committee on Waterford 3 comprised of two outside Directors and himself. This formation of this committee will heighten the Board's overall involvement in project affairs even further. DISCUSSION The composition, election of members, responsibilities and operating methods of LP&L's Board of Directors ate similar to the common industry practice. As in any investor-owned company, the Board is vested with ultimate responsibility and final accountability for the company's operating results. a typical outside director of LP&L Company is an accomplished and successful businessman. His background is in the fields of finance, insurance, agriculture or manufacturing. His philosophy in the > management of nuclear power projects is to rely on the company's senior management for all technical decisions, and to concentrate on policy guidance and executive performance review. A typical inside director of LP&L is m experienced utility industry executive. He held operational, m9nagement and executive pmitions ( in the company, and is thoroughly knowledgeable with all facets of its operation. His philosopi.y is to become personally involved with all strategic decisions, and to rely on his staff for tactical decisions and day-to-day management. The relationship between LP&L's Board of Directors and its executive management is based on a great deal of trust. Because of the company's long record of good performance, low electric rates and successfully completed projects, this confidence was well earned. As the Waterford 3 project proceeded and project costs escalated, the Board became more actively involved, but its relationship with management did not change in substance. Page F-4 L - _ _ _ - - _
Throughout the project duration, the Board remained satisfied with the performance of company management and bared its decisions
- 9. . upon management's advice.
The fact that Waterferd 3 performance is above the industry norm indicates that the Board's assessment of LP&L's management was correct, and that their relationsnip was beneficial to the project. CONCLUSIONS Decision Management Company, Inc. reviewed the invMyement of LP&L Company's Board of Directors in the Waterford 3 project. o Based upon this analysis, we have determined the following:
- a. The involvement of LP&L's Board of Directors in Waterford 3 was commensurate with the utility industry norm.
- b. Project status information received by the Board of Jirectors wea adequate in light of its role on Waterford 3.
2.0 Evolution of the Grand Gulf Agreements DESCRIPTION The 1973 MSU System Agreement provided that, in order to use economies of scale, capacity additions were to be planned on a system-wide basis. This provision enabled operating companies to e install larger, more economical units than would be possible if each company planned its system independently. These new, larger units, referred to as " participating units", created a temporary "over-capacity". The Agreement provided that this excess capacity be distributed among all operating companies in accordance with a formula which made each corispany's reserve margin equal to the overall system reserve margin. During the early and mid seventies, the load growth was rapid and the MSU Operating Committee's plans called for the addition of one or more units during practically each year into the future. As a result, the relative capacity positions of the operating companies were expected to chenge frequently and with them, the amount of capacity purchased or sold. 'lhis rapid growth would also minimize the duration of "over-capacity" periods. During the late seventies, the load growth slowed significantly. As a result, "short" compank.s had to purchase capacity from "long" companies over much longer time periods. This situation was aggravated by the fact that all upcoming " participating units" were nuclear and coal plants; such plants involve hip,h fixed charges (capital investment) and low fuel cost. In accordance with the 1973 equalization formula, the short companies would have had to pay for 9 this capacity during the early years of operation, when the capital recovery costs were the highest.( Later on, when capital recovery Page F-5
payments were reduced by depreciation, the short companies would not have guaranteed access to capadty for which they had borne the high front-end costs. This situation was first recognized by Louisiana Power & Light Company. In early 1979, LP&L cenducted a study to ide.itify alternative approaches to allocation of MSE capacity and revision of the System Agreement. The company proposed that shares of ownership of Grand Gulf be permanently fixed. The Middle South Operating Committee conducted similar studies during the same time period. DMC, L.c. was informed that the primary concern in these studies centered on what type of generation would " participate" in the capccity exchanged for y equalization of reserve capacity (i.e., latest base load unit or intermediate oil / gas unit). In September,1979, the Middle South Operating Committee agreed that "in the long range, assignment of MSE capacity should be to accomplish proportionate financial responsibility for coal and nuclear units as base load capacity." After discussion of the various plans concerning the allocation of MSE capacity, the Operating Committee voted to recommend to the Chief Executive Officers that MSE capability be allocated under a plan which continued to equalize capacity using each companies last added base load unit (or permanently allocated share of MSE capability). LP&L voted against this motion, preferring to equalize capacity using intermediate gas / oil units. It should be noted that LP&L's objection centered only on this issue. LP&L agreed to the method of determining permanent allocations of Grand Gulf based upon providing each company with its proportionate share of base load coal and nuclear capacity. Following this meeting, LP&L prepared a presentation for the Operating Company CEOs. The presentation addressed LP&L's reasoning behind their objections to the plan recommended by the majority of the Operating Committee. The discussion of this issue continued into early 1980. During 1980, LP&L participated with the other Middle South companies in a generation expansion study conducted for the Middle South System by Energy Management Associates. This study concluded that: 1
- 1. The Middle South operating companies should construct as much nuclear and coal fired capacity as they could finance on favorable terms.
Page F-0 l
9 3 2.. Construction of substantial nuclear and cocl fired capacity would greatly benefit the customers of Middle South operating-companies because of the expensive oil-fired generation displaced. In July,1980, LP&L, MP&L, AP&L, NOPSI and Ark. Mo. signed a
" Memorandum of Understanding Allocating capability of Grand Gulf
#1' and #2, which fixed allocated shares of Grand Gulf #1 and #2 in accordar.ce with the following schedule:
LP&L 32.4% or 709 MW MP&L 37.8% or 827 MW NOPSI 29.8% or _. fin MW 2188 MW The memorandum also specified that for purposes- of the System
. Agreement, Grand Gulf #1 and #2 capacity would be counted as
" capability" but not as a " participating urit" because the capacity was not installed by a' party to the System Agreement.
On June 15,1981, _ the Second Amendment to the Availability Agreement stated that fixed shares of ownership of Grand Gulf 1 and 2 'were to be distributed in accordance with the following y schedule: AP&L 17.1% or 374 MW LP&L- 26.9% or- 589. MW MP&L 31.3% or 685 MW NOPSI 24.7% or _.510. MW 2189 MW - DMC was informed that -the above agreement is, primarily, a credit
. document. Its purpose was not to reallocate fixed shares of Grand .
Gulf ownership, but to assign indemnification responsibilities to the four operating companies.
' On July 28, 1981, the operating. companies and MSE executed and shortly thereafter filed the Reallocation Agreement with the
_ Securitics and Exchange Commission l(SEC), assigning the fixed shares m
'of Grand Gulf capacity as was agreed in the July,1980 Memorandum
' of Understanding. In this agreement, Arkansas Power & Light
-agreed to relinquish all rights to Grand Gulf, and the remaining
-three companies. agreed to assume the capacity of Grand Gulf in _
accordance with the following percentages: s{ W)- . Page F-7
i UNIT 1 UNIT 2 COMBINED TOTAL LP&L 38.57% 26.23% 32.40% 709 MW MP&L 31.63% 43.97% 37.80% 827 MW NOPSI 29.80% 29 10% 29.80% SE MW 2188 MW We were informed that the main reason fixed percenteges were assigned as shown above was in 6 hat Arkansas Power & Light Company's base load generating capacity is 50% nuclear and 50% coal, wherecs the other operating companies had ordy minimal coal fired capacity and no nuclear capacity at all. In light of MSU Operating Committee's s decision that base load capacity should be defined as nuclear and coal fired generation, it was obvious that AP&L fulfilled its obligations and, therefore, did not need any additions. We were also informed that Arkansas Power & Light company's early entry into nuclear and coal generation was largely due to the repudiation (with Arkansas Public Service Commission's concurrence) of AP&L's natural gas fuel contracts. This left tMm with no assured fuel for their existing plants. Consequently, when capacity was needed for the system, and was to be constructed by Arkansas Power & Light Company, (because they also were the short company la the system) the celection of nuclear and coal by AP&L was a clear choice. As a result, AP&L's system is approximately 85% nuclear and coal based. DISCUSSION The Grand Gulf Unit Power Seles Agreement is before the Federal Energy Regulatory Commission awaiting the decision. We will, therefore, limit our observations to a few key c, sues and focus on benefits and drawbacks entailed by the current capacity and energy formula. It appears to us that the debate as to how Grand Gulf capacity and power should be allocated is rooted in the following facts: o Grand Gulf costs, like tha cost of all contemporary nuclear power plants, have escalated to unprecedented levels. From today's perspective, the cost of this capacity appears unattractive. o The peak pow er demanti growth has slowed down considerably. From today's perspective, the new capacity appears unnecessary in the immediate future. We believe that Louisiana Power & Light Company properly identified the two key issues underlying this subject: the need to achieve a proper mix of the base load, intermediate and peaking generation, and the advisability of eliminating inequities entailed in - the 1973 System Agreement. Paec F-8
With regard to the generating. capacity mix, LP&L noted correctly. that a proper ratio of base to intermediate and peaking capacity must be achieved in order to minimize the cost of electricity to the consumers. As indicated in Figure F-2, the optimum mix range is narrow and extremely sensitive to variations in capital cost of base load (Cb) and intermediate units (Ci), as well as the corresponding fuel costs (Fo and Fi). During the course of the 1970s, LP&L gas deliveries under contracts to United Gas and Texaco had been reduced or curtailed, In addition, the 1978 Fuel Use Act prohibited the use of natural gas or oil for new utility boilere, and required discontinuation of oil / gas fired generation after 1990. These developments, coupled with the high price of oil, altered the status of LP&L's gas and oil fired base load units to intermediate and peaking _ category. Therefore, in light of : data shown in Figure 1-1, LP&L was well advised to acquire additional base load capacity. The assumptions used as a basis for development of the optimum generation mix changed significantly between 1980 and 1983. Because of the global recesalon and conservation measures, the price of oil dropped. Due to events discussed in ~other parts of this I.U report, the capital cost of nuclear and coal fired plants underwent rapid escalation. These changes made new base load units (at least temporarily) less economical than the intermediate vr.its. LWith regard to the aforementioned agreements to which LP&L is'a
- l. party, we find that the company acted reasonably and prudently.
As previously discussed, LP&L identified inequities entailed in earlier agreements and acted promptly to. alleviate them. In the process, the company achieved its goal to permanently fix its share of Grand Gulf. By doing so, LP&L assured that the capacity paid for by the ccmpany- would be available to it throughout the plant operating life. Of course, if power demand remains low for a prolonged time period, L.P&L will have paid for unneeded capacity. Conversely, if power dema.ad accelerates and costs of fossil fuel grow, Waterford 3 and Grand Gulf may prove to be an extremely wise investment. L
.With regard to Arkansas Power & Light's withdrawal from Grand Gulf, the explanation we received from LP&L and MSU executives is reaeonable. (AP&L has adequate' base load coverage, whereas the other generating companies do not.)
p J b Page F-9
CONCLUSIONS DMC, Inc. reviewed the evolution of the Grand Gulf agreements in light of criteria defined in Section D-3. Based upon the analysis, we have concluded the following:
- a. LP&L management properly identified the need for revision of the System Agreement and Grand Gulf capacity allocation, and took prompt actions to implement improvements,
- b. LP&L accomplished its goal of permanently fixing the shares of ownership of the Grand Gulf ur.its. Tt:is is beneficial to LP&L and its consumers.
t
- c. LP&L management defended the company's interests and, where appropriate, voted against decisions detrimental to it.
- d. Some decisions made in conjunction with Grand Gulf did not favor LP&L's positans. Withha the circumstances which existed during the past decade, and within a system setting, it would be unrealistic to expect all decisions to favor a single company.
Based upon the above considerations, DMC, Inc. concludes that Louisiana Power & Light management acted prudently and competently with regard to all facets of the Grand Gulf 6greements. O O Page F-10
t O FIGURES b m Page F-ll
d- FI6URE F-1 COMPOSITION OF LP&L COMPANY'S BOARD OF DIRECTORS DIRECTOR'S NAME ------------ ------- INCUMBENCY PERIOD -------------------- 70 71 72 73 74 75 76 77 78 79 80 81 82
== =:============ ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
ANIRUS,6.L. CM CM CAIN,J.M. PN PN PN PN PL CASSIBYs C.J. OD OD 08 OB OD OD OD OD OD OD OD CUCULLUs L.J. PN , ENGLAND,H.M. OD - DD OB OD OD Ob OD OD OD OB OD OD OD FISKE,D.B. OD OD HARRISON,C. OD (ILPATRICK,T.R. OD OB 08 OD OB OD OD OD 08 OD OD OB LENIS,F.M. CL CL PM PM PM PM PM PM PM CM CM CM CM McCOLLM, W. PN PN PN PN PN PN PN OD RA!LS 6.C. OD OB OD RODRItiUE,E.A. PL PL PL PL PL PL CL CL OD 08 OD OB OD SAY0IE,S. OD 09 OD 0D OD 00 SHACKELFORD,H.D. OB OB OB OD OD 08 OD 00 08 OD 08 OD SMITH,No.C. OD OD TURER, W.V. CD OB WYATT,J.M. VL VL VL PF PL PL PL PL PL PL CL ,O) \ ==---======================================== _ LEGENB: C CHAIRMAll P PRESIDENT V VICE PRESIBENT OD OUTSIK DIRECTOR F MSU SYSTEN FUELS L LP&l. ColFANY N MSU, INC. N lEIPSI ~U
FIGURE F-2 ENERGY COST - GENEGATION MIX RELATIONSHIP O 37 ' 4.69 3.6 4.57 I I I P = 15,000MW e C2,= S3OO/KW Cg= SiOOo/KW -j F= I 50 MILLS /KWH 15 MILLS /KWH g Fa= 4.44 g 3.5 s / a ( G $ 3.4
\ L '
- .31{ s 5
- 5 8 I 3.3 r 1.19 g
E I i cz=$ioo/xW 12 4.06 3.1 3.93 0 10 20 30 40 50 60 70 80 90 10 0
% BASE LOAD GENERATION FIGURE PROVIDED BY LP&L
P A R T ll1 WATERFORD 3 PROJECT MAN AGEMENT PAGE CHAPTER G - INTRODUCTION 'ID PROJECT MANAGEMENT
- 1. Project Management Functions 1
- 2. Evaluation Criteria 5 CHAPTER H - PROJECT MANAGEMENT
- 1. Background 1
- 2. Evaluation Criteria 3
- 3. , Organization and Responsibilities 4
- 4. Project Milestones 20 CT 5. Overall Conclusions 24 27 Figures CHAPTER J - BUDGETING, ESTIMATING AND COST
- 1. Background 1
- 2. Evaluation Criteria 2
- 3. Estimating & Budgeting 3
- 4. Cost Evolution & Variance Analysis 13
- 5. Cost 17 Figures 19 CHAPTER K - SCHEDUIJNG .
- 1. Overview of Scheduling 1
- 2. Waterford 3 Scheduling Process 4 i 3. Evaluation of Waterford 3 Schedules 10 Figures 22 CHAPTER L - ' PROJECT MONITORING AND REPORTING
- 1. Overview of Monitoring and Reporting 1
- 2. Evaluation of Waterford 3 Monitoring 4 and Reporting I Figures 17
-,g b
V
l Chapter G (m) V INTRODUCTION 'KJ PROJECT MANAGEMENT This part of the Waterford 3 / Grand Gulf Study report consists of five chapters. They examine the methods used in planning and control of project work and evaluate the roles of the key protagonists. Their purpose is:
- a. To describe LP&L's/Ebasco's project management functions - Estimating and Budgeting, Scheduling, Status Reporting, Project Control and Support Functions,
- b. To exam'ne the roles and responsibilities of LP&L/Ebasco's and key contractors' management personnel, and
- c. To analyze the past and present construction cost estimates and determine whether' the estimated total cost is reasonable and prudent and not the results of defective or incomplete planning and monitoring of contractor charges,
- d. To evaluate the construction schedule and determine whether the unit can be in service as scheduled,
- e. To review company's management capabilities and determine whether
. ,q LP&L has had sufficient managerial expertise to properly monitor the construction of the Waterford No. 3 Unit from a technical and financial perspective, and
- f. To document DMC, Inc. conclusions regarding the above issues and make recommendations in the following areas:
o Should any portion of the cost of the Waterford No. 3 unit be deemed to be imprudently incurred and, if so, how much? o Should LP&L augment its management capability in order to successfully complete, license and operate the Waterford No. 3 Unit. The following sections present a generic overview of project management functions and define criteria for evaluation of Waterford 3 project management, estimating, scheduling, rronitoring and control activities. 1.0 ' Project Management Functions Project Management represents the top level of project planning and control. Its objective is to assure that project participants work toward common goals, and that the project direction is consistent with' that of the company. This objective is accomplished through a process involving planning, monitoring and control of project (\ j) work and resources, and a number of specialized functions. Following is a brief overview of processes and functions which provide for disciplined work performance and resource management. Page G-1
i O PLANNING Project planning entails five management functions: Project Definition, Responsibility Assignment, Scheduling, Estimating i Budgeting and Resource Planning.
- a. The Project Definition function entails activities necessary to develop a complete and accurate definition of project scope and requirements. To ascertain clarity of this definition, the project is (usually) subdivided into its component parts, elements and/or phases. Tasks necessary to complete the project are defined for each individual component, element and/or phase. The process is completed through scoping of task work and definition of component characteristics / requirements. The results of the Project Definition function are formally documented to serve as a basis of scope change control.
- b. The Responsibility Assignment function entails activities necessary to assure that all elements of project scope are assigned to 1,erforming organizations, and that work assignments are not duplicated. At the outset of this process, the project participants are identified and their relationships documented in a Project Organization Structure. Responsibilities for performance of work within various tasks is then documented in Responsibility Matrices, Bid / Contract Package lists, contracts, purchase order or other similar documents. The Responsibility Assignment is completed with the development of charters, rosters and position descriptions for all participating organizations and positions.
- c. The Scheduling function begins with a definition of the interdependence of project components and interfaces among participating organizations. This objective is accomplished by documenting input / output requirements and precedences of project tasks in a Logic Diagram.
Based on this Logic, and estimate of quantitles and resources, a Project Control Schedule is developed.
- d. The Estimating and Budgeting function defines the quantity of resources required to accomplish project work. Estimates are developed based on the definition of project scope, assumptions of project conditions and environment, and experience with sirallar projects.
Page G-2
(. .- 1 m Estimated quantities, manhours and costs are negotiated with performing organizations to determine project budget. Budgeted costs are then time-phased over the duration of the project to establish the Performance Control Baseline.
- e. The Resource Planning function assures availability of funds, manpower and other resources required to support project plans. Resource levels are determined irum the Performance Control Baseline and doc:Imented in Cost, Manpower and other plans. Risks associated with the project, and accuracy of planning assumptions are analyzed, and contingencies determined to account for such risks. Project resource levels, plans and contingencies, as well as resource planning assumptions are reviewed, reconelled with strategic plans, and formally approved.
The products of the above functions are compiled into a Project Execution Plan, a document providing tactical guidance for accomplishment of desired project results. MONFIORING The Monitoring Process consists of three management itmetions: Data Collection, Analysis and Forecasting, and Management Reporting.
- a. The Data Conection function provides for collection of schedule, cost and technical status data. Data are collected by means of techniques compatible with those used for project planning, and in a manner which assures objectivity and timeliness. In addition, the Data Collection function includes data checks designed to assure that project status information is valid and auditable,
- b. The' Analysis and Forecasting function provides for asse'ssment of the current and future project
- performance. Project status and conditions are analyzed in light of approved baselines and planning assumptions.
Deviations, if any, are noted and formally documented. In the ~ case.that technical, schedule or cost variance is significant, problems are analyzed to determine causes and identify solutions. Effects of problems, to-date performance and' proposed solutions are evaluated, and 3 estimates of revised scope characteristics and/or M resources prepared. Page G-3 --
O
- c. The Managensent Reporting function assures that all levels of management have timely and accurate decision making inforastion. This information includes:
o Technical, schedule and cost status, o Project environment and conditions status, and o Problem /veriance analysis and alternate courses of corrective actions. The above information is structured and management reports deigned to maximize visibility and to provide for data traceability. Results of the project monitoring process form the basis of management control. The increased visibility project status offered by these functions helns dhninish uncertainties associated with decision making, and leads to better overall project results. CONTROL The Project Control Process consists of three management functions: Work Control, Change Control and Baseline Control.
- e. 'Ihe Work Control function directs initiation and stoppage of project activities. This control extends through all levels of Project work breakdown structure (WBS) down to individual work assignments. Work Control is i>ased upon review of project plans. Review is performed to determine whether planning is realistic and supportive of p.'oject goals and baselines. Work initiation is authorized if planning is adequate and necessary funds are available. Work stoppage orders are issued when internal or external conditions indicate the need for project redirection.
L. The Change Control function provides a mechanism for dispmition of changes in project scope, requirements, schedule and budget. Proposed changes and their causes and effects are defined in Change Requests. Change Requests are evaluated in light of potential impacts and benefits, Changes are approved if they are mandatory Page G-4
(^ ( or if they optimize overall project results. If a change is necessitated by controllable problems, actions are taken to prevent reoccurrence.
- c. The Baseline Control function provides a mechanism necessary to assure that o accuracy and realism of project schedule and budget are maintained throughout project duration, 4 o any and all changes to project schedule and budget are formally approved, and o changes to project schedule and budget are incorporated into project plans.
The Baseline Control function is initiated following the approval of the Project Execution Plan and continued throughout project duration.
'the Project Management Functions establish a link between corporate goals and
.3 4 policy and the day-to-day project activities. While their scope and implementation d methods vary from one company to another, each function must be performed adequately _in order to achieve optimum project results. The manner in which Louisiana Power & Light Company and Ebasco performed these functions is examined
~
in the following sections. The evaluation was accomplished in light of criteria shown below. 2.0 Evaluat!on Criteria The adequacy of LP&L's and Ebasco's project management methods were evaluated
- in light of the common. Industry practice in the early 1970s, and the evolution of this practice over the intervening time period. Quastions addressed in our evaluation include the following:
- 1. Vere project management techniques used at the outset of Waterford 3 o adequate in light of project needs?
o reasonable in comparison with common industry practice?
- 2. Did the Waterford 3 staff develop appropriate project plans? Did these plans include fN
,l( o Project scope definition? Page &5
O o Estimates and budgets? o Project networks and schedules?
- 3. Were project level plans refined by contractors / subcontractors and performing organizations?
- 4. Was the status of work and performance of organizations / individuals monitored?
Did status / performance data include actual cost progress and labor performance?
- 5. Were project status and performance reported to management regularly? Were these reports accurate and timely? Did they provfde an adequate degree of visibility of project status, performance and actual / potential problems?
- 6. Did project management personnel take actions to resolve problems, improve performance and control cost / schedule?
- 7. Were project plans maintained current throughout the project duration?
- 8. Did LP&L and Ebasco monitor effectiveness of Waterford 3 project management methods and make necessary improvements?
- 9. Was the evolution of Wa;erford 3 project management techniques reasonable in light of the industry practice?
The following chapters document DMC's findings and conclusions regarding the adequacy of Waterford 3 project manageusent. O Page G-6 _ - _ _ _ _ _ _ _ _ __ ._ _ _ _ _ _ _ . __.__0
Chapter H PROJECT MANAGEMENT The management of a project as large and complex as a nuclear power plant presents a demanding challenge to those responsible for effective use of resources. This is 'especially true for a nuclear power plant project whe::e life cycle transcended the last decade. During the past 10 years, the nuclear industry went
. through a' period of expanding requirements and significant incidents. These events severely' impacted the management approach to achieving the ultimate goal of bringing a safe plant on line in a cost effective manner.
The objective of this chapter is to evaluate the performance and effectiveness of LP&L's and Ebasco's management of.Waterford 3 work anel resources. Since the ultimate responsibility for Waterford lies with LP&L, Chapter H will place greater emphasis on how LP&L managed the overall project and how it gradually assumed greater overall control and responsibility as the project proceeded through the startssp and pre-operational phases. Ebasco's role in project management of the
;Waterford 3 project is covered to a lesser extent; detailed discussion of Ebasco's perforinance on the component functional areas of project management,
_ (procurement, engineering, licensing, and construction, etc.) is presented in other parts of this . report.. This chapter will include a discussion and evaluation of Ebasco's overall performance and focus on how they integrated the resources of the key functional areas.
\.
1.0 - Background The continuously evolving circumstances and outside influence throughout the
- Waterford 3 project were monumental. A summary of the historical background and key events that occurred,during the project life cycle are described in Chapter C. .Some of the most significant influences that necessitated change and required management response are summarized by the following:
1.- REGULATORY CHANGE: The increase in the number and type of the regulatory requirements through the period of Waterford 3 construction was -large. by -any measure. Figure 0-2 shows an overall perspective of the number of regulations issued. This regulatory growth presented a t challenge in the form -of an ever-changing target with regard to what technical objectives needed to be achieved and what resources are
- necessary for their accomplishment.
2.- INCREASED PUBLIC AWARENESS: The increased involvement of the public in the licensing process and expanding role of environmental issues were the indirect cause of many of the regulatory changes. This created an environment that all utilities were not. accustomed to dealing with. It added another dimension to the overall management of the project. l
.3. COST ESCALATION: ~ Because of various incidents, the nuclear debate
.Page H-1
r and other unsettling developments, the financial market became wary of the security of investing in utilities in general and in nuclear utilities in # particular. As a result, utility bond ratings were decreased, and the industry began paying premium rates for the money needed to complete construction. In addition, inflationary pressure and skyrocketing interest rates created additional strains in the financial market. The capability of utilities to obtain the financing required to address ever-expanding cost projectiorc decreased significantly due to the aforementioned developments.
- 4. DISRUPTIVE EVENTS: Special events such as the Brown's Ferry fire and the TMI accident caused drastic regulatory changes. Projects at various stages of completion had to address the " lessons / learned" that evolved fron. these events. In addition, the NRC significantly increased the requirements for nuclear experience utilities must have prior to operation.
These requirements created an overwhelming demand and competitiveness in obtaining qualified operating personnel.
- 5. NUCLEAR BANDWAGON: The period during which the Waterford 3 project commenced can be characterized as an era when many companies were joining the nuclear " bandwagon". During this time period, there was a general consensus that nuclear power was the means of providing inexpensive and reliable power. This conviction was so widespread that from 1970 to 1974, for example, the utility industry ordered 121 Nuclear Steam Supply Systems. The large number of reactor orders in the early seventies created shortages in both shop space and qualified personnel, and created an extremely one-sided " sellers" market.
- 6. PAST UTIllTY EXPERIENCE INERTIA: Another significant condition was the inertia built up by utilities through years of experience with power plant procurement and construction. Before nuclear technology was developed, most utility companies contracted for requisite engineering, procurement, construction and start-up services with Architect Engineering / Construction Management (AE/CM) firms. A small number of companies had the in-house capability to perform some of these functions. What is important to note is that both approaches were equally successful. Virtually all pre-1970 endeavors were characterized by the relative ease and predictability of building additional generating capacity, both fossil and nuclear. This positive experience created an inertia force which ran countercurrent to the need to evolve and continually change in order to meet the expanding challenges of the last decade.
A more complete discussion of the project and industry history is presented in Chapter C. The items repeated here are highlighted to focus the reader's attentior to some of the more salient influences that affected the completion of the Waterford 3 project. Page H-2
Hvaluatice Criteria. c 2.0
- b. }
As discussed in the previous section, the management of the Waterford project was driven by a continual stream of external and internal influences. Within this environment,' the overriding evaluation criterion concerns management responsiveness to change, and its ability to optimize project performance in light of the changing conditions. While implementing this criterion, the evaluator must account for complexities and difficulties of the environment through which the project evolved, and set the range of acceptable performance standards accordingly.
- The basic elements of management in a changing environment are shown in Figure H-1. The process is initiated when a-stimulus or influence is perceived. This stimulus might develop within the project, or be created by external forces.
Whether the problem is internal or external, management awareness must be
- sufficient enough to_ perceive it. Once the stimulus or problen has been identified, information must be gathered to develop alternative solutions. When the information is gathered and analyzed, a decision is made as to which approach should be taken. At this stage, a detailed plan of action should be developed and implemented. Management must monitor the progress of implementation of the corrective action and use of the committed resources. If difficulties arise during corrective action imnlementation, a revised plan of action must be formulated, and the process repeats alf.
O. The necessary condition for evaluation of a management process is that all of its (I steps are traceable through documentation. DMC's ability to trace this process during -various historical stages of Waterford 3 was difficult during certain periods when precise documentation was not available. When such situations were encountered, information related to key decisions was obtained through interviews and evaluation.of diagnostic reports prepared during the same time frame by various consultants and regulatory agencie . The-key diagnostic reports considered by DMC included the Nuclear Regulatory Commission's SERs and SALP reports, as well as outside' consultants' reports prepared between 1977 and 1980. The acceptability of LP&L's management performance must be judged in light of how other utilities handled similar problems in the same time frame. The Waterford
. 3 management process was evaluated more intensely during the periods that could substantially affect the project cost and completion date. Also, any deficiencies in the management process were weighed against " bottom line" performance indices-by compering the -overall Waterford performance with performance of other projects constmeted in the same era.
The evaluation criteria for LP&L and Ebasco are, naturally, different as the two companies played distinctly different roles. Our criteria encompassed the overall management process and. addressed many different levels of Waterford 3 management. . 79 -J U 4 Page H-3 m i.r m . . _ _ _ _ _ _ J
i 2.1 Ebasco Criteria
- 1. Did Ebasco, ire light of the circumstances which existed at the time, respond to both internal and external stimuli in a timely and effective manner?
- 2. Did Ebasco commit adequate resources to the Waterford project in terms of number, quality, and structure of its organ sation?
- 3. Did Ebasco establish working relationships and open communication channels with LP&L in a manner which created an environment of cooperation, as opposed to confrontation?
- 4. Did Ebasco advise LP&L of problem areas in a timely fashion, even at the expense of identifying problems it may have been responsible for?
- 5. Ilow did Ebasco's performance on Waterford 3 compare with industry norms at the time?
2.2 LP&L Criteria As discussed previously, the biggest challenge to LP&L management was the continually changing nature of the environment surrounding the project. There were many outside influences that necessitated change kf the company's posture during this period. LP&L performance was evaluated in light of its ability to manage and respond to change. Our evaluation placed more weight on LP&L's ability to perceive the need for change, gather appropriate information and make required decisions, than on specifics of the corrective action.
- 1. Did LP&L (a) provide the appropriate level of involvement; (b) have an appropriate organizational structure; and (c) have capable key project personnel to monitor and control Ebasco's efforts?
- 2. Considering the past inertia of the utility industry, did LP&L management respond in a reasonable and timely fashion to internal and external stimuli which necessitated changes as the project evolved?
- 3. Could Waterford 3 have been completed sooner and at a lesser cost if LP&L had assumed a more aggressive project control role during later stages c,f the project?
The edequacy of LP&L performance against each criterion was evaluated in light of circumstances and capabilities that existed during the time period subject to evaluation. 3.0 Organization and Responsibilities Historically, utility companies employed several different approaches to procurement of nuclear generating capacity. Prior to Waterford, there was a period when the major Nuclear Steam System Suppliers were offering turn-key contracts in an effort Page H-4
H to promote nuclear power. The turn-key contracts were soon discontinued and the opportunity to acquire generating capacity in this manner eliminated. l When this option was no longer available, utilities began acquiring nuclear
! generating capacity in the same manner they historically acquired fossil-fired power plants, The acquisition methods ranged from one extreme where the utility contracted with an architect-engineer and/or construction manager for the total design and construction of the plant, with a minimum level of involvement on utility's part. The other extreme approach was taken by larger utilities which had the in-house capability to design and/or construct the plant with their own work forces. In between these extremes existed a variety of combinations of utility participation and contracted efforts. All of these modes of obtaining nuclear generating capacity have been and can be successful. Each mode presents its own set of unique challenges and problems and requires different approaches, and varying
. levels of responsibility and resource commitments.
The Waterford 3 project approached the part of the spectrum with minimal utility participation in the design and construction pacess. Ebasco was contracted by LP&L to design and construct Waterford 3; in the beginning, LP&L's role included monitoring and' providing technical input regarding operational and maintenance features. As the project progressed, LP&L's role significantly ircreased as they assumed the responsibility for plant start-up and, eventually, operation of the - Waterford 3 station. An idealization of how the rehtive levels of control and
- direction between a utility and its AE/CM change over the life of the project, is
~O shown in Figure H-2.
3.1- Evolution of Ebaseo Organization and Responsibility DESCRIPTION This section will address Ebasco's organizational structure and responsibility for the overall management of engineering and construction piiases of the Waterford project. As stated in the introduction, the functional areas of project management under Ebasco's control (i.e., engineering, procurement, licensing, construction, etc.) are discussed in their respective Chapters. Figures H-3 through H-5 show the basic evolution of Ebasco's prob:ct organizational structure over the life of the project. Ebasco's organization structure was typical of many AE/CM's orgnizations throughout the project. It consisted of a matrix orgLnization where resources were drawn from key discipline groups within Ebasco's corporate structure such as mechanical, electrical, and civil engineering, licensing, procurement, cost and scheduling and construction management. The resources were placed under the Project Manager's control for execution of the project. p)
-(
~'
The primary responsibility of the Ebasco Project Manager throughout the life of the project was to control the performance and integrate resources of these functional groups, and to assure that the overall Page H-5
I project was completed in the most emt effective and timely manner. He also was the focal point for client interface and project performance accountability. This simplified description of his responsibilities should not be construed to diminish the complex nature of the effort required to effectively manage engineering and construction of a nuclear project. Figure H-6 discusses Ebasco's corporate commitment to LP&L on Waterford 3. Figure H-7 presents an overview of the interface between LP&L and Ebasco as it evolved throughout the duration of the project. Figure H-8 summarizes the experience level of some of Ebasco's key project participants. Figures H-9 and H-10 present an overview of Ebasco's goals and principles used as the basis of planning and project control during the construction phase and the pre-operation / start-up phase, respectively. The difference in these two figures demonstrate how the responsibility shif ted from Ebasco (during construction) to LP&L (during the start-up and pre-operational stages.) Figure H-11 identifies some of the key stimuli and events responded to by Ebasco project management at various times during the project. The bottcm half of the figure presents the actions taken by Ebasco in response to these stimuli. Ebasco's response to the 1977 consultant's report is documented in reference 258. As will be discussed later, this report was one of the more significant external stimuli which acted as a catalyst to affect changes and improve overall project performance. LISCUSSION Ebasco's organizational structure, as it evolved through the project, is fairly typical of the industry's practice during that period. However, any organizational structure merely forms the framework from which effective project management can occur. An important aspect of any project organization is the capability of the people responsible for execution of the key management activitics. DMC evaluated the Ebasco team's capability both through a review of experience records, and through the interview process. It is our opinion that Ebasco's team was extremely capable throughnut the project. The support of Ebasco's corporate office, as reflected by the high caliber individuals in key project management roles throughout the project, is commendable. In 1977, an outside consulting firm reviewed Ebasco's performance on Waterford 3 and offered some criticism and recommended actions for improvement. Ebasco's response to this report, reference 258, was very professional and timely. Ebasco also conducted a number of internal evaluations, and the Waterford project continually Page H-6 l l
received the attention of Ebasco's corporate management. Chapter O S, Construction, offers other examples of Ebasco's ability to manage the change by modifying the construction management orgenizational structure to fit the various phases of construction. CONCLUSION Based on the above discussion, DMC finds Ebasco's organizational structure and the competence of the individuals placed in key positions to be significantly above industry averages and in relation to other projects of the same vintage. The ability of Ebasco's project and corporate management to respond to change has been clearly demonstrated; we find it to be above industry norms. Further evidence in supp rt of this conclusion can be found in other partc of this report and, also, later cn in this chapter. 3.2 Project Procedures DESCRIPTION lt was DMC's intent to review the Waterford 3 project procedures during three different project stages, (the beginning, somewhere in the middle and towards the end) 9nd determine how these p ocedures evolved in relationship to industry norms. There were three tpecific project procedure documents in place during the duration af the project. A document written in 1970, entitled the " Interface Guide" was the only Project unique document that existed until the Waterford 3 Project Procedure Manual was issued in May,1978 Subsequent to tnis, in late 1983, the Waterford 3 Project Procedure Manual was reissued as a more complete manual, incorporating the LP&L/Ebasco interfaces previously contained in the " Interface D - Guide", all project unique procedures, and identification of corporate procedures in use on the project. The Interf ace Guide is characterized more as expanding on contractual commitment than as project procedure. The Waterford 3 Project Procedures Manual is fairly comprehensive and typical of a project procedures manual that exists today. However, it appeared to us that this manual was r.ut finalized in the form that we reviewed it until late. Components of i .. this document were develope earlier, but had not been placed in Q ;. - one centralized manusl. s / .. g;$
; DISCUSSION Ebasco was an aperienced Architect Engineer /Constructior. Manager 7 f at the time the Waterford projeat was initiated and, consequently, it had in-house corporate procedures that were used as guidelines for the conduct of activities within each discipline area. However, it was f airly typical to have a comprehensive project procedure document that addressed project unique requirements and defined interf ace responsibility for processing tne review and approval of G key project documents. The detail and scope of this document increased as time went on. The leek of this document during Page H-7 9 .mmmmme--- -
1,. ,- . . m ,, .. , -. ,. .. earlier project phases is mitigated by the previous working relationship established between Ebasco and LP&L, and the fact tuat Ebasco's corporate procedures were being utilized during both the Engineering and Construction phase. CONCLUSION The lack of a project procedure document, throughout the project duration, was not consistent with general industry practice. However, no evidence was found that the lack of this document had any adverse impact on the overall project. 3.3 Evolution of LP&L Organi?.ation and Responsibilities, Figure H-12 characterizes how LP&L's overall responsibilities for Waterford 3 evolved over the life of the project. The e rinciples outl ned in the figure are typical of electric utility companies which ccatracted out the design and construction; this is especially true for firms engaged in construction of the first nuclear units. Many utilities tended, et the time, to minimize their involvement during the design and construction phases of a project. This was particularly true for those companies that had established a long history of understanding, trusting and working with their AE/ cms. However, even in the early stages of a project, there should be a sufficient level of utility involvement to assure that the plant io designed in a manner consistent with the utility company's unique operational and maintenance requirements. A strong effort to monitor and control AE/CM expenditures was not prevalent. As the nuclear project approaches operational status, a utility's involvement and direction increasad dramatically to assure the NRC of its ability M safely operate and maintain the plant. Requirements for this involvement increesed dramatical!.y after the TMI accident. A simplified, graphical illustration of the general transition of control and direction for a utility building its first nuclear plant is shown in Figure B-2. The preceeding discussion was provided as a background for the evaluation of LP&L's organization and responsibilities. The evaluation will address four distinct phases of the Waterf or d 3 project evolution: Engineering, Construction, Start-up, and Pre-operation. There is no distinct, physical transition time between phases, as all activities overlap and interact; each phase is characteri m ed by the prevalence of certain activities during the time period under consideration. The organizational structures, level of involvement and effectiveness of control will be discussed and evaluated in light of the standard industry practice that was prevalent at the time. The evaluation in the latter stages of the project will be more subjective, as a data base for comparison does not exist. While progressing through these various phases, it will be helpful to refer to Figures H-13 through H-17, which document LP&L's approved and actual staffing levels for the project. Discussion of each phase will be prefaced by identification of the time frame and definition of Waterford 3 status at the beginning and the end of the phase. Page H-8 I h ..I.II
r P k ~ . 3.3.1 Engineering Phase - 1971 Through 1974 PROJECT STATUS N _ Activity Start 71 End 74 Engineerin[; 7% 80% 5 Construction 0% 2% Start-up 0% 0% , [ E-g [ DESCRIPTION The LP&L project organization throughout this phase is shown in Figure 11-18. In interviews with DMC, LP&L characterized its involvement during tN engineering phase by the expression " lean and 7
- mean". Essentially, only two individuals were in positions which were directly responsible for the overall management of the
! Waterford project during most of this phase. - 7 Insicrht as to the level of involvement during this period was =: obtsineo principally from interviews, (nembers 1410,1418 and 1422), b While the organizational chart shows only two individuals in this I period, additional assistance was obtained by drawing on LP&L's corporate resources whenever particular troblems had to be resolved, E L or pointe of direction were needed. For example, LP&L used a personnel from an operating plant with expertise in instrumentation F and control when it was necessary to evaluate Ebasco's drawing specifications in this area. LPaL's involvement in the engineering [ and construction phases is shown in Figure 11-19. ur . LP&L's participation included review of key documents such as " top level" drawings, instrumentation and control diagrams, specifications, licensing documents and project progress reports. Pa!'ticular g attention was paid to all areas concerning plant operation and y maintenance. Examples of these reviews were provided in interview t No. 1410. Also, extensive meetings were held to discuss comments i and concerns with Ebasco. All purchase orders and contracts were 3 approved by LP&L management; all Waterford 3 estimates were approved by the Board of Directors after a presentation by LP&L management. r [ DISCUSSION LP&L's staffing levels (associated directly with the Waterford 3 a project) during this period were, generally, below the staffing levels f of other comparable projects. Ilowever, this fact alone cannot be 7 used as a measure of the degree of LP&L's participation and E direction of Waterford 3. Other utilities' project staffs ranged { between 20 and 30 personnel; these positions were filled, generally, Y with inexperienced people. During early project phases, these - employees gainert familiarity with the design construction and h I_ E Page H-9 { V
b -. . E 7 operation of a nuclear power plant. This approach has merit in tha+ it provides a long term program dmigned to enable new employees = to gain experience and, later, nasume responsibilities for plant 3 operation. I The drawback of this approach is that it sometimes resulted in a hindrance to A-E's performance and led to confusion in direction (if E strict control was not provided). A better approe.ch involves e placement of inexperienced employees under the direct control of the A-E, with the intent of gaining experience while being productive at the same time. . . In a utility with low staffing levels, the competence the Key C individuals involved in the monitoring and controlling effort must be I high. This was indeed the case with LP&L's staff during the early stages of th? project. DMC had significant interaction with all ' L. Individuals connected with the project during this project stage. We i believe that their level of dedication and competence was and is Fr very high. O The ideal situation would include a combination of the two g approaches discussed above; to have competent and experienced g individuals who could direct the A-E, while inexperienced personnel F are placed under the A-E's direction for training. < CONCLUSIONS DMC believes that LP&L's involvement and direction during the g engineering phase of the project was highly competent and adequate g in light of project needs. 5 3.3.2 Construction Phase - 1975 'Ihrough 1978 3 PROJECT STATUS a Aclivlig Start 71i EmL7ft _.1 E Engineering 80% 92% ' Construction 2% 58% h Start-up 0% 1%
- l L DESCRIPTION LP&L's organizational structures during this period are shown in l Pigures H-20, H-21 and H-22. Engineering, procurement and -
licensing continued to be active during this period. The period is [- characterized by significant construction progress, build-up in
- Waterford 3 staff and strengthening of LP&L QA activities. L LY&L's QA staff was assigned responsibility for monitorir.g the Ebasco construction effort during a part of this period. la 1975, I one individual was officially assigned to the site to monitor Ebasco's '-
L constructicn effort and provide weekly reports. He was also y authorized to sign certain work autnorizations. 4
- . Page H-10 g -
.9 . . . .
i Formal designation of an official construction monitoring role first oppeared on an LP&L organization chart in 1976; by the end of 1978, there were three persons in that group. Ebasco continued to report directly to the Project Manager throughout this period. Staffing of the project increased dramatically during this period. Dis is summarized by the following excerpt from document No. 290. Prior to the issuance of the Construction Permit, planning for the Plant Staff began. Drough 1975, methods of personnel recruiting and screening were developed using la-house and contract expertise. In mid-1976, in parallel with the Plant Staff organization chart approval, a detailed effort had commenced to select Waterford 3 employses from within.LP&L. Company Poll *y adjustments were made to accommodate the ariditional trainina, and travel to other utilities, whfeh would be required for Waterford 3 Personnel. Through 1977, project manning was successfully accomplished routinely with the exception of the special in-house selection program and a few special recruiting trips. In November 1977,- the Waterford 3 Station Superintendent / Project Manager recognized that Plant Staff manning should be accelerated f and presented his reasons for this recognition. A memorandum proposing a change in the Plant Staff organization chart was ( forwarded to Vice President of Power Production. By March 1978, 41 LP&L personnel were onsite and by May 1978, two_ months latar, the number had been increased to 53. Such increases were. accomplished without undue stress on LP&L recruiting caparollitiec." It must also be remembe ed that this period is characterized by the following conditions:
- 1. Regulatory changes, resulting in untimely engineering and procurement, were affecting construction progress.
- 2. It was clear that unit start-up would be delayed.
- 3. Construction expenditures were escalating.
- 4. Contractors were filing claims to recover the cost of regulatory changes and to justify the resulting untimely engineering and deliveries.
_p These. concerns led LP&L exacutive management to request that a project diagnals be performed by a consulting firm; the analysis was s Page H-11
completed in September of 1977. This report was critical of LP&L's management of the project, as well as Ebasco's performance; it provided a significant stimulus for change. The attention of LP&L management was immed;ately directed ta correction of the perceived Ebasco deficiencies. Ebasco responded to all points of the report in a timely and professional manner. LP&L's response to that report is not as clearly documented. The Company did, however, implement a corrective action and made significant organizational changes in October of 1978 (as a result of a request made in May,1978). During 1978, potential project cut-bah were also being studied by the company; thest studies were probably one of the reasons for the lag between the issuance of the diagnostic report and management approval of organizational changes. DISCUSSION Although there was a significant build-up of LP&L's staff during inis period, a differentiation must be made between personnel responsible for overseeing the Ebasco effort, and those which were being readied to assume start-up and operational duties. Based on the aforementioned evaluation, we would characterize LP&L's involvement in the monitoring and control as below industry standards. This deficiency is mitigated by the quali+y and tightness of the LP&L contract with Ebasco; the thoroughness of LP&L's audits of Ebasco and the lack of adverse findings; and the past relationship of the two companies. With the benefit of hindsight, one could argue that it would aave been effective to place more people directly in tne Ebasco organization for both training and monitoring purposes. This approach may have resulted in a more orderly transition from the construction phase to the start-up phase. LP&L's perception and general awareness of the changing conditions, rising ecsts and schedule slippages, which prompted them to request the aforementioned report, deserves significaat credit and is considered above industry standards. The timeliness of LP&L's response to this report was not consistent with the salient nature of the criticism, but is mitigated by the diversion of management's attention to resolution of financial difficulties and by Ebasco's response to the report. CONCLUSIONS Durir.g this period, a significant number of LP&L personnel were added to the project. The project work was still under the prime direction and influence of Ebasco, as it should have been. LP&L's l use of the diagnostic report as a tool to extract better project Page H-12
(m performance from Ebasco is considered above average. The timeliness of LP&L's response to report recommendations was (\j relatively slow, but is mitigated by other external influences. The criticism of LP&L in this report would also have been similar for many other utilities et the time. L 3.3.3 Start-up Phase - 1979 Through 1981 PROJECT STATUS Activity Start 79 end 81 Engineerinc 97 97 Construction 57 94 Star +-up 2 35 DESCRIP'I10N As discussed earlier, all project phases necessarily involve some overlapping. The start-up phase actually began in 1978, at which time the start-up staff was under the direction of the Station Superintendent. Figures K-13 and H-17 show an additional sharp increase in staffing levels which occurred durirg this period. O This period probably presented some of the most significant challenges to all utilities to effectively respond to and manage the 2 changing environment. This statement is especially true for Waterford because of the stage the project was in. In March of 1979, the Three Mile Island (TMI) incident occurred and triggered a period of exclusive regulatory ecncentration on TMI. This put all utilities in a position where clear direction was impossible to plan ~ for; yet everyone was aware that significant changes were occurring and would result fror" TMt. During this period, other significant events relevant to Watcrford 3 occurred as weP. Following is a list of the most iniportant developments:
- 1. 1979: TM1
- 2. 1979: Consultant's report on LP&L Management of Waterford 3 construction
- 3. 1979: Project slowdown due to financial and licensing reasons
- 4. 1979: NRC report indicating Lnder-eyoerienced staffing of 7- Waterford
( ) V 5.- 1980: Consultant's report on Start-up of Waterford Page H-13 (
l
- 6. 1980-81: Joint LP&L/Ebasco efforts in organizing for Start-up l
- 7. 1980: Project cut back
- 8. 1980: Industry wide competition for qualified people
- 9. 1980: LP&L CEO requests meeting with other MSU CEOs 'to discuss staffing and recruiting efforts
- 10. 1981: ACitS letter containing the following key findings:
(a) Criticism of under-experienced staffing (b) Praise of LP&L fcr outstanding control room design (c) Praise of LP&L for innovative design features
- 11. 1981: SER criticizing LP&L for under-experienced staff
- 12. 1981-82: Monumental recruiting effort by LP&L '
- 13. 1982: SER Supplement signing off on LP&L operational preparedness
- 14. 1981-83: Significant LP&L project organizational changes
- 15. 1982: New Chief Operating Officer and President of LP&L is appointed In parallel with and in response to these influences and events, significant changes were made in the Waterford 3 project organization. These changes are depicted in Figures H-27, H-23 and H-24.
In March 1979, the then current Project Manager assumed the position of Production Operation Manager. In this position, all station superintendents reported to him. At the sams time, a new Project Manager for Waterford 3 was selectad. In October of 1979, the then cuteent Project Maneger was promoted to Plant Manager-Nuclear and start-up remained under his control; the then current Project Engineer was promoted to Project Manager. During this period, LP&L management again sought an outside opinion on how LP&L was and should be managing the Waterford 3 O Page H-14 _ _ _ _ _ _ _ _ _ _ _ _ _ _ . I
i project, and an evaluation of the company's preparedness to assume start-up and operational responsibilities. The consultant's reports were' critical of LP&L's posture at the time, and made strong recommendations for future resource requirements and project organizational structure. In September of 1980, the then current Production Operations Manager assumed the position of Project Director, with Ebasco reporting <11rectly to him. In April of 1981, the Project Director was promoted to Assistant Vice President-Nitelear Operations, keeping the same general responsibilities. In November of "1981, the fossil and nuclear generation functions were completely separated and the Assistant Vice President, Nuclear Operations, was promoted to Vice President-Nuclear Operations, reporting directly to the Senior Vice PraMent. During this- neriod, recruiting efforts intensified greatly, as demonstrated by the following notable improvements: i -(a) Assignment of full time LP&L recruiters, one permanent recruiter in the fall of 1980, and one temporary in mid 1981. (b) ' Significant upgrading of advertising programs, including full page ads in industry magazines, local advertising and, in some cases, in the Wall Street Journal. (c) Addntion of three contract recruiters, beginning in June of 1981. (d). Use of personnel search firms for many key positions. (e) -Upgrading of all technical positions in the Nuclear Operations organization in mid-1981. (f) An across the board salary increase for technical Nuclear Operations personnel in 1981, in order to improve retention of personnel. (g) A general liberalization of relocation and other policies in order to attract key personnel. (h) Iraplementation 'of overtime compensation for salaried employees. Page H-15
As a result of these measurcc, LP&L was able to report to the 1:dvisory Committee on Reactor Safeguards, in August 1981, that the Nuclear Operations complement had increased to approximately 200 personnel, and that certain key positions had been filled. Nevertheless, the ACRS report was unfavorable. , In March,1J82, LP&L reported progress in its manning effort to the ACRS. During the six-month period since the previous ACRS meeting, the Nuclear Operation complement had ger>wn to 316 personnel with over 1,000 man-years of prior nuclent experience. The ACRS reported favorably on measures implemented by the Company in preparation for plant operation. Most of the description in this section is focused on outside influences, as they had e major impact on the ability of LP&L's management to devote as much attention to start <p as the importance of the phase might warrant. Several complex and important a.pects of start-up evolved significantly during this phase. One important aspect that was particularly well in hand was the scheduling and planning effort, which turned out to be ev ;n more critic.al as the complexities of the evolving recuirements increased. DOCUSSION The start-up phase was affected by changes of greater magnitude than any other phase of the Waterford 3 project. During that perloo, LP&L management was called on to make greater departures from its traditional posture Qan at any time during Company's history. This statement is true for all utilities, irrespective of the status of their nuclear plants. However, these changas had the most significant impact on utilities that were close to operation, because they had to absod) changes in a shorter period than utilities whose plants were in earlier stages of completion, or those whose ; plants were already operating. LP&L as a whole was severely ;mpacted during this period and, understandably, did take time to reset. Considering the magnitude of the changes in long standing company policies which LP&L was called upon to make, (particularly in recruiting, salary structure and the continuous demand 8.o obtain nuclear experience), the company's response must be regarded as reasonable. A natural tendency of LP&L (as well as many other org2nizations) was to promote frem within and manage with perple of LP&L who had performed outstandingly in the past. During the initial review of this time period, DMC was concerned with timeliness of LP3L's responses to internal and external stimuli. This concern centered around the possibility that, had LP&L responded in a mare timely fashion to all events during this period, it might have been able to oring the ;,lant on line sooner and as a Page H-16
lesser cost. As a result, we evaluated this phase of Waterford 3 in q much greater detail. 1his detailed analysis led us to the conclusion i that, unconsciously, we were utilizing the benefits of hindsight. Given today's knowledge, LP&L would have been better off if its recruiting efforts had started earlier. DMC believes that if today's LP&L organination had been in place during this period, Waterford 3, potentially, could have achieved fuel load sooner. However, considering the magnitude of changes LP&L had to absorb, we find the LP&L management effort during this period as Czuately responsive and competent. It also must be stated, because of this uniqueness, that it was extremely difficult to obtain a clear-cut retrospective data base against which LP&L's management response could be compared and evaluated. There is little doubt however that the industry norm changed significantly during this time frame. CONCLUSIONS la light of the circumstances and conditions just described, DMC corsiders LP&L management actions during this period as prudent. There are more details that went into this conclusion than can be included in the description and discussion sections due to time
. constraints. Extensive and intensive efforts were made by LP&L to
[] submit required data, and intemive evaluation was made by DMC to arrive at the conclusion of this section (Reference DMC - L290). ( / 3.3.4 Pregerational Phase 1982 to Present PROJECT STATUS Activity Strirt R2 Present Engineering 97.3 99 Construction 94 99 Start-up 35 82 DESCRIPTICN This period began with LP&L's receipt of a favorable ACRS letter, The letter was a direct result of some of the changes that were made in late 1981 and the intensive recruiting effort that continued through this period and is still in progress. (The objective of this program is to replace the contract personnel that were necessary to fill important posithns required by the expanding requirements and problems assulated with start-up). The Pre-operational phase was also et.aracterized by significant O- outside influences, resulting from problems with the Zimmer and {- Diablo Canyon nuclear plants. The concerns resulting from the Zimmer insestigation had significant impacts on the level and quality Page R-17
l r I of Acumentation that accompanied systems as they passed through prerequisite testing, pre-operational testing and, finally, system transfer to the the plant operating staff. Start-up throughout this period continually fell behind schedule. Some majoi reasons for these delays are as follows:
- 1. Inability to meet required manpower levels due to industry-wide shortage.
- 2. Increased retesting due to turn-over of start-up personnel
- 3. Expanding and evolving documentation problems
- 4. Retests for design changes i
- 5. Addit'onal environmental qualification requirements
- 6. Retests for TMI issurn C
- 7. Inability to obtain spare parts that malfunctioned during testing due to industry wide shortages c
- 8. Implementation of a more formal process for system transfer
- 9. Transfer of more retrofit items to pre-fuel load period to avoid sr.curity and health physic impacts after the fuel load During th!s pericd, the overall direction of the project must be controlled by the utility, as all effort is directed toward the Lltimate goal of system transfer and, eventually, operation.
In mid-1982, in order to achieve better control of interf aces between start-up and construction support, an individual (on loan from MSU) was appointed Site Director to provide overall direction and control of start-up and construction. This organization is shown in Figure H-25. He has recently successfully directed the start-up and contract efforts of Grand Gulf I. During our interview w!th this person, it became apparent that he was a very demanding and competent individual. This is partially characterized by the number of meetings he held to coordinate and monitor project performance. Meetings were held three times a week to discuss action items; weekly meetings were held to discuss detail schedule problems; daily meetings were held to resolve problems in start-up interface. Even during this period of strong direction, system transfer was still slipping behind schedule, but in all probability, wcald hav slipped significantly more if this individual had not been as9igned to Waterford 3. Page H-18
e The assignment of this person to the Waterford 3 project demonstratcy the ability of LP&L's executive management to monitor the need for a change, and to effect positive redirection when circumstances warrant.-
'Ihis monitoring process continued through early 1983 when additional management strengthening occurred. At that time, Arkansas Power
& Light Company made available (on a temporary basis), an experienced executive for the position of Senior Vice President-Nuclear Operations. This initiative was taken by the President and Chief Operating Officer (COO) and approved by the LPAL-Board of Directors.
In a continuation of this monitoring process, the COO conducted numerous interviews with key project personnel and initiated discussions with the NRC. Based on these evaluations, and in light of the progrecs made by the newly appointed Senior Vice President, LP&L recruited and hired an experienced executive (in June of 1983) to permanently fill the position of Senior Vice Feesident-Nuclear. This parson has a history of outstanding accomplishments charac'.erized by the following statements: He was employed by Northern States Power between 1973 and f ( 1. 1981 and, as Project Manager, soccessfully completed two nuclear projects.
- 2. He -was. employed by WPPSS between 1981 and 1r93; the nuclear units he managed as Program Director had a CE NSSS, and Ebasco Services, Inc. was the AE/CM.
- 3. Under his management, these units were being constructed at a remarkable rate of about 2% per month.
- 4. He is knowledgeable of Ebasco's operation and personnel.
?his individual was given almost complete -authority to take steps necessary to bring Watr' ford 3 on line. He acquired additional key
- personnel including the 'act Manager and Completion Manager.
These - persons were a. 9tviewed by DMC, Inc., and were found to be high!y experience competent. The new Project and Completion Managers has red the revised project schedule and are confident that these prg. jectives can be achieved. The current Waterford 3 Project organization is shown in Figure H-26 , (pl. DBCUSB'ON This period is charat.terized by strong executive management
-involvement- that brought about significant and positive change. The magnitude of these changes, and the fact they were initiated late in Page H-19
l the project history, was one of the reasons we were concerned with the effectiveness of management during the previous period. As described in the previous section, our concerns were founded on hindsight, and we found LP&L's actions as justified. Current LP&L readiness to assume operational responsibility, is considered to be well above industry norms. DMC's opinion has been confirmed in an interview with the NRC. It is also our opinion that LP&L management reacted to change in an effective manner throughout this period, even in light of the recent schedule slippages and cost increases. Rese slippages have been caused, for the most part, by influences Leyond LP&L's control. CONCLUSIONS LP&L's executive management during this period exhibited exceptional involvement and skill in light of surroundir:g circumstances. We find their performance during this project phase as commendable and prudent. 4.0 Project Miletonc:= , Significant Project Developments and Achietements This section centains a brief discussion of some of the more significant achievements and accompliehed on the Waterford 3 project. These achievements are attributable to a higher degree to either LP&L er Ebasco; they will be treated here as project achievements, as both organizations participated in all major decisions. Most of the items mentioned here are discussed in more detail in other chapters of this report. DESCRIPTION 1. Early Site Labor Agreement: This item is discussed in detail in Chapter S, Constructic 1; it testifies to remarkable foresight on the part of LP&L and E.sasco to plan for good labor relations, rather than react to labor problems. The labor agreement resulted it practically no down-time during construction -an achievement far above the industry norm.
- 2. Management of Project Cutbacks or Slowdowns: DMC reviewed the efforts that went into planning for some of the project cutbacks, especially the significant cutback that occurred in 1980.
His particular cutback was reviewed in depth. DMC evaluated a
; significant number of documents and the planning related to this ,
i event. The management of this event demonstreted cooperation I between LP&L and Ebasco and provided insight as to the capability j of the management of both organizations to manage this very I delicate situation. Clearly, a 50% cutback in a project of the size Page H-20 u _ _ _ - - - _ - _ _ _ _ _
of Waterford had -a significant socio-economic impact on the New Orleans area. DMC believes that the effort that went into minimizing the impact of this necessary cutback was outstanding. For example, when informing contractors of the cutback, LP&L/Ebasco pointed out poor contractor performance as a factor which contributed to the need for this cutback, thus using the event as an incentive to increase future performance of contractors.
- 3. Licensing Achievements: LP&L and Ebasco made significant achievements in the licensing arena. During the period after TMI, the licensing of. existing plants came to a halt for a period of nearly _two years, as the NRC was totally consumed with TMI. In order to expedite the NRC's review of the SER, LP&L placed staff members directly in Bathesda to increase their presence, expedite the NRC efforts, and to obtain the most accelerated review possible.- The accelerated review was also made possible because the.NRC's case load forecasting section evaluated the then current Waterford 3 schedule as one of the few achievable schedules in the industry at that time.
Another outstanding achievement in the licensing area involved the
- minimization of intervention impact. The Louisiana Consumer's League and the Joint Intervenors were admitted by the Atomic Safety and Licensing. Board into the hearings. Between the two j groups there were 60 contentions. LP6 L effectively negotiated the detailed list of 60 contentions down to two. Dese two contentions were eventually litigated in the hearing process. The rest of them
-were disposed of outside the hearing process, which effectively minimized the total duration of the hearings.
Another above everage aspect of the Waterford 3 project with respect to licensing was based on our interview with three of the NRC personnel associated with Waterford 3. They were unanimous in their evaluation of the Waterford 3 project team as cooperative and responsive to NRC needs. ney stated that LP&L put forth the effort necessary to arrive at mutually agreeable solutionr, to the licensing issues. During these interviews, we were also informed that LP&L is currently evaluated as one of the utilities best prepared to assume operational responsibility.
- 4. Procurement and Contreet Administration: As discussed in the procurement and contract administration sections, the achievement of both LP&L and Ebasco in this area is considered outstanding.
p Assistance in this highly professional effort was provided by the law ( firm of- Monroe & Lemann, which aggressively protected LP&L's rights from claim threats and effectively kept the claim process x Page H-11
from downgrading the contractors' performance.
- 5. Labcr Overtime Use: LP&L/Ebasco practices regarding use of overtime as a labor management tool was above industry standards.
In general, overtime was used on a selective basis only to achieve specific goals. Overtime was used to attract craft labor when other projects in the area were providing a drain on the resources of the Waterford 3 project. Overtime was also utilized as a tool to expedite certain critical work packages that were needed to meet other project milestones. Overtime was also used when it was found to be a more cost effective solution than addition (and training) of l inexperienced craft labor.
- 6. Labor and Foreman Training Program: Comprehensive training programs were initiated to assure effective quality workmanship. I
- 7. Engineering Achievements: Waterford 3 engineering achievements are as follows:
(a) Slip-forming of the containment buildings (b) Ultimate sink design (c) Plant monitoring computer (d) Nuclear plant island structures (e) Shield building ventilation system (f) Roll away missile shield (g) Decontamination facility / hot machine shop (h) Containment "topoff" erection (i) Physical modeling.
- 8. Internal Project Reviews: Review of R.e project was undertaken jointly in mid-1982 by Ebasco and LP&L to objectively evaluate the status of start-up and to datermine the most aggressive methods
! that could be employed to reduce project costs. This evaluation concluded that the most effective way to minimize project cost was to accelerate project completion by use of overtir and shift work. t Construction and testing were placed on a seven day week, 24 hour day production basis. Additional LP&L and contractor staff were mobilized to support this effort, which resu?ted in the on-schedule completion of the cold hydrostatic test of the primary system in Page H-22
Ym) 1982. Cash flow uncertainties associated with the Texaco rebate necessitated short term staffing deferrals in 1983, and downgraded the positive effects of this plan.
- 9. LP&L Cost, Monitoring and Control: An example of LP&L's involvement in cost control is demonstrated by the following:
A specific cost exposure was identified in the January 1981 progress report called " post accident cample facility." It pertained to a new ' building to house the TMI mandated post accident sampling facility. This cost exposure attracted the personal attention of the President of LP&L. Extensive discussions and evaluations led to Ebasco's recommendation, documented on June 30, 1981. Potential cost of the modification recommended by Ebasco, was approximately $6 million. LP&L management rejected this recommendation in the interest of restraining project cost, opting instead for an acceptable alternative which resulted in a savings of $31/2 million.
- 10. Financial Auditing-Another outstanding aspect of the Waterford 3 project is the lack of adverse findings by LPSL's financial auditing team throughout the duration of the project. This is a credit to both LP&L for the thoroughness and offectiveness of their audits, and to Ebasco and Waterford 3 contractors for their (g) performance and ability to pass these audits without significant
\_/ findings.
DECUSSION All of the above achievements more or less speak for themselves and do not require further consideration. They are a compilation of some examples of abcVe average performance and achievement. CONCLUSIONS The conclusion of this section is thrt Waterford 3 project performance in many important areas was outstanding. 4.2 Comparative Project Performance DESCRIPTION CONSTRUCTION PRODUCTIVffY INDiOES Figures H-28 through H-37 present a comparison of key construction productivity indices of the Waterford 3 project with various other projects. These figures were obtained from a 1981 report prepared for Southern California Edison. The Waterford 3 project was decoded from the rest of the projects and the comparison was verified by Ebasco. These figures are based on 1981 data; the base plant was San Onofre, (a CE plant). When reviewing these figures, one must look more at the overall ranking rather than the specific [^ numbers because different utilities use slightly different methods for compilation of these statistics. What is important is that the Waterford 3 project is consistently close to or above average Page H-23 1
l performance. As an independent check of these numbers, DMC was allowed to review other sources of similar comparison that were not as yet published . These sources were more up to data and the comparison is made on a more uniform basis. This data is shown on Figure H-38. COST AND SCHEDULE COMPAREONS Figures H-39, H-40, and H-41 present the bottom line comparisons of =hedule, cost and cost growth respectively. These figures are repeated here as these comparisons are important to obtain an overall perspective of project performance. The reader should not dwell on the specific numbers, as each plant has its own unique circumstances, such as exact construction start times, NSSS system, location and labor conditions, etc. The important fact here is that the Waterford 3 project perforrr.ance was significantly better than average in comparison with a relatively large data base. These figures were also independently verified witn the previously mentioned sources. CONCLUSION The Waterford 3 project cost, schedule and overall construction performance are consistently better than industry norms. 5.0 Overall Conclusicas The overall conclusion presented in thic section summarize DMC's findings regarding the overali performance of LP&L and Ebasco. Conclusions stated here are based not only on materials in this Chapte', but also on evaluation of the component parts of The Waterford 3 project covered in other chapters. These data sonaces dre integrated to establish the overall impressions of management's performance on Waterford 3. 5.1 Ebasco Project Management Ebasco's project management of the Waterford 3 project was found to be competent, rt.sponsive and effective relative to industry norms. 'Ihis does not imply that there were not certain areas where improvements were warranted; our overall assessment, however, is as stated above. The following paragraphs summarize our evaluation of Ebasco's performance in relation to the specific evaluation criteria given in Section 2.0.
- 1. Did Ebasco, in Ught of the circumstances which existed at the time, respond to internal and external stimuli in a timely and effective manner?
Evaluation: Ebasco's performance is rated very highly in this category as its corporate and 7roject management demonstrated the ability to Page H-24
perceive the necessity to redirect its efforts to accomplish objectives g effectively.
- 2. Did Ebasco commit adequate resources to the Waterford project in terms of number, quality and stmeture of its organization?
, . Evaluation: Ebasco's overall performance with respect to this criterion is rated above industry norms. This is demonstrated in part by the fact that Ebasco's Construction Management organizational structure < continually changed in response to the needs of the various construction phases. All the Ebasco personnel interviewed were found to be talented and expetienced individuals. <
- 3. Did Ebasco establish a working relationship and open communication channel with LP&L in a manner which created ar. environment of cooperation, as opposed to confrontation?
Evaluation: A relationship characterized by cooperation and candor was in effect throughout the history of a number of projects Ebasco
. completed for LP&L. DMC believes that this relationship was continued on the Waterford 3 project.
- 4. Did Ebasco advise LP&L of problem areas in a timely fashion, even at the expense of identifying problems it may have been responsible for?
Evaluation: DMC is not aware of any issues or areas where Ebasco's internal performance or problems were not discussed with LP&L in an open and candid manner. As discussed in Chapter Q, Procurement, we ilnd Ebasco's candor above the industry norm.
- 5. How did Ebasco's performance on Waterford 3 compare with industry norms at the time?
Evaluation: . The previous statistics demonstrate that E5asco's performance was at least average and, in many cases, significantly above industry norms. 5J LP&L Project Management LP&L's:overall project management of Waterford 3 is generally considered to be
' adequate.- In some areas, LP&L's porformance was significantly above the average; in.other areas, certain improvements couki have been made. Based on information we compiled during this study,Mic believe that-our findings regarding areas where improvements could have been made, were based on " hindsight". The dotted line on Figure H-42 depicts a generalized measure of LP&L management effectiveness
,; against a non-dimensionalized, idealized base during various phases of the project.
The following paragraphs summarize LP&L's specific performance vith respect to
!(VA) the evaluation criteria of Section 2.0.
. Page B-25
___m______._._.____...____.___m_ _ . _ _ _ _ _ .
- 1. Did LP&L provide, (a) the appropriate level of involvement, (b) have appropriate organizational structure, and (c) have capable key project personnel to monitor and control Ebasco's efforts?
Evaluation: l I (a) The effectiveness of LP&L management involvement throughout the f duration of the project is character! zed in Figure H-42. In hindsight, earlier involvement of additional LP&L employees would have been beneficial. (b) LP&L's organizational structure was weaker in numbers than the industry average in the urly project stages, but the competence of key individuals compensated completely for this deficiency. (c) All LP&L employees with whom we were in contact or interviewed personally, exhibited extreme loyalty and dedication to completing the Waterford 3 project. The competence of LP&L employees is also rated high.
- 2. Considering the past inertia of the utility industry, did LP&L management respond in a reasonable and timely fashion to internal and external stimuli that necessitated changes as the project evolved?
Evaluation: As discussed in detail in Section 3.3.3, there is some evidence of c lack of timely response by LP&L management during the
" start-up phase". In light cf circumstances which existed at the time, especially the magnitude of the changes LPEL was expected to absorb (see Figure H-43), we find the company's response as reasonable. This deficiency is further compenseted by the strong actions of LP&L executive management that took place between 1983 and the present.
Se Could Waterford 3 have been completed sooner, and at a lesser cost, if LP&L had assumed a more aggressive project control role during the latter stages of the project? Evaluation: Based upon DMC's evaluation of LP&L performance in light of Criterion No. 2, we believe that either a positive or negative answer
- aust be regarded as moot because the answer would necessarily be based on hindsight.
O Page H-26 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ . }
f O RGURES L r n. O f Y O Page H-27 1
O ricuae s-, MAN AGING WITHis A CHANGIN'G ENVIRO.NMENT t MANAGEMENT
/ PERCEPTION OBLEM NITOR DEFIN ARENE v
EVELO ALUA I PLAN ALTERNATIVES JJ hY MAKE DECISION / j , o
FIGURE H-2 O IDEALIZED V!EIGHTING OF RELATIVE PROJECT MANAGEMENT CONTROL f ENGINEERING CONSTRUCTION START-UP PREOPERATION O MEASURE OF INFLUENCE, f AE/CM DIRECTION, CONTROL N N 71 72 73 74 75 76 77 78 79 80 81 82 83 84 TIME (YEARS)
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FIGURE H-5-- EBASCO PROJECT ORGAND,AYION ~7/" JULY, 1983 PROJECT MANAGER
.~ -
_., ~ ' ~ ~ ' ~ ~ ~ '
' ~ ~ '
StTE MANAGER ASSOC. GEN. PROJ. COST /
~' ~
60HED. ESSE PROJECT ENGR. 'l ~ ~ COUNSEL--]
- ~
F068 SUPPORT QA SITE MANAGER - - - - - - -
' - - ~ " - - ' - '
~ CROUP ' ASST. SITE MANAGER
' -- --- r
-;_ ~ . . . . . . . . . _ . .
PROJECT SUPT.
-- - - - - CONSTR. 0. CONST. MATERIAL SITE PERS r- - ,----
COMPL. ACCTNG. ADMIN. SUPVR. CON. SUPT. RES. ENGR. CONTRACTb MANAGER -- , ._ _ _ _, . ENV. ENGn. EBASCO PA LABOR RELA 110SS MANAGER lCONSTR. SUPT. & SAFETY ENCR. AREA CONST. SUPT. I FIGURE PROVIDED BY LP&L
FIGURE H-6 EBASCO CORPORATE C0tetITHENT TO LP&L AND WATERFORD 3 Caliber of personnel assigned to the project. ! Atter. tion and responsiveness to project needs and LP&L concerns. l Commitment of executive levei 7.ctsonnel during critical stages of the projcet. Close working relationship with LP&L executive management; unusual degree of familiarity with the project at Chief , Executive levels of both LP&L and Ebasco. l l Agreeing to defer payments to Ebasco, at no cost to LP&L, during periods of LP&L financing difficulties, l Patience in resolving out-of-scope and delay fee settle-ments. FIGURE PROVIDED BY LP&L O
FIGURE H-7 GAL /EBASCO PROJECT MANAGEMENT INTERFACE Ebasco worked as an extension of LP&L: . Relationship open and candid. LP&L was party to all significant project i decisions. Monthly and weekly progress reports jointly developed to enhance visibility and accountability for project performance. Periodic project and executive review meetings evolved in format and adjusted in frequency as appropriate to phase of the proj ect. Frequent LP&L visits to New York to review / direct engineering, procurement, and licensing activities. LP&L representation to virtually all Ebasco site meetings both Ebasco internal and with contrac-tocs or-vendors.
'( Since transfer of Ebasco Project Manager to the site in late 1978, daily informal communications greatly facilitated joint awareness and r?sponse time to real or potential project probleme , in-cluding meetings with LP&L home office executives when necessary.
Since establishment in mid-1982 of LP&L's Site Director responsible for both construction com-pletion and start-up, Ebasco's management inter-faces hcve been with that office. FIGURE PRfNIDED BY LP&L -
.d s
L _ _ _ _ _ _ - _ -_
l l FIGURE H-8 EXPERIENCE OF EBASCO PROJECT TEAM LEALERS TOTAL YEARS TOTAL YEARS NUCLEAR EXP. POWER EXP. R. K. Stampley 18 18 R. J. Milhiser 17 17 R. Marshall 22 25 g K. Afonso 9 9 R. Cosgrove 12 15 J. Costello 13 12 R. Define 36 41 H. Huhn 10 11 J. Padalino 11 11 R. Roy 10 10 N. Saari 8 13 L. Stinson 20 20 V. SooHoo 9 17 R. Watt 10 24 J. Willa 16 18 R. Wynter 10 11 Average Years of Experience 14.4 17.0 FIGURE PROVIDED BY LP&L 9
I i r FIGURE H-9 P_ROJECT PLANNING AND CONTROL PRINCIPLES CONSTRUCTION PHASE (1975 - 1981) Establish the most aggressive credible detailed plans for engineering, licensing, contracting, procurement, and in-stallation. Integrate these plans, together with LP&L's planned Start-up/ tegting sequence, and communicate these in a comprehensible and manageable manner to Ebasco, sub-contractor and LP&L project participants. Build and develop the overall project team and working relationships necessary to achieve the defined project objec-tives. Balance the benefits of project continuity with fresh perspectives. Develoa associated craft and nonmanual staffing requirements, time-phased estimates of cash requirements, and total cost estimates. ( Obtain LP&L Board of Directors budget and schedule authori-zation. Establish the degree of management visibility necessary to provide an early warning of departures in accomplishments or expenditures versus planned, such that alternative corrective actions are defined, evaluated and implemented in the mancir which least inpacts project objectives. FIGURE PROVIDED BY LP&L O
FIGURE H-10 PROJECT PLANNING AND CONTROL PRINCIPLES - STARTUP/ OPERATIONS PHASE (1982-1983) LP&L startup testing and operational requirements escablish priorities for Ebasco'c work. Ebasco works to jointly establisned schedules for system completion, including physical and paper work associated with system releases, turnovers, and transfers to LP&L. Ebasco concurrently works to finish construction on an area completion basis, consistent with access restrictions and regource requirements to support the priority needs of LP&L startup and operations. FIGURE PROVIDED BY LP&L 9
VIGURE H-ll PROJECT TEAM DEVELGPMENT PHYSCIl0 LOGY V 1972 corporate definition of Ebasco Project Management System. Centralization of New York activitier beginning 1975. 1975 generic role definitions for Project Managecent and Construction.
~
Staffing of key project poritians 1975 - 1978.
, Ebasco Corporate Operational Improvement Study in early 1977.
1977 MAC Report advocating a more closely knit project organization and more involvement of New York based personnel in site activities. ACTIONS 5/78 kick-off meeting aith 15 kcy project leaders. fM I 10/78 follow-up at first line supervisory level. E 1d 12/78 follou-up working level. 1979 assessment interviews in June, September, December. 2/80 project team overview by top 5 managers. 5/80 presentation on Waterford 3 at Greater Boston OD Network Conference. 6/80 joint efforts with LP&L recognizing transition to start-up phase. 1981 follow-up and assessment. FIGURE PROVIDED BY LP&L ( . N.) i
FIGURE H-12 I PROJECT ORGANIZATION & RESPONSIBILITIES GENERAL , ULTIMATE RESPONSIBILITY FOR THE WATERFORD 3 PROJECT WAS CLEARLY RECOGNIZED TO BE LP&L'S AND AS THE PROJECT EVOLVED LP&L CHANGED TO CLEARLY ACCEPT THIS RESPONSIBILITY. HIST 7RICALLY, LP&L DELEGATED ESSENTIALLY THE TOTAL DESIGN AND CONSTRUCTION RESPONSIBILITY TO EBASCO, AND FOR WATERFORD 3 CONSIDERING THE REGlTLATORY POSTURE AT THAT TIME, THERE WAS NO REASON FOR THIS DELEGATION TO CHANGE. AS THE ECONOMIC AND REGULATORY ATMOSPHERE CHANGED, SO DID LP&L WITH INCREASED STAFFING TO OVERSEE PROJECT ACTIVI. TIES. O FIGURE PROVIDED BY LP&L l l 9
F1GURE H-13 LML STAFF ;NG EVOLUTION
~
TOTAL 3 675,,
-600_ ,
P l E 525~ SLOTS APPR - l R ON BOARD , l 5 450 -
*.l 0
N l'" 375~
- N E 300 /
~
L .' 225~ : l 150_ , 75- .'
..e 0- . - s i .i p i i i i i i i i i i i i i i i 71, 76 77 78 79 80 81 82 83 YEAR DAYE AUTHORIZED ON BOARD li71 3 5
//71 4 5
, 1/76 5 5
'^ 7/76 23 16 1/77 37 16 7/77 70 45 1/78 112 64
-7/78 112 80 1/79 112 95 7/79 177 105 1/80 177 120 7/80 177 140 1/81 296 153 7/01 408 245 1/82 41' 280 7/82 489 320 1/83 453 387 10/83 621 482 FIGURE PROVIDED bY LPi L
FIGURE H-14 LP&L STAFFING EVOLUTION GENERAL OFFICE NUCLEAR 200, O 180- S10TS APPR ..- ON BOARD [ ',- 160_ l , P 140~ .- E R 120~ l S ; O 100_ ; N : N 80_ : E : L 60_ ; 40_ ; 20-
,,..>.. ..>. 3 .......>
~
0 - i 1- i i i i i e i i i e i i i i i 71 76 77 78 79 80 81 82 83 YEAR DATE i.UTHORIZED ON BOARD L 1/71 3 5 7/71 5 5 1/76 13 9 7/76 16 9 1 '77 16 9 7//7 16 9 1/78 16 9
//78 16 14 1/79 22 14 7/79 22 14 1/80 24 14 7/80 24 14 1/81 24 14 7/81 110 '3 1/82 154 73 7/82 200 131 1/83 200 131 10/83 153 93 FIGURE PROVIDED BY LP&L l
f FIGURE H-15 LP&L STAFFING EVOLUTION , QUALITi ASSURANCE O - 50_ 45_ g
.P 40_ SLOTS APPR esse ;
E ON BOARD l R 35 - S : 0 30-e N N 25~ E L 20_ ,30e.ee e 15_
/ ,
e- 6ee&ee&ee&ee&ee&ae&Oe&ee&ee&ee9
- r 5
0 - 1 I I I i 4 i i i i i i i i i i i 71 76 77 78 79 80 01 82 83 YEAR
\s DATE AUTHORIZED ON BOARD I 1/71 0 0 7/71 0 0 1/76 10 7 7/76 10 7 1/77 10 7 7/77 10 7 1/78 10 7 7/78 10 7 1/79 10 7 7/79 10 7 1/80 10 7 u 7/80 10 7 1/81 10 7 7/81 21 8 1/82 21 13 7/82 21 21
.1/83 30 29 10 /83 46 26 o FIGURE PROVIDED BY LP&L
l FIGURE 11-16 '6 LP&L STAFFING EVOLUTION 4 PLANT STAFF 450_ SLOTS APPR . 400- l ON BOARD l 350- . ' l P 300- . g ' R 250- . e- ' 3
- 0 200~
N
- N 150- -
E
- L 100_ ,- j 50_
0 , , ' a-- i i T t i i i i I 4 I i i i i I I 76 77 78 79 80 81 8? S3 71 YEAR E AUTHORIZED ON BOARD DATE 0 0 1/71 0 7/71 0 ' 0 0 1/76 11 7 7/76 11 7 1/77
- 44 44 7/77 44 1/78 86 86 54 7/78 64 1/79 86 145 74 7/79 105 1/80 145 145 145 7/80 197 1/81 262 277 207 7/81 217 1/82 236 259 227 7/82 237 1/83 266 422 343 10 /83 J
t
I I FIGURE H-17. LP&L STAFFING EVOLUTION SUlmARY
.t h The graph labeled " Total" indicates the total number of approved LP&L Nuclear related. positions versus time. This graph represents the sum of the o.raphs labeled
" Plant Staff", "G.O. Nuclear", and "QA". The time period represented is from
-January, 1971 through October, 1963. From 1971 to 1976 the total number of Nuclear related positions are due to G. O. Nuclear chart positions only. In 1976 the Finnt
. Staff and QA positions were introduced. From 1976 onward tae increases were due to contributions from all 3 categories. The following is a tabulation of the changes:
DATE G.O. + QA + Plant Staff = Total Actual on Nuclear Approved Board 03/71 3 + 0 + 0 = 4 5 12/71- 5 + 0 + -0 = 5 02/76 13 + 10 + 0 = 23 16 05/76: 16 + 10 + 11 = 37 04/77 16 + 10 + 44 = 70 , 01/78 -16 + 10 + 86 = 112 64
. 06/79 22 + 10 + 145 = 177 p)
;V .02/81 11/80 24 54'
+
+
10 10
+
+
262 262
=
296 326 153 09/81 110 + .21 + 277 = 408 245 01/82 iS4 + 21 +' 236 = 411
,11/82. 200 + 30 + 259 = 489 387
-08/83 .157. +. .30 + 266 - 453 10/83 '153 + 46 + 422 = .621 482
-m The' apparent decrease in 08/83 is the result of the Nuclear Administrative Sarvices being dropped from the G. O. chart. The Plant Staff figure dated 10/83 included the Administrative Services Group.
- pFIGURE PROVIDED BY LPGL is );
____.________________m.___ _ _ _ _ _ . _ _ .
1 llllI Y y S T N O
. A R
TR OTL l S E AUS - NG N OA OO q f8I CN CC
- S
- A
/ AB M
AR EH E RTR T ACE _ O EEG l LJA CON URA NPM G N T; R G EE E N N ON OI RIG I R P TE C E l N E - U N DI OG RN P E . N O I T N n A N OG Z I N O TI 8N7 1A9 I1 TI C CN UN II _
- G1 R U DA HR E D OL E G RP '
AF O , O P T T O E R R A N O
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& R nac P E e i L d .f N nLf E o& o Y G pP B sLn e o rf D roe E o e D ces I vs Lie V & t r O P ud L cd R ea P l x .
aeeL E i cntP h& R i a L U f f yao s G Ob wt I F : E T O N O l llllIl!l -
FIGURE H-19 t ' /^ 'WATERFORD 3
'( LP&L PARTICIPATION i
\ REVIEW OF LICENSING' DOCUMENTS
' REVIEW OF. TOP. LEVEL DP.AWIt:GS - FU!;CTIONAL REVIEW REVIEW OF CONTROL WIRING DIAGRAMS - FUNCTIONAL REVIEW
' REVIEW AND. APPROVAL OF PROJECT PROCUREMENT AND CONTRACTURAL DOCUMENTS.
ESTABLISHMENT OF STANDARD CONTENT AND LANGUAGE BIDDER LISTS
'3PECIFICATIONS/ REQUESTS FOR BIDS g BID EVALUATIONS /SELEC1 ION OF VENDORS OR CONTRACTOR?, s AWARD OF PURCHASE ORDERS / CONTRACTORS, INCLUDING COMMERCIAL TERMS AND CONDITIONS.
SUPPLEMENTS TO PURCHASE ORDERS / CONTRACTS
;- CLAIMS LAWSUITS
- CHANGE CONTROL
- COST REPORTING 4
PROJECT REPORTING' f i J FIGURE PROVIDED BY LP&L-m. Ej
l f FIGURE H-20 LP&L PROJECI ORGANIZATION MARCH, 1974 0 DATE g 3/T4 MANAGER OF POWER F'-: ODU C Y I ON C GENEH All N G OUALITY PITODUC 11011 S T A T 10lis ASSURANCE EliG i t!E Eltl NG PRODUTTION] NUCLEAR PROJECT PLANNING g MANAGER r----------- A/E CONSTRUCTION MANAGER PROJECT ENGINEERING O EBASCO AND OTHER CONSULT /.NTS NOTE: Official LP&L correspondence to Ebasco was initiated by an executive of IJ&L and that LP&L executive was the addressee or. official Ebasco correspondence to LP&L. FIGURE PROVIDED BY LP&L 9
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/ R
_ A E _ L A 1 C E _ TTR CR E l I N C I H V E OG C R JP A E E OP N T S RU A P S M l LG Y AN T NI I OR S I R I E E U l TE C C AN I E R I V S E G N R P N O E l, OE I S T E R l A V E G S Z I A E I1 E T N -- 4N8 Y C A A P R I R T A F R M U E O 2A9 T DT E T G
- G1 I L E S ,
ARN E A I S N HRO , AU I O N L G l I U S I T N S E R Q A S S l N M E l E RTE D A C UCB S I GEM D R L IJE I O N FOV T N C O RO E S T N E R I PN D N AR S TT I T O L E TE CA L S N I R P G C l AR E E T E , A RT
& R D A G I IS P P I R A .N T A WV PR l NI L S E N S M E ON E E P A S L CI R O M S M C. P A A )
C R G A V R E C E A N I fI R E O I L N L I V C I C N U A E N R & G l S T N G I N L I U L g N N D E P A H L C L P S Y B D E R ; D E 0 I G V A l O N EE A T/ R M A1 P R D1 T TE T E N TNG . N R A L
'g SAA SLN SP&I U P APA O A M
G M I F 9
!lf;Ill i' I
i, - 3
/ '
- \j FIGURE H-25 LP&L PROJECT ORGANIZATION Jt'tY, 1982 SENIOR VICE PRESIDENT QUALITY ASSURANCE
'1 l
VICE PRESIDENT 14UCLEAR OPERATIONS 7 1 t I
, Pl. ANT TRAll1111G ACitlNtSTHATIVE FROJECT SUPPOPT S
- l. HAHACER HAHAGER f f; HAHAGER I
l i I I I - _ l l l
~
ASSISTANT QUALITT PtJLNNING 4 AST.,1STAUT PLANT CONTROL SCllEDULINC' PLANT , q 1 MANAGER MANAGER OPERATIONS PWT
& SERVICES HAINTENANCE SITE DIRECTOR I
LEAD ST*RTUP A/E - CONSTRUCT 10,N rtANAGER ENGINEER EBASCO AND OTilk". CONSULTANTS DATE " OPERATIONAL TEC13NICAL CONSTRUCTION bI E"bI 0 ENGINEERING ENGINEEHil1G SERVCIES FIGURE PROVIDED BY LP&L m
ll ' O R E G A N A MR A T SE N T NL A N OC T A I U S T TN I S E S I L S S P A S M A O E 'C V G I N T I U N C I R E A E X R G E T A NR AA MEL R A TC E CU L EN C J U O 5 R P - R E G N A N O A I M T TS NN E A EO R G Z D t E N I3 I T G A 6N8 SA AR H ER NA ( C 2A9 RE AE
- G1 PP ML C
HR E O TU O , O CR NN E R I A A L g 3 RTE VE P 3 8 UCB .L C 3 / GEO R U 3 0 1 IJI SN FOC _ RC P L P S E _ L C I _ V A1 : EE SG A RN aA LM L CI 1 N P U T R A L T & S P E C L N A R Y UR B SE SG D AA E N YA D TM I I L V A O U R Q P E R U G I F
!fl l ,IIl[ l l
<-~~~
f ( l 4 ( V FIGURE H-27 LPR PROJECT ORGANIZATION
-OCI0BER, 1979.
'VICE PRESIDENT. POWER PRODUCTION t
a i I i l PRODUCTICi l FOSSIL OPERATIONS QUALITY PROJECI'S ASSURANCE MANAGER MANAGER W-3 PROJECT MANAGER CENERATING W-3 PL/J4T STATI0 tis !!ANAGER SECURITY W^ CONTROL l ADMINISTRATION OPERATIONS TECIINICfL MAINTENANCE START 1'l' TRAINING SERVICES - p---_ - 1 I AE 0)NSTRUCTIOt4 CONSTRf'CTION ENGINEi3 TING RECORDS UL1HG SC HAHACER E8ASCO AND OTliER LONSULTANT WOTE: 3; ATE OFFICIAL LP&L CORRESPONDENCE TO E5ASCO WAS 1:IITIATED BY AN EXECUTIVE CF LP&L. 10/79 AND TilAT LP&L EXEL'JTIVE WAS THE ADDRES iEE ON OFFICIAL F.BASCO CORRESPONDENCE TO LP&L FIGURE PROVIDED BY LP&L l l l a
FIGURE H-28 SOUTHERN CAllFORNIA EDISON COMPANY NOTE: 11.72 mh/cy represents composite unit rate for form-CONCRETE PLACEMENT PRODUCTIVITY work, rebar, embeds and concrete. FIGURE IROVIDED BY LP&L 2.37 mh/cy ry resents placement of 4, screte including cure time. 13 , 12 - li:}2, l lI 10 o m 9 - 4 U PLUS O NE E E ~ o - 7,ID 7.35 3 .................. W.C ............................. g 7...................................., .......................................... m 7 n. 84 5 96 58 o
- 6.94 6 62 5.61 -
I .30 3 .us, ss . . . . . . . . . . . . . . .M. .E.A. N. . =. 4. 8 3. . . g6 ............ ..... ..... ...... ............................... ...... 4.41 4.30 4 ~ 3.72 2 63 P - 3.42 3.25 MINUS ONE n l- 2.97 - 3 - . .n , o - 2 50
, +
2 44 , , 2 . ,
.)Q 3.29
?E Th, N
1 . w4 e 47 . _ i 1 6 8 7 8 9 10 11 12 13 14 15 18 17 SAN ONOFRE 2 I 2 3 4 DATA ELEMENTS WATERFORD 3 O O O .
T. :D
)~ '( FIGURE H-29 SOUTHEM CALIFORNIA EDISON COMPANY RE8AR PRODUCTIVITY FIGURE PROVIDED BY LPSL 90 -
80 - 80 3 1 70 - gN 1
...................................oau...................................................., ....... . . . . . . . . . .P.L.*A. . .O. ..N...
E. .p...< e 89. 7 H 64.70 69.50
=
E $0 m ss.it 33.43_ 54.25 E3.75_ 44.0 48 0
. .g . . . . . ,.................. ...... ......, ...... .....<...... ....... . . . . . . . . . .M. E. ...
A. .N. .=. 4 8 9. . . . . . . . .
~
O 40 -
*PG 28 30 0 l j .. ...... , . . . . . . ......
M-
...... ....., ,...... ,.....> ...... ......q............ ...... .,.3.................=......
MINUS ONE e 34.1
, .g3;.......
- 30 -
M ! lll [' 20 - Dlll l 2 : 17.55 10 - > il '!' f ii ! ! i hi li 1 2 3 4 5 6 7 8 6 10 ll 12 13 14 15 IS SAN ONOFilE 2 DATA ELEMENTS WATERFORD 3
FIGURE H-30 SOLITHERN CALIFORNIA EDISON COMPANY STRUCTURAL STEEL PRODUCTIVITY FIGURE PROVIDED BY LP&L l 70 l 82 89 40 - 52.82 i El 06 60 - , l
......................................... ..... ................... ......i . ............ ..... . . . . . . .. . . .. . .. . .. . . .P.L.U. .S. O. ..N. E. .e. . 4 7. 41. .
45.15 z 40 84 O sc 40 - ma
- 36 04
- i
~8 33 48 . . .. . . . . . ....M. .. .E.A N. . .......
- 33. 20 i
o ..rvvver.............' . . . . . . ............ p.....< ............. ....., ...... ... ........ ...... ...... h 29 48 29 8
< 30 3
.9I 2399
- 14if1 21.42 20.7 .
20.7 ,, 20 - ) gr l
..... .....< ...... > . . . . . . ............< ...... .....- ....... ...... ......< 4 i...... ...... ....... ...... y .M..I.N.U.S. .O.N.
. .E. e.=.18. v. 7 j ,
t4.6y 4.s3 ?.j,'dy, '
.r, 10 - :n 3.; .
8 .: m
. 'i, &
i .? '?, I l .____ l 2 3 4 6 9 7 8 9 to it 12 13 14 16 SAN ON0 File 2 DAT A ELE *4ENis WATERFORD 3 M O -- O - O
F E H-31 I SCUTilERN CALIFORNIA EDISON COMPANY SMALL PIPE PRODUCTIVITY FIGURE PROVIDED BY LP&L p .. _ 10 - M 9 - a - l 7.2
- ,........................P.L.ll.S..O.h..t'. ,..*. 7 12..
o ........................... d3 ............................... .................. . .. 7 00 EXPECTED l k 343 In ATE ~ 6.80 C 99 6% COMPLETED E g -
$5 5.5 5.15 .l...... . . . . . . . . . . . . .M.
5 g, ...................... ...... ...... . . .. . . . .. . . . g .5 0. .s. i q ...... ..,........ . i
. . . .E.A .N. =.5. 0 3. . . . . . . .
t
$4 - 3 e,,j,,
303 _3d ****** *****' ****' "***** i E MlHUS OilE o - 2 94
} 63. ,2.75. ...... 2 60 ' * * * * * ' ***** ~ *****i"' ***** ***** *****' *****' *****
g ' f,* l j ' E 2 < I 83 -
.'e ,$
up 1 - , h h. we (x g %; WERCENT _ 100 100 93.3 05 100 98.7 08.1 64.1 89 87.7 77 0 99.0 CDMPLE TED 95 4 18 5 19 5 _50 _ 3 5 6 7 8 9 10 18 12 13 14 15 If SAN ON0FRE 2 1 2 4 DATA ELEMENTS WATERFORD 3
FIGURE H-32 LOUTHERN Calif 0RNIA EDISOff COMPANY LARGE PIPE PRODUCTIVITY FIGURE PROVIDED PY LP&L 12 11.5
~
II 10.7 1 to - 8 40 PLUS ONE o - 8 71 g
..............................................3..}0.. .. . ....., ...... ..... ... ,........ ...... ..............................................
8 - '7.5 b G
* } .
a 8.45 g ME AN = 8.32 w l. . . . . . .
.................................m.. . . . . . ...... ...... ...... ..... . . .
1.y......................................... m 8 - ......l...... D 5 50 5.2 O a ga - 5 04 3 5 ! 4,yg 4,, 4p
< g -
2 s , . . . 4 ... ....., ...... ...... ,...........
, 3 7 4.
...... . . , . . . . . ..... ,.3 su 83 ..... ...... ..... ...... ......,.....,
f.. . ..... MINI!$..ONE sr - 3 E3 3 pn< 3 - 3 87 f ,I a v I - M .- I 4 TIf
. 4 9!>
I 2 3 4 5 8 7 8 9 to Il 12 13 14 16 16 SAN ONOFi1E 2 DATA E LEMENTS WATERFORD 3 O O O
q Q %f SOUTHEM CALIF 0MIA EDISDN COMPANY PIPE SUPPORT PRODUCTIVITY FIGURE PROVIDED BY LP&L 120, - 814.37 110 - 106.13 100.0
,00 ............... ...... ............. ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .P. I.L.U.S. .O.N. .E. .o.=. 8 94.49 EXPECTED
- RATE = 89.23 4
90 . . _ , , , 27 9% _CO._MPL.E.TED g a0 - is.2s .d)b n;: 13.22 h ,'.yj,/.
'~
3 70 ................ ...... ...... ...... . . . . . . ...... ..... ....... g.,.g...... R............ ., . .M. .E.A. .N..=.8. 8 4. . . ... . . . . . ' y 82.0 I j, ~ ars 60 - ,
, 'e a- ?
) ,,' i o ?,.i T 50 44.35 ,'
g - 40 - 5
...... ............ ypp, . .M. .I.N.I.E. .O. N..E. .o... 3 7 4
*?
32.58 . 30 - , ['L 24.5- 23.38 AY
; -),
20 - 4.K
- q,,
'gr's
'I
'N -
10 i d. t r 4U.. PERCENT 78 79 2 97.9 COMPL1E TED 59.9 24.7 800 100 116 l36 79.1 97.7 87.7 1 2 3 4 10 6 7 8 9 to il 12 SAN ONOFRE 2 DATA ELEMENTS WATERFORD 3
O
. 0 E .
E 2. 4 .. N N .
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//'[j f$f4r.&,
- i k@ -
IMAGE EVAL.UATION TEST TARGET (MT-3) AX/ 4
,//,4 i
%"? s7/> ' V
$> //g,,,
11 1.0 'g m na yllliial i l i,i ['uEn !.8 { 1.25 i 1.4 W l.6 L n== 1 4 isomm - -*j
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- ?y7//i1 +f, ,
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i i +QN+ o 5@ 2 IMAGE EVALUATION ///gj/ ' Mi
,#%g,&,
A\ /4 5 ',3 NN%k/ TEST TARGET (MT-3) h i\ ' W
/77 f// b &
+ <e
" 1.0 !!HE Bu Hal u n* :le" s
I" m j
- a. g l
F l 25 1.4 1.6 1 ___
< 150mm >
4 6" >
# %>,, ,/;y 4%
b
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, ak 9) o d
j IMAGE EVALUATION i
.A,,,, *s# a m. z. m.....c 1. m...r.3)
((//%p be'de,,,. .
<> s 1.0 lf En Du e ? En i,i (f HM 1.8 l
1.25 1.4 16_ i
< 150mm
- 4- 6" E k r ,3 , k o i l
l<tf.+4 _ _ -- --- L_- - -
N
\
FIGURE H-35 SOUTHERN CALIFORNIA EDISON COMPANY j CONDUIT PRODUCTIVITY l FIGURE PROVIDED BY LP&L 4.0 3.19 30 - l 4 2 82 o 24 ~ 2.48 i ~ u . PLUS ONE e = 2.24 i r ************************************** ***** *********************** ***** *****************' ****- * *** * ********************* w i l so 20 - y g, ' ,Lt $,, h - E - 1.74 3.74 ( 17 1' a g' h 4
.g.,....................
,...... g ....... ..... ..... q'.,.yf m__--_. ;,.Itgp
-.ME.AN--= l .5_3. -
;I.!!
- a i.ie 1.le
~ '
0 97 30 l .V k MINUS ONE o = 0 8
.. ...... ..... . . . . . * " " ' * " " ' ' " " ' "*"' *****< 0.75...*.*- ...... ..*... ...*.- ...... >g9), a *
- a u a = + = * . * * *- * .2 l . . . . .
- 0. 7 2 '
! O 4i ;- , .'l
#4; 75 h
{ ,
'! 't i 2 3 4 6 8 T S 3 10 11 12 13 14 15 16 SAN ONOFRE 2
! DATA Et EMENis WATERFOP.D 3 1
FICERE H-36 SOUTHERN CAlll0RNIA IDISON COMPANY CABLE PRODUCTIVITY FIGURE PROVIDED BY LP&L 0.15 0 15 0.14 - 0.13 - 0.12 - - 0.11 a l-
--.l. FLUS ONE 0.11 -
q = i
............ ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... ......................................o..0.104........ .
l 0.10 - _ alo og g o 0 00 _0.03 u 0 09 - - m k . I.
8 0 081
* <g . .M. .E.A.N. . . 0 0. 7.W. ..
so 0.00 ............< ...... ........... .....< ................< ..... ..... ........... ................ ...... .....< ... ql K 0 074 007 a07 0 07 - 0.07 - 3 0 004 2 0.06 E 0M [ MINUS ONE I
! .. .. ..a. ...*. . .(.til{ . [ ."a o. -a0.054 a a n a.~ . '
'.u -.... ...a ....< ..... ..... ..... .....l.....-
.. ..... 0 052 ....< ..... .*~.
0.05 - N l f4,:!
~ i
.. t 0 04 -
g jg , g k j]'
*I 0 03 -
M: ' 0.02
')[f
. r jk,e 4
0 01 - 1;l'- c n I 2 3 4 5 S J 3 9 to 11 12 13 14 IS IB 17 12 SAN ONOFRE 2 D ATA ELEMENTS WATERFORD 3 , 9 e
I ' .. t d FIGURE 11-37 SOUTHERN CALIFORNIA EDIS0N COMPANY f CONDUCTOR TERMINATION PRODUCTIVITY i l FICURE PROVIDED BY LP&L i i ! 1.0 1.5 g,qg
~
1.40 T - ! 1.4 - - y j 6 ................................................ ................... . ... . ....... i .22 ...... ................ . ., ....................... ! 'd 1.2 - 3.14 1.12 h M q PLuf,ONE e = l.24
- s -
j 2 037 EXPECTED i
! E IS
*~
~
E
...... . . . . . . . .o g2 ....... ...... ...... ,...... ...... ......
}es..
a RA1E = 0 972
. , ~ y'7' }j 7.m.mm.~~.CC.;
sa 44E AN = E90
! h 0.e -
8.Je 0.73
~~
0.72 . i m 4 m 0.00
! 3 0.e - 88. 5 7 -
- o ................. == . .. ....... . ... , . . . . . . ...... .... . ...... ...... ...... ....... ...... ...... ...... i. .......................<
! I 0.341
') MINUS ONE e = 0.56 j i 0.4 -
g 0.304
- 4l j
0.2 - i ? I PERCENT U 50.1 21.7 l 33.5 800 100 SG 98 9 41 100 03 5 02.5 S.8 74 45.5 42.7 99, } COMPLETED I 2 3 4 5 8 1 5 9 to 11 12 13 14 15 la SAN ONOFRE 2 1 i DATA ELEMENTS 1 3 WATERFORD 3 fi i 1 1 2 l i
FIGURE H-38 INDEPENDENTLY VERIFIED PRODUCTIVITY FIGURES STUDY O WATERFORD 3 AVERAGE Fermwork 1.17 MH/SF .82 MH/SF Reinforcing Steel 23.79 MH/TM 40.00 MH/TN Concrete Placing 2.97 MH/CY 3.70 MH/CY Structural Steel 10.45 MH/TN 46.00 MH/TN Large Bore Pipe 7.12 MH/LF S.10 MH/LF Large Bore Pipe Hangers 105.14 MH/EA. 79.00 MH/EA. Small Bore Pipe 8.40 MH/LF 7.70 MH/LF Cable Tray 3.06 MH/LF 3.70 MH/LF Conduit 1.23 MH/LF 1.73 MH/LF Wire and Cable .09 MH/LF .07 MH/LF Craft Labor Hours (MH/YW) Low 25.00 MH/KW Engineering MH/KW Average 9.45 MH/KW Watcrford ecst is $2400/KW at precent. LEGEND: MH = Man Hours SF = Square Feet l TN = Ton CY = Cubic Yard " LF = Lineal Feet EA = Each KW = Kilowatt FIGURE PROVIDED BY LP&L
; i l ;l , ll l, 0
0 e l 7 1 7 5 2 4 5 N 1 OI o t T A l v 0 E 4 0 5 3 D4 6 7 8
) 1 4
N O3 R3 1 3 3 0 " Aa 1 1 0 O I Dy 3 " T NR 4 g g1g A I g g ,g g g g , j y g ,g g g g g , ,g A T S 1 R l 3 7 7 0 8 E . 1 3 0 P b O 3 2 6 8 1 0. ) O 8 1 6 7 0 0 2 1 0i7 22 1 1 8 2 1 1 1 0 01 1 1 t 1 l I. 5, 1 4 A 5 1 1 1 1 1 1 i 1 1 3 0,1, 8 I 4 32, C 1.i 1 g , , ,, { u g0g g
, , , g ,.
8 T R I s 5 5 5 5 N U E N A t A E l 0 5 0 1 0 O 0' So M l 0 7 3 1 2 8 8 5 E .C 4 9 5 2
. ( N 9 S
D O i g9, 9, 9g ; , ,. , D
~
DT R A l o. O) IV 9 F E R T g 9 E R D 6 8 TA A R9 9 5 3 W T Aa
- S DY 7
_ H Y NR AA E N N TO _ A O SN 8 2 P g _ M I 0 O T G CC . I U a 7 m F TH a m s TS m
- l. m l
N m b ( O m C 6 m R( u E n W: - PO S _ N AO N I 1A AT _ 3l R 4 OuU L D N O I T C R U P R T L S _ I N B O C _ 1 D - E l 2 2 D I K1 2 K Y V 3 I 2A 3 A 2E 3 O E A I I 2 A E L3 R EEPN E E N P EL A D N RFEAAM i 2TN NR DR R 21 R 2TAE 2 N - P F I 2 E1 I EA A l N A 1 E NVNIO 2N E
/
T C O F EOHHBADO2 VNCE HNF 2 O N R YLR LBI BDHKHA NECC3 O F RTE C K 2 E A R R E O ONUS EAE S OE EL E LWY S AU R NWEESLRI YLH I U E I J T OI T LNMSTO AQT RLL SM DLP PEAUAAI RNMRS MLAMMSTR AARTTDLQ S EMOIMTL A AL VL1 E RTT EOOALG MHGR G I RN A A AOUAHI E AAE AI UI OAEEI F PU WP SCSWSMBWF SSFLZLCPWMSLCCBB MVLPVN 4 !il 4 ',$ iI 4 < , 1 l!fj{l- illlli
- ' jgi ;il' i1lliI4
FIGURE H-40 i LOUISIAN A POWER 8 LIGHT COMPANY WATERFORD S. E. S. UNIT 3 CONSTRUCTION COST PER KILOWATT INCLIJDING AFUDC
' FIGURE PROVIDED BY LP&L MINUS ONE STD. PLUS ONE STD.
DEVIATION 079 MEAN 847 DEVIATIO*- 615 DOLLAR PER KILOWATT ' PLANT ' 590 13,00 15,00 ?opd 25po 30po 35po' 4q00 I I I I I I SUMMER sum ==mamun i458 8 8 8 t i I SUSQUEHANNA i '.16 4 8 , I a . BELEFONTE I can ' ' I i 1 FIRMI 2 " 70 t 1 I I I WATERFORD 3 Vv i ' i 1 i SAN ONOFRE 2 9454 ' ' i 1 I MIDLAND 2 .'~ ' 1 I I WPPSS 2 w '4 I i 1 I i MILLSTONE 3
" ~ ^ '
l I I BEAVER VALLEY 2
~ " ' ' \
l l l
- WPPSS 3 -
I I I '" I i I
! ZIMMER I '~"
i i 1 i' SHOREHAM I I I 4 I I I i O O O
)
FIGURE H-41 FIGURE PROVIDED BY LP&L. LOUIS ? ANA POWER 8 LI GHT COMPANY WATERFORD S E. S UNIT 3 } COST GROWTH COMPARISDN INCLUDING AFUDC (PERCEN T ) 1 l PERCENT INCRE ASE FROM ESTIMATE AT CONSTRUCTION START 4 PLANT Igo 2g0 300 4p0 590 690 700 WATERFORD '. --273
-*wus out sTcoano '
I ' ' DEvuT10N 202 % ' BEAVER VALLEY 2 I I I I CATAWBA I a 2 *6 ' ' t i I i
~ l '
COMANCHE PEAK T a 2 ;
- i i
! FARLEY 2 1 I I h 205 ' ' l LASALLE I B 2 1 I
- we. 3sa%
i
= - ik '
' LIMERICK I 8 2 I I l 1 MIDLAND I & 2 I I I i MILLSTONE 3 " l
- I l PERRY I 8 2 I 266 1 1
! SHOREHAM
~
- F2 I l 1 I ':
SUMMER 2ss
' aus out STANDARD
'2e i I i SUSQUEHANNA 18 2 ocy,, ,.,g
- WATTS BAR I&2 , ,
l ZIMMER I , , , f 3
FIGURE H-42 O IDEALIZED WEIGHTING OF RELATIVE PRO ECT MANAGEM NT CONTROL ENGINEERING CONSTRUCTION START-UP PREOPERATION O MEASURE OF , AF/FM / t
" ~ ~ ~
INFLUENCE, /'N LP&L DIRECTION, /
' TILITY CONTROL ,
s
/
,s l
71 72 73 74 75 76 77 78 79 80 81 82 83 84 , i T!ME (YEARS)
FIG H-43 NUCLEAR INDUSTRY LEARNING CURVE 100% 90 - pf 80 - /
/
70 - l
/
/
60 - ,/ 50 - LEARNING CURVE j 40 - /
,/ .
30 - g- # REGULATORY GROWTH 20 - /-'
/
10 - / l 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983
Chapter J BUDGETING, ESTIMATING & COST In this chapter, we will make frequent use of the terms estimate, budget, funds, cost and financial audit. Following is a definition of the intended meaning of these terms. Estimate: Forecasted amount of resources needed to complete a project. Bu%et: Approved estimate. Funds: Money used to pay obligations. Cost: Actual FUNDS expended; thir quantity is compared with the BUDGET to measure performance. Financial Audit: A process used to ensure expended FUNDS were allocated to pay for resources, as documented by the audited party booked COST. Figure J-1 presents the evolution of the approved budget and booked costs throughout the Waterford 3 history. This figure and the above definitions should be kept in mind while proceeding through the following pages. v Chapter J will focus on four subjects: the methodology, accuracy and reasonableness of Ebe.sco's estimates; LF&L's ability to ascertain the reasonableness of these estimates; techniques used by LP&L to determine whether Ebstsco's expenditures were reasonably consistent with budget allocations; and LP&L's ability to estimate and monitor its own expenditures.
1.0 Background
l l Estimating and Budgeting are among the most important elements of an effective l project control system. The overall control system, in simple terms, include the l following steps: l l 1 Define work scope
- 2. Establish baseline schedule
- 3. Establish baseline estimate
- 4. Integrate cost estimate / schedule to obtain a performance baseline n 5. Monitor the performance baseline with earned value techniques i 6. Provide varience analysis and repeat proces:.
Page J-1 I
The objective of any estimate is to determine the most likely level of resources necessary to accomplish project work. The following will describe and define some . key processes and terms used in the estimating and budgeting process. Quantity Estimate: Development of a quantity estimate is initiated once the project scope of work is sufficiently defined. Quantities of products, services, materials and equipment are estimated for each individual project task. Manhour Estimate: Quentity estimates define the number of units of products, services, materials and equipment. In case the task requires expenditure of labor hours, average hours necessary to accomplish a unit of work are noted. These unit hours are determined or based on the company's experience with earlier projects or on the estimator's judgment. They are multiplied by the es'imated number of units of work to determine the totcl estimat.ed labor hours. Cost Estimate: Proper performance measurement is possible only if all project resources are expressed in the same units. It is obvious from the above discussion, that quantity and manhour estimates do not meet this crite.? ion, and that conversion to a common unit is required. This conversion is accomplished by multiplying manhours and other quantities with unit cost of labor, materials and/or equipment. Unit rates and total cost of each task are noted in the cost estimate. 2.0 Evaluation Criteria 2.1 Ebasco Evaluation Criteria As discussed in the introduction, the key aspects of our evaluation of Ebasco revolve around the estimating methcds and the accuracy and reasonableness of Waterford 3 estimates. The following specific criteria will be used to evaluate Ebasco's performance in the estimating process:
- 1. Were Ebasco's estimating techniques and personnel competency adequate in light of (a) existing conditions, (b) project needs, and (c) the state of the art throughout the project?
- 2. Were Ebasco expenditures consistent with budget allocations?
- 3. Were Ebasco's variance analyses reasonab!c and did they provide sufficient back-up or allow access to LP&L for the same tpon request?
- 4. Were Ebasco's estimates reasonable in light of existing conditions throughout the project?
- 5. Did Ebasco have sufficient cost control procedures in effect to ensure optimum contractor performance?
O Page J-2
3, 2J LP&L Evaluation Criteria p- The specific criteria for evaluation of LP&L's performance in the estimating and budget!ng process are as follows:
-1. Was - LP&L involvement in monitoring and controlling the estimating proces of Ebasco sufficient and appropriate to ensure the credibility of the LP&L approved budget for the Waterford 3 project?
- 2. Did LP&L have sufficient staff in both number and competency to carry out the re; , 'bilities defined in criterion 1?
- 3. Did. LP&L estimating and budgeting capabilities evolve in a manner
!- consistent with the evolution of the overall responsibilities of LP&L on the project?
i
- 4. Were LP&L estimates and variance analyses reasonable in light of the existing circumstances?
2.3 Evaluation of Cost of Waterford 3 l The criteria defined in this section will be used to evaluate the overall cost of the , Waterford 3 project and the reasonableness of the latest estimate to completion. l p 1. Are the estimated and booked costs of Waterford 3 consistent with Q industry norms?
- 2. Is the latest estimate and variance analysis to completion reasonable in light of existing conditions and requirements?
i 3.0 Estimating and Bu%eting An overall perspective of the evolution of estimates and budgets can be obtained from Figure J-4. 'Ihis figure shows the progression of the estimata throughout the duration of the project. In the early stages of the project all estimates and cash flow projections were produced by Ebasco's New York office. The first estimate was considered order of
- magnitude (00M) and was based primarily on Ebasco's experience with current and
- past~ nuclear projects. An adjustment for escalation was also included in this estimate., The first officially approved budget for the Waterford 3 project was $230 l million; of this $199 million was allocated for Ebasco expenditures and the
- remaining $31 million constituted the Allowance for Funds Used During Construction
[ ( AF UDC). No LP&L costs were projected at this time, as such costs were considered insignificant in light of past experience. This budget was approved by LP&L's Boed of Directors on November 16, 1970, and commercial operation was scheduled for January,1977. l ,- s Page J t ,
It wasn't until July,1973, that project-specific information was included in the estimate. This variance included the impacts of piping design c.-iteria, special foundation considerations and estimate refinements. Since this estimate was the first estimate to include project-specific data, it was used as the baseline estimate for future variance analyses. The Ebasco allocation was $361 million and the AFUDC was $84 million, for an approved budget of $445 million as of October of 1973. This baseline budget was again updated in December,1974, shortly after the resumption of earthwork, and incorporated escalation costs and revised regulatory requirements which resulted frem the long delay in issuance of the Construction Permit. The Ebasco allocation was 560 million and the AFUDC was 150 million, for an approved budget of 710 million, as of December,1974. From this point on, the Waterford 3 estimate and budget were controlled through cost reports. These reports were prepared and reviewcd in accordance with the following process,
- 1. Preparation of cost reports by Ebasco Cost / Schedule Department, included the following activities:
- a. Initial preparation and analysis by cost / schedule personnel based on revised quantities, unit rate analysis, changes in scope and trends of actual costs.
- b. Review, first with Construction Supervision / Engineering and then with contractors, of variances, corrective actions, and bases for further forecasting.
- 2. Cost reports were reviewed by Ebasco, contr tetors and LP&L. The review process included the following activities:
- a. Review by Ebasco Project Department Heads and Project Manager,
- b. Review by Ebasco Executive Management.
- c. Review by LP&L Project Management,
- d. Review by LP&L Executive Management,
- e. Review and authorization by Board of Directors (BOD).
- 3. Status updates included the following activities
- a. Monthly Status Reports to Ebasco's project department heads and Project Manager. The Progress Analysis (Cost / Schedule Report),
which was reviewed by Projact Management, Construction Supervision and Contractors, identified scheduled manpower, actual manpower, actual versus scheduled productivity factors, and bulk quantity Page J-4
<c
'"'~ " ' ' " " ' " " " ' " ' " ' " " * ' " ' ' ' " ' ' ' ' ' " ' " ' ' " " " " ' ' ' ' "
- C" charts and graphs. depict progress against approved budget plans.
The planned manpower levels used in the Progres Analysis Report also served as the base for cash flow budgets. Consequ ently,
- review of this' data formed the bacis for budget variances and corrective actions at the management and working level.
- b. . In addition to issuing Monthly Progress Reports, Quarterly Review l Meetings with Ebasco Executive Management outlined Project Statui
- i. (Cost / Schedule) including problems and corrective action.
- c. Monthly and Quarterly Reviews with LP&L Site Management also summarized cash flow variance explanations. These variances, along with changes in scope, as identified in the Monthly Progress and Cost Reports, resulted in revised projections of present year and project costs.
- d. Quarterly Review Meetings with LP&L and Ebasco Executive Management outlined project status (Cost / Schedule) including problems and corrective action. -
4
- 4. Annually, or more frequently, a revised project budget was submitted to LP&L for authorization. Authorization received from the LP&L Board of Q Directors for the revised budget was based on data submitted by LP&L Executive Management.
-(/
3.1 Ebaseo Estimating & Cost Control Process l'
'Ihe adequacy of an estimate is contingent upon the performance of each of the functional areas within the project. The estimate therefore takes into account both the direct and indirect input of the past and projected performance of all of the functioral areas.
Figure J-2 and J-3 present a flow chart of the integration of functional areas which provide input and approval for resetting the project estimate baseline. The baseline estimates were originally prepared in the New York office. The later forecasts were made primaril; in the field office, since that is where the data upon which the forecasts were based could be most readily obtained. An account numbering system was established for the project and utilized by both the Accounting and Cost departments. An inter-related financial and cost reporting computerized system has been maintained on the job and provides an accounting of actual dollar- expenditures, as documented in the Accounting records. Most cost forecasting at Waterford was done utilizing manual techniques based upon data derived from the computerized Project Quantity and Manpower Report (PQMR) and the _ actual dollar expenditures. The primary tool utilized at Waterford for cost control was the Project Quantity and Manhour Report which is discussed in more detail in Chapter L, Status Reporting. Page J-5
All estimates were documented in Cost Reports; each report included an explanation of variances from the previous cost report. Figure J-4 represents a history of Waterford 3 estimates. The items circled identify estimates which were reviewed in detail by DMC. The basic format o" the Cost Reports has always been consistent. It includes the estimate of materials and installation costs; booked, committed and remaining cost; and total probable cost, or estimate at completion. Variances between the total probable cost and the latest approved budget were documented in the variance section of the report; cost variances were analyzed and explained in the body of the Cost Report. Estimates and forecasts at Waterford were divided into five functional areas of cost division. These areas include: materials purchased by both the New York Office and the Field Office; contractor costs (a listing of all of the construction contracts); indirects (Ebasco's indirect charges excluding contractor indirects); Ebasco Services cost (the cost of permanent payrelled Ebasco personnel engaged in engineering, construction management and other related services including expenses and overhead); and exposures and contingencies. Early in the project, contingency was used only to allow for errors and omissions. " Identified exposures" is a term which was developed at about the midpoint of the project in order to quantify potential new cost items and to provide a means of associating dollar figures with those items. As the identified exposures became reality, their cost was incorporated into the body of the report. Identified exposures were used frequently toward the end of the project as the impact of Three Mile Island and otner licensing-related changes were becoming known. The cost of these changes was l conceptually estimated and included in the report under Identified Exposures. As the Engineering drawings became available and specific contractor assignments could be made, the Identified Exposure cost was replaced by the estimated cost of installation. Cost forecasting was accomplished based on actual experience, quantity takeoffs and both engineering and licensing judgment. A trending type method was utilized for forecasting most Indirect type items (Ebasco Services and the indirects included in other contracts). Contractor gutatitative items were forecast based on the actual unit rates which were being experienced as well as expectations of difficulty in the remaining installation. I Cash flows for each contractor were developed based upon the Cost / Schedule plans with appropriate additions made for indirect costs and for the expected payment lag. Cash flows were developed for the same functional levelt as were used for the Cost Report Summary; they were time-phased by month for the upcoming year and by quarter for the following years until project completion. In general, the cost reporting control techniques utilized at Waterford 3 were a step above the standard techniques of the time. When the earned value technique was implemented at Waterford 3 f t was somewhat of a novelty, but it quickly Page J-6
i n 1 became the accepted standard. Construction Supervision, in particular, grew accustomed to considering the value of the work accomplished as it related to the approved estimate, instead of considering accomplishments in terms of sheer quantities installed without realizing the relative importance of each of those quantities to the project as a whole. The explanation of the variance between consecutive estimates is the key management tool for initiation of corrective action fer various functional groups or contractors. It may also be used by executive management to track the accuracy of the estimating process. An exang:le of this variance analpis from a typical cost report is shown in Figure J-5. Experienced personnel are an important element in obtaining the most reasonable and accurate estimate. Figure J-6 summarizes the experience level of key Ebasco employees involved in the cost / scheduling and accounting of Waterford 3. DISCUSSION DMC, Inc. did not have an opportunity to evaluate all aspects of Ebasco's estimating and cost control process. Two of the areas not l reviewed in depth include Ebasco's accounting and auditing systems. All impressions we did receive of these areas were good, and if there were any significant problems they would have turned up in other areas of our review. i This section will present DMC's evaluation of the estimating process including variance analysis. The reasonableness of particular l( i estimates with respect to conditions existing at the time of their preparation will be discussed in Section 4.0. As discussed in other l chapters of this report, Waterford 3 was constructed during a period of signifiennt change and unpredictability. This background placed an additional demand on the estimating and quantity tracking systems-to clearly differentiate between variance categories such as scope changes and rework, and to clearly define those categories. DMC feels that Ebasco's estimating process evolved in an orderly fashion and was consistent with the background of changing requirements and project phases. The early estimates were based on Ebasco's experience with current and previous projects; as the engineering phase progressed, the estimates reflected the appropriate level of plant-specific information. As the various installation contracts were defined, this information was also included. Throughout the heavy construction / installation j phase Ebasco continually monitored and trended productivity rates. Esasco's variance analysis is adequate and is reported at an appropriate level in the cost reports. In an attempt to track the variances throughout the history of the project, the format as shown in Figure J-7 was developed. While trying to track the variances of Page J-7
three of the major contractors, inconsistent use of terminology throughout all cost reports made it difficult to place some items in the proper summary level categories. This is understandable considering the duration of the project and the f act that the intended use of the variance analysis was only to get from one cost report to the next. However, in retrospect, an overview variance tracking system such as that shown in Figure J-7 may have been an effective management tool. DMC was unable to obtain back-up for some of the earlier variance analyses. We were informed by LP&L that these analyses are available, but that they are extremely voluminous. We did review some of the back-up for the August,1983 estimate and found it appropriate and consistent. Another important indication of the adequacy of Ebasco's cost estimating and accounting process is found in LP&L's financial audits of Ebasco and its contractors. LP&L has characterized these audits as having minimal findings throughout the project. CONCLUSION The Ebasco estimating process was consistent with project needs and evolved in an orderly fashion in light of changing requirements. Many aspects of the integrated cost and schedule system are considered better than the industry norm. The variance analysis process and the reporting level are considered adequate throughout the project duration. Also, the competency of the Ebasco personnel with whom we had discussions and the general experience level of the cost / schedule group are considered above industry norms. l l l l l 9 Page J-8
3.2 LP&L's Monitoring and Control of Ebasco's Costs (aV) DESCRIPTION In the earlier stages of the project, LP&l's overall direction and monitoring of Ebasco activities was at minimal level. This was also true of cost monitoring. However, a comprehensive and effcetive financial auditing system was in effect throughout the project duration and the initial contract with Ebasco was considerably stronger than the industry standard. A formal budget approval system was in effect throughout the project duration and there was extensive interaction between LP&L and Ebasco project management and discussion with LP&L executive management before the formal estimates were presented to the Board of Directors for approval. LP&L first authorized a cost / schedule pmition on the LP&L project staff in October,1978. In November,1980, the Plant Staff organization included a Planning and Scheduling unit. In 1983 the LP&L cost and scheduling functions were integrated under the LP&L Project Manager. LP&L's involvement in overseeing and ascertaining the reasonableness of Ebasco's estimate was described in the overview of section 3.0. Much of this involvement was in the form of informal discussions and meetings with Ebasco, so it was difficult to determine the complete depth and effectiveness of LP&L's reviews and .p) i involvement, although LP&L was in the approval chain for all major and most mince costs. DMC requested examples of documentation showing LP&L's participation in cost control and monitoring. However most of the documentation received was concerned with items of relatively small dollar value. One effective example of cost monitoring is described in Ch9pter H. This occurred when LP&L's executives became concerned about the cost of the Post Accident Sampling Facility. They rejected Ebasco's recommendation for a $6.5 million facility and opted for an acceptable alternative which cost only $3.0 million. One important aspect of cost control is the effectiveness of the financial auditing system. An effective audit process will uncover problem areas and will also provide positive incentive to those being audited to conduct their activities properly and minimize audit findings. LP&L Internal Auditing Department Organization and Procedures are shown in Figure J-8. Figure J-9 presents the October 22, 1983 audit status report for Waterford 3 and shows the cumulative audit hours spent on each major contractor during 1983. The LP&L Internal Auditing Deputment has performed compliance
/g) audits of Waterford 3 contracts since 1976. These audits have k/ covered contracts for approximately 50% of the total amount Page J-9
disbursed. The audit procedures used by the internal auditors were comparable to those commonly utilized in the industry. Based on the results of their audits, the opinion of the auditors was that charges billed by Ebasco and their subcontractors were generally in accordance with the provisions of the contracts. Their results also disclosed that the controls and procedures used were adequate. Another effective cost control tool is the strength of the original contract and the effectiveness of overall contract administration. LP&L's administration of the Ebasco contract is discussed in Chapter R. 'Ihe conclusions of that chapter state that the original contract and the supplements are stronger than industry norms. Because of the background of changing requirements, claims management became a more significant tool. This is also discussed in Chapter R, and LF&L claims management has been evaluated to i be above industry norms. The evaluation in Chapter R is mainly I concerned with claims of subcontractors. DMC did not have an opportunity to review the details of LP&L management of Ebasco out-of-scope claims. During the interviews i DMC was informed that as the project evolved, Ebasco identified (by letter to LP&L), work which Ebasco believed to be beyond the scope of the contract. LP&L project personnel and, if appropriate, others (including the LP&L purchasing department or independent third parties) reviewed such claims based on their knowledge of project and industry events and provided recommended resolutions to LP&L , l management. Following these management reviews, claims were ! resolved by response to Ebasco and, if necessary, a contract supplement was executed. Contract supplements were usually , approved by LP&L legal counsel prior to execution. During the latter stages of the project, LP&L authorized an integrated cost schedule group. This organization is responsible for cost control of both LP&L and its contractors. DMC had extensive discussions with personnel from this organization. The current organization chart for this group is shown in Figure 10. The group was extensively involved in monitoring and directing Ebasco activities related to preparation of the September,1983 estimate to completion. l DISCUSSION An effective cost control process includes the following elements:
- 1. Appropriate selection of a contractor and level of the owner's confidence in that contractor
- 2. Effectiveness of the contract, amendments thereto, and j contract administration l
l Page J-10
L
- 3. Effectiveness of the contractors' cost control sys+em
- 4. Effectiveness of the owner's cost monitoring / control process i
- 5. Effectiveness of the financial audit system
- 6. Effectiveness of the change and claim control process.
Our evaluation of LP&L performance in cost monitoring and control l was focused upon the company's performance with tapect to above . elements. i
- 1. Contractor selection was evaluated in Chapter Q, Procurement, and found to be above industry norms.
- 2. The effectiveness of the contract was also evaluated in i Chapter Q and determined as above the industry norm, with the exception of change control (item 6) below.
1
- 3. Ebasco's cost control system has been evaluated in previous chapters of this report and in Chapter L, and found adequate or above industry standards.
- 4. DMC's interpretation of the. scope of this activity is based not I -only on an evaluation of the formal organization charged with 4 the responsibility, but also on the cognizance and participation 4 of key LP&L Waterford 3 personnel. DMC attempted to obtain data for this evaluation through the interviews and dcoumentation requests, but this process did not yield enough specific information to enable a statistical "harda evaluation of
- this area. Our " soft" evaluation, which is based on general-perception and the lack of definitive data is that they may have-been deficient in this area during the early and middle
< stages of the project. This evaluation is also substantiated by the 1977 and 1979 consultant's reports. However, because of the adequacy of the other elements and the lack of any direct impact, we can attribute no cost
'~
impacts or savings had this potential deficiency not existed.
- 5. LP&L's financial audit system is evaluated to be consistent with industry standards. DMC also feels that the posture of this organization may have played a significant role in
- achie.ving the level of performance put forth by the parties l
LP&L audited. b' 6. Our evaluation of LP&L's change control process of the Ebasco Page J-11
. ..___.. _ . __._- _______ . _ ._. _ _ _ _ .~_ _ __ _ _ _ ._._ .-, _ _ _-_ _ _
I 1 contract is similar to that of item 4 - i.e., due to the 1&k of definitive, hard date and our general perspective, tne LP&L change control process could bc potentially deficient. Ebasco's documentation of out-of-scope items was reviewed by examination of the pcrtinent at section in various progress reports and review of one of their invoices. Ebasco's . documentation and reporting of this item is considered I excellent (this conclusion was to be expected because of the built-in incentive). We find no direct evidence that LP&L provided or obtained the technical expertise necessary to back up any negotiation of these claims. This evtluation cannot be considered final until the Ebasco contract is completed and claims are finally settled. However, it should also be pointed out that we have not found any financial impacts resulting from this potential deficiency. The above elements interact and overlap to produce an effective cost monitoring / control process. Deficiencies in one element can be be compensated by strengths in others. Our overall evaluation is that LP&L's cost / monitoring process was adequate, but improvement of some elements would have been beneficial. It is also noted that this evaluation h based on periods prior to 1983, as our evaluation of the current cat / monitoring system shows that it is now operating effectively. CONCLUSION LP&L's cost monitoring /contrni system was adequate, but had some weaknesses oefore the current organization and personnel were in place. The current organization is performing effectively, and we can attribute no cost impact to the potential deficiencies which existed earlier. 3.3 LP&L's Forecasting and Budgeting Process DESCRIPTION This area was evaluated only for the latter stages of the project, when the estimating and budgeting process for portions of the project for which LP&L was directly responsible became significant. Figure J-11 shows LP&L's portion of the total approved budget by year. Figure J-12 shows the composition of LP&L's budget. LP&L's basic forecasting and budgeting process involved canvassing the key LP&L managers and obtaining their evaluation of projected resources needed to complete the Waterford 3 project. The process has evolved over the years and has become considerably more formalized with the addition of department and cost center pre-code numbers. Page J-12
Currently, there is a stronger emphasis on variance explanations and a more detailed look at justification of temporary and contract Y employees.- -The forms shown in Figures J-13 and J-14 are used to l d collect forecast and variance data by cost group. A. detailed review of all forecasts is performed by the cost group and follow-up meetings are held with all departments. Department heads then make presentations of their forecasts before a review e board which consists of the Nuclear Operation Senior Vice-President, Senior Managers and a representative of Corporate Budgetiag. LP&L's current cost monitoring / control process consists of monthly cost reporting and variance analysis and continuing efforts to evaluate the performance of and needs for contr. net personnel. , DECUSSION DMC held extensive discussions with the LP&L cost group and concluded that they are currently capable of effectively performing in the cost monitoring and control area for the LP&L direct resource expenditures on the Waterford 3 project. A detailed evaluation of LP&L's effectiveness of past performance in internal cost monitoring and control was not performed. The cost group's current approach to forecasting. and budget control is i considered adequate a .d consistent with project needs. j' CONCLUSION The current posture of LP&L's cost forecasting and control group is D sufficient .and consistent with the Waterford 3 project needs. l 4.0 Cost Evolution and 7ariance Analysis u This section will trat t Ebasco and LP&L's forecasts and estimates throughout the Waterford 3 project durMion. The discussion will. concentrate more on the current estimate to completion than on evaluation of past estimates. The variance analysis of previous estimates is r.ot as significant as the current one because discrepancies are adjusted by the contract claim process. These efforts have been discussed in [ previous sections and other chapters. l 4.1 Overview, Variance Analysis, and Cost Evolution to Date L DESCRIPTION Figure J-15 describes the evolution of Waterford 3 cost estimates _ and cost growth and the reasons for the variances from previously approved budgets. This figare includes Ebasco, LP&L and AFUDC j costs.' Figure J-16 shows a comparison of the B-2 cost estimate i with other Ebasco and non-Ebasco projects during the same time frame.. 'The final cost of the project will be discussed in the last section. , Page J-13
- ~ .. - . .- - . - _ - .. - , - - , _ . . . . - . - .. _ _ - -. - . - .-..-. - . _ .
l The cost reports circled on Figure J-4, were used to track the cost estimate and variance throughout the project history. Figure J-7 was prepared in an attempt to track some of the major contracts in l consistent summary level detail but because of the lack of consistent terminology at the detailed level, this was impossible. 1 This effort was useful, however in that it aided our attempt to find I anomalies and inconsistencies. No significant discrepancies were found, but the following observations did result from the review.
- 1. The variance analysis for Ebasco Services in all cost reports is not as de+. ailed as those of other contractors in the cost reports.
- 2. There may be some discrepancy between the present piping contractor's unit productivity rates and the overall averages reported by Ebasco. This is probably attributable to the fact that rates towards the end of a job increase because of congestion, interferences, and project cutbacks.
- 3. The cost growth category referred to as " schedule delay" consistently appears to include work that is not completely time-related.
DISCUbSION The variance analysis and progression of the estimated cost is considered reasonable and corsistent with general industry norms. CONCLUSION The variance analysis and cost evolution to date are reasonable and generally consistent with industry norms. 4.2 Cst Growth Causes .. DESCRIPTION There bave been numerous reports written over the years in an attempt to untangle the root cause of nuclear power plant cost growth. Figures J-17 through J-20 were obtained from some of these sources and present a picture of industry-wide trends and an analysis of the causes of those trends. Figure J-21 present LP&L and Ebasco's analysis of the cost attributable to major regulatory changes. This report was not complete as of this writing, but a similar report on a contemporary project categorized overall cost growth as follows: 25% - Schedule delays 50% - Regulatory Changes 10% - Deaiga changes 4% - QA scope growth 11% - Other reasons Page J-14
These statistics were compiled 2 years ago and, consequently, the A percentages attributable to regulatory change and QA are smaller l than a current analysis would show. The same project split the total cost growth into 46% escalation and 54% Scope Development. , I DECUSSION Each project is bound to incur costs in a slightly different manner, l depending on its timing, duration, and local conditions. This data is ;
. presented here to compare the overall cost growth of nuclear power plants, in general, with that of Waterford 3. The major difference is found in the latter stages of the project; this significant influence is attributed to the "7Jmmer effect", increased demands on system transfer documentetion, QA requirements on hangers, system walk-downs and as-built documentation.
CONCLUSION The causes of cost growth of the Waterford 3 project are in line with industry experience. 4.3 Estimate to Completion and Variance Analysis DESCRIPTION Figure J-22 presents an overview of the cost and schedule to complete the Waterford 3 project. Figure J-23 presents the approved budget by year for LP&L and Ebasco through 1985. These figures are from ' the September,1983 presentation to the LP&L Board of Directors. t Figure J-24 gives a perspective of the number of people required to
' complete the project. 'Ihis is important because a significant part of the cost is associated with non-manual labor involved in overall system documentation.
LP&L's explanation of their portion of the forecast variance is shown in Figure J-25. While reviewing this variance with them, we requested and received a further breakdown of part of the variance; this br0akdown is shown in Figure J-26. The explanation of Ebasco's portion of the budget variance is given in the July 31, 1983 cost report. Figure J-27 shows a breakdown of this budget variance, a further breakdown of costs attributed to schedule delays and individual contractors. This cost report was reviewed in detail by DMC. The major cost variance resulted from: o The schedule delay of fuel load from May 1983 to March 1984 (131 million) o Seismic hanger re-inspection o Instrumentation installation ., k / o QA-record review Page J-15
o Hot functional modifications LP&L's cost group was extensively involved in both LP&L's and Ebasco's latest estimate to completion for the Waterford 3 project. Also, the newly appointed Senior Vice-President of Nuclear Operations and his staff performed an intensive review of all aspects of the latest estimate, and assured the Chief Operating Officer, Chief Executive Officer and Board of Directors that this budget and schedule were achievable. As can be seen from both variance analyses, a significant portion of the current variance is attributable to the schedule delay. Extrapolation of the amount attributable to the schedule delay shown in the latest estimate to complete indicates that the cost associated with further delays can be as high as approximately $36 million a month, or $1.2 million a day. (This figure was determine by dividing LP&L and Ebasco's costs attributable to schedule delays by 10 months. This figure may be high as there were items in this category which were not time related.) DISCOSSION The estimate to complete Waterford 3 was reviewed in detail with both LP&L and Ebasco. LP&L was involved considerably more with the preparation of Ebasco's portion than was evident in the past, and was responsible for establishing the current tracking format for work / task packages. This was a significant effort since the bulk of the remaining work is documentation oriented and cannot be tracked in the same fashion as bulk construction activities. It is our opinion that the cost estimate and budget to complete Waterford 3 is sufficient and may even contain levels of effort in excess of those needed to successfully complete the project. However this is considered prudent, as the consequence of not accomplishing fuel load on schedule could be as high as $1.2 million a day. The variance analyses DMC reviewed were found to be reasonable, with the possible exception of too many items being placed in the
" schedule delay" category. However car detailed review determined that these items were necessary, even though they possibly could have been placed in more appropriate variance categories.
Assignments to the summary level category are somewhat subjective. CONCLUSION The September,1983 estimate to complete the Waterford 3 project may contain levels of effort in excess of thr.se needed to successfully complete the project, but this is considered prudent in light of the ecst impact of not meeting the current schedule. Page J-16
4 O : LP&L's involvement in this latest budget development, and its ability to track the: budget performance, are considered adequate and prudent. The variance analysis for the -latest cost growth is considered reasonable, but some activities may have been allocated to subjectively. 5.0 Cost - DESCRIP110N The booked cost to date (September 30,1983) of the Waterford 3 project reported by LP&L is 2.07 billion dollars. The cost to . . complete the project is estimated at $579 million, bringing the total to $2A49 billion. This cost is equivalent to approximately $2,400 dollars per net kilowatt ($/KWe is the most common factor used to compare plant costs). Figure J-28 shows how the Waterford 3 project compares with other contemporary plants. There are many other data bases against which the overall cost performance can be measured, but none of them are more up to date than this figure. This figure was prepared by LP&L and Ebasco by obtaining data directly from other l utilities in September and October of 1983. 2 ( Another comparison, which is shown in Figure J-29, was obtained from the Electric Utility . Week issued November 14, 1983. This publication had an out-of-date figure for Waterford 3 and we are uncertain as to how current the other figures are. DECUSSION The following items are considered important when evaluating comparative cost of nuclear units.
- 1. $/KWe, although a more equitable comparison standard than total dollars, is far from a perfect comparison standard.
- 2. _ Considering the recent ' impact of the "Diablo Canyon" and i "Zimmer" situations, only plants which are contemporaries of Waterford 3 can be equitably compared.
I 3. Comparisons with industry peers should take into account whether a plant is the first unit to be built by a utility, or whether the utility has prior experience with nuclear units already on line, as this learning experience is significant. LO Page J-17 "
- 4. Other important factors include (a) one and twer-unit sites, (b) local conditions such as seismicity and foundation, and (c) the location itself in relation to labor rntes and material availability.
These factors are all significant, but it is almost impossible to factor them completely out of current data bases. DMC has reviewed other data sources at:1 the cor.shtent result is that the cost of the Waterford 3 project is average, or better than average, in comparison with a significant number of contemporary plants. A final important aspect of the cost of Waterford 3 is that DMC's extensive rcview of the project failed to turn up any area where a cost impact could be attributed to gross mismanagement on the part of LP&L, or the lack of cost control procedures. CONCLUSION The estimated total cost of Waterford 3 is reasonable; it is equivalent to, if not lower than, the cost of comparable plants. O i 1 l l l l l l 9 Page J-18
I j l FIGURES , i ( O
/ 5 8 9 1 i 4 4 8 _ 9 9 0 1 2 I 3 8 9 1 I I 2 8 9 9 3 1 Y 4 1 1 9 C S N 8 2 1 8 E 1 6 9 RE 4 1 U G 1 1 TIN 1 0 I 8 DNT 9 9 1 N 4 EO 9 a PC l 9 X 7 E E L 8 9 1 1 DU ND 6 8 [/ l 8 J A E H 7 9 E SC 1
- R TS l7 U E 7 9
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' i 1 7
9 9 9 1
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FIGURE J-2 COST / SCHEDULE PLAN PREPARATION AND REVIEW FLOW CHART ESTABLISH REMAINING QUANTITIES APPROVED QUANTITY TRACKING FORECAST REVIEW AS ON ! 9 ESTIMATING REMAINING COST REPORT { 4 4 PRESENTATION COST ENGINEERING MANHOURS FLOW CHART COST ENGINEERING APPROVED 1)EBASCO CONSTR o NOT APPROVED DEVELOP MANPOWER ROJECT PW LOADED SCHEDULE 2)EBASCO ^ " ABUSH CONSTRUCTION PROJECT
" ^
- R_ANNING B SCHEDULING
- SUPT APPROVED COST ENGINEERING 3)CONTR ACT0d PRESENTATION n SUPRVSN & TO COST ENGINEERING MANAGEMENT LP B L CONSTRUCTION 4)LPBL CONSTR MANAGEMENT SUPERVISION COORDINATORS ,
NOT APPROVED bROVED a DETERMINING AREA, NOT APPROVED M ATERI AL 8 DRAWING AVAILABILITY
^
PLANNING B SCHEDULING BASELINES CONSTRUCTION PROCUREMENT ENGINEERING FIGURE PROVIDED BY LP&L
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FIGURE J-3 COST REPORT PREPARATION AND REVIEW FL(W CHART
!. EGT IMATE AND/OR ThP.LCA ST CATA COST ENGR 0FOREC AST REY l E.W REVISE ! R EVs Er#
OTYS ( Mil 6 I;0flEr AsT ( FOMECAST( t[ylCT b
* .S C HE pill E M SCHEDULE 4 f off f C AST Tsi C(' All't.E TE ACTijAL ( :CHilhAE 2'lVI.I.Ol'E D WIT H: +
Qu A'JT IT I ES C oplSTRUCTIOtJ wlTH:
- COST /
My ccar/
^"I " Y 'sC"l: Dut C Su rf: r v I c ors
. EARNED VAll4EM ( couTFAC TMS SCHt owi sN i
'" PL AIJ
. _[. 4 PRobLlCTIDNj " I _ l'R O DUC TI V I TY COST / A(1IJAL (4%WS 3% COWtt. SColEbOLING cost / % %E'S g ,,o,,3 EE f *5 l llo'lks no APIPG*/AL o T llAE. CHEETS vts COST EHGR 9 ISSUE COST nspogy io Rt l4 Alt 4 t NG pgoject Qil#1TITIES
" I' i, Otl4NTIT Y A PPROVAL ; TRACglH6 7 ,f NO YES E & Ti f44 TING _.
PRESEllT to LP{L cons i tJ g'tJT 10 l'O'4R ,
/ MH(N .gyAl( AgyE gpg (Afgg pgl4ggg Rt s/ Isr. Cis vcs,
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j lia CAP.I.l E R PHASE.5 TMG C o t. T l' A c t l IPlE, % COMPLElf l LP( L APl'itO-it.I. ENGerJ EE R RELIED PAO RE UPent ' l I JUDCFMElIT, PRODUCflDil RAffs* FIGURE PROVIDED BY LP&L ANTI UNIT RATE EVPGRIEHCE.
FIGURE J-4 LOUISIANA POWER & LIGHT COMPANY WATERFORD SES UNIT 3 EUDSET HISTORY FOR WATEPf0RD (CONCEPTUAL ESTIMATE TD CdRRENT F6 RECAST) (MILLION) FORECAST 1 2 3 4 5 6 7
@ @ @ @ @ 13 h
EUDGET APPROVA. DATE NCJ 70 NOV 71 SEPT 72 GCT 73 DEC 74 SEPT 76 AUS 78 AUG 79 AUS 90 AUS 81 FEB 82 AUG 82 MAR 83 SEPT 83 FORECAST OF COMMERCIAL CPERATION DATE JAN 77 JAN 77 JAN 77 JAN 77 FEB 80 APR 81 NOV B1 FEP 82 APR 83 APR 83 JdLY 83 JM 84 MAR 84 NOV B4 ENGINEERING & CONSTRUCTION a * * *
- 625 794 360 1011 1118 1259 1406 1464 1645 LP&L * * * *
- 25 74 89 135 171 230 291 303 496 SUB10TAL 199 246 2?3 361 560 650 B69 949 1146 1289 1489 1697 1767 214!
AFUDC 31 43 57 84 150 1o3 241 220 346 225 319 360 396 508 TOTAL 230 289 350 445 710 815 1109 1229 1492 1574 1803 2057 2163 2649 n - NOT AVAILABLE FIGURE PR7/IDED BY LP&L
# 9 e
FIGURE J-5.0 SAMPLE COST REPORT VARIANCE ANALYSIS w ,
\
~ LOUISIANA POWER & LIGHT COMPANY WATERFORD SES - UNIT NO 3 MANUAL COST VARIA1:CE
SUMMARY
f Contractor: Tompkins-Beckwith - NY-ll ($ in 1,000)
- Manhours Wage Rate Variance I. Schedule - - -
II. Quantity Change 79,261 @ 15.92 S'1,261 1 -. ] III. Productivity Changes 55,960 @ 15.92 $ 890 ) , IV. Estimate Refinement 181,455 @ 15.92 $ 2,888 j V.- TMI - - -
- v VI. Contract Reassignment - -
VII. Pricing Differential Due to
.Manhour Distribution D-9 Rev 2 Remaining Wage Rate S17.54 D-9 Rev 1 Remaining Wage Rate $15.92 Wage Rate Variance $ 1.62 D-9 Rav 2. Remaining Manhours x851,771 $.1,380 i VIII. Other: Adjustment to D-9 Rev 1 $(1,091)
GRAND TOTAL $ 5,328 FIGURE PROVIDED BY LP&L O
FIGURE J-5.1 SA:fi'LE COST REPORT VARIANCE ANALYSIS LOUISIANA PWER & LIGHT COMPANY WATERFORD SES - UNIT N0 3 EXPLANATION OF VARIANCES Contractor: Tompkins-Beckwith NY-11 ($ In 1,000's) I. SCHEDULE EXTENSION II. QUANTITY INCREASE Small pipe - Increased footage in small bore pipe S 629 of 4,804 LF caused an increase in forecasted r an-hours of 39,535. An ir.arease in small pipe fc,r the central nitrogen system accounts for 3,000 LF. All other increases were caused by revisions to isometric drawings done by T-B. The footage refinements were inade in the TGB and RAB and involved the AC, CW, DW, CF, CD, ES, MS, LO and NG systems. Large Bore Pipe - Large bore pipe quantities in- $ 176 creased by a net 613 LF and 11,083 manhours. An increase of 1,129 LF in the TGB, RCB and FHB ot - curred in the ES, FP, CC, CD, and FS systems. The increase in the ES system is due to redesign of 874 LF of pipe from 2" to 4" diameter. Other increases were due to quantities exceeding the previous forecast. A decrease of 566 LF in the RAB and yard occur'r ed in the AC and CW systems. Large Bore Valves - Large bore valves increased S 5 11 valves and 327 manhours due to the redesign of tite ES line in the TGB. Large Bore Hangers - Large bore hangers increased by S 358 225 hangers and 22,531 manhours. An increase of 199 hangers can be associated with new designs in the ES, LO, CC, CD, EG, and WM systems. The other 26 hanger increase is an allowance for new hangers required to maintain the pu=p alignment. Large Bore Welds - Large bore welds increased by S 92 83 welds and 5,785 manhours due to added welds in the ES system. III. PRODUCTIVITY Small Bore Pipe - Rework of small bore pipe accounts S 436 for a forecast increase of 27,420 manhours. This increase was made in the RCB and RAB and involved the AC, CC, CD, CH, DW, it.D, and BM Systems. FIGURE PROVIDED BY LP&L
FIGURE J-5.2 SAMPLE COST REPORT VARIANCE ANALYSIS T LOUISIANA POWER & LIGHT COMPANY WATERFORD SES - UNIT NO 3 e P EXPLANTION OF VARIANCES Contractor: . Tompkins-Beckwith - NY-11 ($ In 1.000)
.III. PRODUCTIVITY (continued)
Large Bore Pipe - Large bore pipe rework accounts S 94 for a forecast increase of 5,876 manhours. This increase was made in the TGB, RCB, and RAB and in-volved the CS, CC, CH, AS, and BM systems. Re-routing and placing pipe on final location is the i principal reason for the rework. l Large Bore Valves - Large bore valve manhour fore- $ 12 cast increased 737 manhours in the RCB SI system. Large Bore Hangers - Rework on large bore hangers $ 275 account for a manhour forecast increase of 17,289 _gs manhours. - Mose of this rework occurred in the RAB
~
and is involved in the AC, DW, MS, CD, EG, CC, SI, ( )' and FS systems. This rework can be attributed to
\s./
the following problerr.s:
- 1) ~ The majority of hangers are installed
- prior to the pipe and are usually re-located af ter final placement of the pipe.
- 2) Exposed plates cannot be installed in their design location due to rebar interference.
31 Embedded plates are not on design location thus necessitating hanger re-design. Large Bore Welds - Rework' on large bore welds ac- $ 137 counted for a forecast increase of 8,638 manhours. This increase occured in the RCB and RAB and in-volved the MS, CS, SI, and CC systems. Penetrations - The forecast for penetration in- $ 16 creased 1,000 manhours due to work remaining on HVAC penetrations. , t t ( FIGURE PROVIDED BY LP&L
~ FIGURE J-5.3 SAMPLE COST REPORT VARIANCE ANALYSIS LOUISI.GA POWER & LIGh'I COMP.GY WATERFORD SES - UNI! N0 3 EXPLANATION OF VARIANCES Contractor: Temokins-Beckwith - NY-11 (S In 1,000) III. PRODUCTIVITY (continued) Extraction S team in the Condenser - Forecast san- $( S0) hours for this item was reduced by 5,000 =anhours based on actual experience. IV. ESTIMATE REFINEMENT Exuosed Plates - A f orecast increase of 31,606 man- S 525 hours wss necessitated for the installation of addi-tional exposed places. This is due to the problems experienced presently with longer ins tallation loca-tions and no places being available in that area. A forecast increase of 1,380 manhours occurred due to the settlement of an FJO between Ebasco, IP&L and J A Jones. These manhours were previously expended. Finabing & Drainaee - An increase of 121 manhours was S 2 necessary to offset the to-date manhours previously expended beyond the forecast. Whip Restraints - An increase of 25,800 manhours is S 411 reouired to complete work on MS anchors 1 and 2 and FW anchors 3 and 4 as per DCN 296 and 2';9. Pipe Cleaning - A forecast =anhour increase of 4,s7S S 78 manhours was necessary due to actuals exceeding the previous forecast. S 2 16 Cara & Mair enance of ?ermanen: Plant Ec uiemen: - An allowanca for naincanance of percanent plan: equipment and hangars ac: un:s f or a nanhour f ora-cas: increase of 13,500. Previous f:racas ts ac-
- untad :nly for valve naintenance requiremen:s.
Han2er Rawort - in incrasse of 31,:10 nanncurs has 3 .. ?7 been added :: 111cv f:r :=- e - n; aanger revern. Ice
- :he pr: ec:'s encerianca .::: encass::a :averz :f larga 'sora can2ers a sapars:a ac::un: has been esta:-
*ishec 20 Orar% ::asa nandour3.
?.anh0urs 2xpe dad fOr ini:ial insta_lacian vill con:inua .a Se c argec agains:
- heir respec:ive h-nger ace:unts, vi:n all rework nan-hours being :: acted sacara:ely. This will ensole pr:-
j ac:s ::n:::ls :: rapor: pr:cuc:ivi:7 fac: rs and per-
- ent ::=plata vich nora ident-itaole explana:: ens af variances arc preole= areas.
FIGURE PROVIDED BY LP&L
FIGURE J-5.4 SAMPLE COST REPORT VARIANCE ANALYSIS O LOUISIANA POWER & LIGHT COMPANY ( ') I WATERFORD SES - UNIT h) 3 EXPLANATION OF VARIANCES Contractor: Tompkins-Beckwith - NY-11 ($ In 1.000) IV. ESTIMATE REFINEMENT (continued) Support Craf t - Due to an increasing trend of expen- $ 360 ditures on support craft in recent months, which is consistent with the other manpower increases, a fore-cast increase of 22,630 manhours is required. This category consists of carpenters, electricians, team-sters, and operating engineers. t V. TMI - VI. CONTRACTOR REASSIGNMENT - VII. PRICING DIFFERENTIAL DUE TO MANPOWER REDISTRIBUTION $ 1,380 VIII. OTHER $(1,091)
~~s Ihe overall variance is decreased by an adjustment j of $1,091,000 to the D-9 Rev 1 cost report.
[
\.s i IX. NON-MANUAL / CONTRACT OIHER Non-Manual - Despite a significant increase in man- $ 146
- power, non-manual reflects only a minimal increase in the projected cost. This minimal increase is due, primarily, to the f act that actuals ran signi-ficantly below the D-9 Rev 1 forecast for the months of December, January, February and March. Secondari-ly, the 9% retroactive non-manual otligation (as per EJA 102) was over compensated for in the D-9 Rev 1 cos t report. 3
' Overhead - Overhead has been calculated at the re- $ 228 cent contractual obligation of 6% of the actual manual labor cost. (This rate was applied to D-9 Rev 1 as well.) The increase is a result of the increase in the manual forecast.
Fixed Fee - The fixed fee has been calculated as- $ 265 suming productivity of 1.0. This performance fac-tor would allow for the most accurate forecast a long range scale. The increase in due to the increases in the msnual forecast. O Eculoment - This increase is a direct result of the $ 99 l As manual forecast increase. FIGURE PROVIDED BY LP&L m
FIGURE J-5.5 SAMPLE COST REPORT VARIANCE ANALYSIS LOUISIANA rWER & LIGHT COMPANY O WATERFORD SES - UNIT NO 3 EXPLANATTON OF VARIANCES Contractor: Totmkins-Beckwith - NY-11 ($ In 1,000) IX. NON-MANUAL / CONTRACT UTHER (continued Expendable Material - This increase is a diryct re- $ 152 sult of the manual forecast increase. Mobilization - Mobilization has increased only S 3 slightly due to the f act that no actuals were billed for the period of May 1980 thru February 1981 yet the D-9 Rev 1 f orecast had allowed f or payment in this period, thusly overstating D-9 Rev 1. GRAND TOTAL S 6,221 O l l l FIGURE PROVIDED BY LP&L
I i i I i FIGURE J-6 i 9 Total Years Total Years Individual Nuclear Exper. Power Exper. lr
~
R. Coagrove 12 15 -l R. Dawes 17 30 i R. Fawcett 16 16 l L..Gilliland 14 19 i P. Gregory '11 11 ! H. Huhn 11- 11 l R. McMaster- 9 9 W. Pettigrew 7 13 : f N. Saari 8 13 M. Soniker 7 13 ,
' AVERAGE YEARS OF EXPERIENCE 11.2 15 I
O L 1 5 I- 1
- i s
- a 1
t~ l FIGURE PROVIDED BY LP&L l i (.....:-.,_____.____.________.._--__._-.-_.-_--_.-_._.~_-_____.,.-..-______-,.....--__ -.
FIGURE J-7 PROPOSED VARIANCE ANALYSIS TFACKING FORMAT O MCAST 48tKR 6 7 11 9 le 11 12 13 le 15 1$ le 87 De pt 99t1 peR2 ECAST 8471 44 78 448 79 N: 79 AL to AL 80 m 81 Jan 82 auG 82 am 83 MT 83 AJ6 63 FASti VMiMCI M6ri v4RIANCE k5t! WIMCI BG6ET W14act IJEt' varianct ETIT vu:Antt 9060T vas;amCE k%GCT WIAE! BMT v&A!4NCE k%6TT w menn.a.m. ...= us..a == = .nm. nm u.au === ==== nom n=. um.. ==== nun ===. ===. .mm === === n== ===. .u.ienct M,tri a.==... c TfDPtis -KCu'Tr C17t114 TOTAL IOEA50 K 1W: Tion SCOPE CuaGE EStata!!> LA80s Tgg $$973 10,og 63 3 530; 71 70 75;98 e846 B'lo4 66 '9 a 41 91475 42890 134295 23749 158064 3715 1a1759 1473: 17s4 4 %* IE Ee ICE 45tl Kf1N!i!> !?04 14L 2906 63T liCDPI CH4GE 1+17 -544 4090 CIT WE CWm6E 1163 # 136J 3277 mi! IhCOK3) $469 SCEkt[ KLa- 1 41 dfGE 10:4 2229 tow CT@ eier last -let 14842 R3C44Cd 8 McZ M*DIA TCTAL INCriain KTIC0m KDPI CheeGE E3CA4i!On LA83k TC% *k837 0 e6837 9 ell 53 48 e4 66333 1541 6't:4 7600 754 4 10C9 Se153 3406 f61 2062 91 43 -1%: 905&2 7 2'e 9c6 I4 Cit 4;;I KJ InI!!On 4'80 .5 33 e'6a 128' SCOPE CM4GE -11.'0 1804 1777 1621
#!T P4 CHMGi -1625 -PB 19 %
e6s laCUXCM -310 652 2456 SCKkLE KiA: 25' 78 CGA es 522 STO 35-, 4462 1674 2719 Dk ETERIAL TCTAL IEttASD KfIs!TIDs SCOPt ChMGE ti1ALAT10s LAtas TCT4L 7107 2169 9276 2303 11579 965 12564 1947 1 491 2655 17146 9164 26310 C71 33381 9410 42491 6869 493 0 54:3 54'e 3 IEttasr) KT!stTIOn 68 T !!36 2452 SCOPE ChMGE -15 1194 MT RATE CMANGE 1498 21P 349 1299 anGE IEt(KC8) -8 13,8 SCERLE KLAf 32' dEt ec3 351 1203 2943 aLL CONil4CTOR 44TUI4L 172758 10087 1828 3 14293 197168 10934 208102 6 2001t2 11392 218 494 4 223384 -th4 221920 5493 227413 5204 2 2617 6662 [htbit AL CM2 ACTOR LAlop 2543G 38948 2T78 18320 316898 25969 342867 20590 36345' 14m 378234 77476 455710 78430 534140 17082 551;22 3580s 567c28 2338:4 820642 EL IDWTRACT5 TOTAL 25430 38948 2 2 78 18320 316Pt 25969 3428 0 20590 b 14m 3's 34 17476 455718 78430 534140 17M2 551222 35a06 587029 ERASCC KWICES. 8: E343C0 KRVICES. $171 (3n5C0 KWICIS. TCTA 147343 14454 164115 20'209 20723; lb 2429e* 310150 330800 3617Gs 39151: a 7 000 .,00c W _.
= im im m
me - xu 4..+ O
. . . . _ . _ _ . _ _ = _ . _ - _-
FIGURE J-8 m f\m LOUISIANA POWER & LIGHT COMPANY INTERNAL AUDITING DEPARTMENT LPSC AUDIT Internal Auditing Department
+ Organization Director of Internal Auditing Reports directly to President and CEO Audit Committee (Outside BOD) approves and monitors audit schedule.
Audit reports are sent to President and Audit Committee.
- Compliance Audits at W3 Audited each major contractor at W3 fx -
Have made a major effort this past year to audit contractor before they left site.
}
Audited Ebasco's Home Office billing through-out the history of project. . Ebasco's Force Accoun't contract was audited and is scheduled to be reviewed again during 1984.
- Audit Procedures 4
Comparable with other procedures utilized by other utilities and industry. Includes procedures for basis of opinion relating to Internal Accounting controls. Has been reviewed by our independent auditors (DH&S) .
FIGURE J-9 4AnucaD 3 ATc: II.a 1983 WATERIORD HOURS gT CATE00RT/ CONTRACT MONIH ENDED OCTOBER 22, 1983 ACTUAL ACCQCLATIVE TOTAL FROM Coh'!RACT /CATIG0KY FOR __ JANUARY 1. 1983
^~
CONTRL"T AT ITS Completed: Mercury Co. of Norwood. . . . . . . . . . . . 2 461 500 39 NISCO . . ... . ....... ...... - 414 425 11 Westinghouse Electric Co. . . .. ....., - 386 450 64 Mechanical Insulation. Inc. . . . . . . . . . - 354 400 46 P ed en S t e e l . . - . . . . . . . . . . . . . . - 223 200 (23) Florida Steel . . . . . . . . . . . . . . . . - 195 200 5 A.chor Darling. . .............. - 194 160 (34) Pacific Valve . . .............. - 136 120 (36) R. V. Harry . . . ..... .. ...... - 140 80 (60) Hudson Products . . . . ... .. ...... - 122 120 (2) Conax Co rp . . . . . . . . , ....... 1 113 80 (33) westinghouse Electric Co. (403519). ..... - 112 80 (32) CEO Construction Tasting (W3.F-7) . ..... - 110 200 90 Indus tri al & En gineering. . . . . . . . . . . - 104 80 (24) Viking Fire & Protection. . . ... ..... - 75 80 5 Coastal Air Balance . . ....... .... 9 71 400 329 Fischbach & Moore. Inc. .. . .. ...... - 49 140 91 Brothers Cons truction . .. ... ...... 1 47 150 103 Total Cc=pleted . . .. . ... ..... J 3.326 3.865 Sy In ?rogress: Beh Brothers Const. Co. . . . .. ...... 6 593 450 (143) Etasco Home Of fice. . ... . .. ...... - 538 400 (130 Louisiana Industries. . . . . .. ...... 139 254 300 46 B & B Insulation. .............. 136 190 200 10 CEO Construction Testing (W3-NT-26) ..... 21 178 300 122 Gdf Engineering. ... . . .. ...... - 160 400 240 A. Gianbelluca Cons truction . ... ..... 8 90 150 50 Total In Pxogress . . . ... ..... 310 2.003 2,200 197 Total Budgeted. . . . . . . . . ..... 321 5.329 6.065 736 l Completed: 1.P&L Con ^ ulting Purchase Order Audits . . . . 2 893 Consulting Centracts-LP&L . . . . . . . . . . - 741 Tempkins-Beckwith. Inc. . . . .. ...... - 608 Scaf folding Rental & taection . . ...... - 324 Total Not-Budgated. . . . ... ..... J 2.566 Total Contract Audit . .. ..... - 325 7.895 CTHER A"DITS Coupleted Audits. . .............. 9 3.255 In Progress: Insurance . ................. - 411 Treight Audit . . .............. - 32 Total other Audit . ... .. ...... j 3.698 ADMINISTRATITE General . .. .. .............. 86 2.307 S pecial Proj ects . . . . . . . . . . , . . . . J 375 Total Administrative. . . ... ..... _94 2.68_2 TOTAL dOURS. . . . . . . . ...... g 14_.121 FIGURE PROVIDED BY LP&L
FIGURE J-10 I CURRENT LP&L COST / SCHEDULE ORGANIZATION f PROJECT MANAGER - NUCLEAR , e . , COST / SCHEDULING MANAGER - NUCLEAR p L SCHEDULING SilPERVISOR COST &'BUDGERING SUPERVISOR , E 8/30/83 J L L l l-1 I r 4
.-,e.,-# .. ,i... m,. , , . . . . , , . . . - , , . . _ . _ , , , . . . . , _ , . , , ,___,,,,_,.___,-.c___..-_ _ - , . , . _ , . . - , _ , . . , , _ _ , - , . _ _ . _ , , , , . _ _ . . . , , ._,.--2
FIGURE J-11 EVOLUTION OF LP&L's WATERFORD 3 BUDGET ($ IN MILLIONS) i
$500 -
<>$496 400 -
$303 300 ,
$27 200 -
$2,3jt h
$U!
S135 100 - $39
$74 i l
_S25 i i i i i i I ' 76 77 78 79 80 81 82 83 l l 9
FICURE J-12 O LOUISIANA POWER-& LIGHT COMPANY , WATERFORD SES - UNIT No. 3 LP8L BUDGET COMPOSITION ; il 4 I: 0 ALL COSTS INCURRED DIRECTLY BY LP&L INCLUDING: LP8L EMPLOYEE PAYROLL AND EXPENSES CONTRACT STAFFING /, SERVICES MATERIALS & SUPPLIES INSURANCE, LICENSING FEES, ETC. i O .0 118 DEPARTMENTS'OR COST CENTERS 0 57 TYPES OF COST l i i
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l V O s O D M H R a. I T F Z T P n O P I C i N i R A E n k A H H R 1 4 R n K C T A 8 8 U S S H N u A E I I O E Y 9 1 9 1
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FIGURE J-15.1 OVERALL BUDGET VARIANCE ANALYSIS TOTAL TOTAL COST AMOUNT COMMERCIAL BUDGET ESTIMATE OF GROWTH OPERATION DATE $ MILLIONS $ MILLIONS DATE SIGNIFICANT REASONS FOR COST GROWTH Nov. 1970 230 N/A Jan. 1977 Initial Estimate Nov. 1971 289 59 Jan. 1977 Estimate updated to reflect latest wage rate information. Increased forecast of AFUDC. Sept. 1972 350 61 Sept. 1977 Addition of 12 foot thick Common Foundation Mat suitable for a licensable design and soil conditions on the site selected. Better definition of NSSS equipment. Impact of then known piping and seismic criteria. Additional AEC/QA criteria. Changed design criteria from FIGURE PROVIDED BY LP&L a two to three train feedwater heating arrangement. 9 O O
r L FIGURE J-15.2 OVERALL BUDGET Vr.RIANCE ANALYSIS I TOTAL TOTAL i COST AMOUNT COMMERCIAL
- BUDGET ESTIMATE OF GROWTH OPERATION DATE $ MILLIONS $ MILLIONS DATE SIGNIFICANT-REASONS FOR COST GROWTH
' Increased forecast of AFUDC. Oct. 1973 445 05 Nov. 1978 Delay in issuing the Construction Permit. i 4 i Re-evaluation of NSSS equipment. t i l
' Addition regulatory requirements.
l 1 Revised pipe restraint evaluations.
- .f i
i Change in design concept for ultimate heat sink. 1 Dec. 1974 710 265 Feb. 1980 Further delay in issuing Construction Permit. l I I i More accurate estimates based on more canpleted design of f FIGURE PROVIDED BY LP&L structural and civil areas and detailed quantity take-offs.
FIGURE J-15.3 OVERALL BUDGET VARIANCE ANALYSIS TOTAL TOTAL COST AMOUNT COMMERCIAL BUDGET ESTIMATE OF GROWTH OPERATION DATE $ MILLIONS $ MILLIONS DATE SIGNIFICANT REASONS FOR COST GROWTH Incorporation of installation rates consistent with then current industry performance. Increased non-manual staffing levels to support increasing regulatory and QA requirements. Contingency increases resulting from a larger cost base. Increased forecast of AFUDC. Sept. 1976 815 105 Feb. 1981 Better definition of Regulatory Requirements in the piping and electrical areas. Increased Engrg. and Design Requirements based on current regulatory requirements and work to go estimates. FIGURE PROVIDED BY LP&L DL O O -- O
FIGURE J-15.4 DVERALL BUDGET VARIANCE ANALYSIS TOTAL TOTAL COST AMOUNT- COMMERCIAL , OPERATION- t BUDGET ESTIMATE GF GROWTH DATE $ MILLIONS $ MILLIONS DATE- SIGNIFICANT REASONS FOR COST GROWTH l Aug. 1978 1109 294 Oct. 1981 Schedule delay costs in conjunction with increases-in bulk quentities and actual unit rate experience. l Recognized _ need for early LP&L participation. J-l t t Longer Project duration increased overheads. 1 Increased estimate for spare parts. I Incorporated increased projections of contractor overhead costs (non-manual, etc.) resulting from more conservative administrative and QA controls requirements. t Better definition of structural steel equipment supports. I Tornado Missile Protection requirements. i FIGURE PROVIDED BY LP&L Increased Licensing requirements. ; 4
TOTAL TOTAL FIGURE J-15.5 COST AMOUNT COMMERCIAL OVERALL BUDGET VARIANCE ANALYSIS BUDGET ESTIMATE OF GROWTH OPERATION DATE 5 MILLIONS $ MILLIONS DATE SIGNIFICANT REASONS FOR COST GROWTH Unit Price and Qty. adjustments for circulating water and concrete work. Payment of civil contractor claims resulting from rquiatory induced changes. Revised HVAC material and installation costs. Additional C.E. supplements and options. Increased overhead projections based onregulatory require-ments and work to go. Increased forecast of AFUDC. Aug. 1979 1229 120 Feb. 1982 Longer Project duration resulting from shortage of skilled craftsmen. FIGURE PROVIDED BY LP&L Refinements of LP&L salaries after Project staff and start-up manpower requirements were defined.
# 9 e
FIGURE J-15.6
' ^ ^
i '- TOTAL TOTAL COST- AMOUNT COMMERCIAL BUDGET ESTIMATE OF GROWTH OPERATION DATE $ MII. LIONS $ MILLIONS DATE SIGMIFICANT REASONS FOR COST GROWTH i Increase in Insurance Costs. 1 Scope changes for chilled water system and a new universal L.P. Rotor. Revised FSAR Defense costs. i > Pipe whip restraint increases. i i Evaluations of site quantity projections and actual instal-lation rates, i i i Increased forecast of AFUDC. Aug. 1980 1492 263 April 1983 Longer Project duration resulting from restricted cash flows and revised NRC estimated licensing commitments. FIGURE PROVIDED BY LP&L Increased Start-Upstaffing. I
. ---, e -- - - .- - .
FIGURE J-15.7 OVERALL BUDGET VARIANCE ANALYSIS TOTAL TOTAL COST A!10UNT COMMERCIAL BUDGET ESTIMATE OF GROWTH OPERATION DATE $ MILLIONS $ MILLIONS DATE SIGNIFICANT REASONS FOR COST GROWTH Increased -On-Site Training. Increased Licensing commitments and regulatory requirements. Increased purchase of spare parts. Preliminary Three Mile Island estimates. Revised material pricing for piping and supports. Revised quantity and productivity adjustments reflecting current analysis. Increased forecast of AFUDC. Aug. 1981 1574 82 April 1983 Refined TMI estimates. FIGURE PROVIDED BY LP&L Increase in consultants to support plant start-up.
# 9 9
,. . . - __ . = -. . . . - -
x ' {'- J v FIGURE J-15.8' OVERALL BUDGET VARIANCE ANALYSIS ! i' TOTAL TOTAL COST AMOUNT COMMERCIAL ! BUDGET' ESTIMATE OF. GROWTH 0PERATION ! DATE $ MILLIONS $ MILLIONS DATE SIGNIFICANT REASONS FOR COST GROWTH-Significant increase in LP&L wage rates. Fire Protection changes as a result of NRC definition of Appendix "R" requirements. 4 i Increase in purchase of spare parts. l Increase in training. Licensing Commitments and response to NRC/FSAR questions. 4 Revised manhour requirements resulting from regulatory changes over the years which resulted in interfcrences and l working in more congested areas. . i Feb. 1982 1808 234 July 1983 Longer Project duration. FIGURE PROVIDED BY LP&L FSAR -Defense costs.
FlCURE J-15.9 EA A A SIS TOTAL TOTAL COST AMOUNT COMMERCIAL BUDGET ESTIMATE OF GROWTH OPERATION DATE $ MILLIONS $ MILLIONS DATE SIGNIFICANT REASONS FOR COST GROWTH NSSS options and revised TMI forecasts. Increased Start-Up/ Testing requirements. Estimate refinements and adjustments for actual productivity in the major contracts. Additional schedule contingency. Increase in LP&L payroll . Increase in Radwaste Handling. Increase in Licensing Costs. Aug. 1982 2057 249 Jan. 1984 Longer Project duration resulting from general impacts of TMI, Fire Protection, inspection of pipe hangers. Purchase FIGURE PROVIDED BY LP&L of spare and replacement parts for start-up. 9 O #
^
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f ' 4 ESTIMATE: OF GROWTH .t
.i SIG IFIC/MT REASONS ,FOR COST 'GROWT *d'-
~BliUGET 4 ]!*DATEOPERATION-,g >
. . 'DATE $ MILLIONS $ MILLIONS ..
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F Increased staffing .for start-up. .'.,e , i +.- ,':
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Sept. 1983 2649 592 Nov. 1984 Longer Project duration.
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FIGURE J-15.11 OVFMLL BUDGET VAPIANCE ANALYSIS TOTAL TOTAL COST AMOUNT COMMERCIAL BUDGET ESTIMATE OF GROWTH OPERATION DATE $ MILLIONS $ MILLIONS DATE SIGNIFICANT REASONS FOR COST GROWTH Revised Punchlist estimates. Completion of all krawn open items; including previously designated retrofits, prior to Fuel Load to minimize retrofit activities. Seismic Hanger Reinspection and complexity of Whip Restraints installation and weldout. Modifications identified during Hot Functional Testing. Implementation of a formal System Transfer Process on an increased number of systems required for Fuel Load. Increase in AFUDC. FIGURE PROVIDED BY LP&L O O a-a O
r~~ ~ (n' s (x_/ ) ) i 4 FIGURE J-16 B-2. ESTIMATE COMPARISON Loulslana Power & Light Company Waterford SES Unit No. 3 DOMESTIC NUCLEAR CONSTRUCTION EXPERIENCE AT TIME OF lSSUANCE OF B-2 ESTIMATE (CRAFT MANHRS/KWe) 4.3 10.4 64l COP ST9UC 10N W ATERFOR0 31B2 ESTIMATE) EXPERIENCE 1972 1/ / / /II / //////r / / / / / / / SO U ANT = 5.8 NON EBASCO CO N WATERFORD 3 (82 ESTIMATE) 8.4 I PWR AVG = 5.8 7.0 = PLANT AVO. l l l l' t I I J I 1 i I O 1 2 3 4 5 8 7 I 5 II 11 MANHOURS /KWe FIGURE PROVIDED BY LP&L RKS-17
FIGURE J-17 WCCLEAR POWER PLANT COST GROWTH SOUTHERN CALIFORNIA EDISON COMPANY GROWTH OF DOLLAR PER XW PLANT COST OF 400 MW AND LARGER PLANTS soon O O amo - Q 3000 - 2750 - O o i 2m - M - O O o 2000 - o O 1750 - O O oO O ! O O 1m - O o o O O 1232 - 0 0 0 1000 - O Oo O Oo o O O m - og O i m - eO gO O O Co m -Oo c% o cP I l l I I I I I I l I I l I I I 0 1983 1984 1986 1988 1987 1988 1980 1970 1971 1872 1973 1974 1875 1978 1977 1978 1979 CONSTRUCTION START 3 ATE l l 1 SOURG: TVA STUDY OF E3T1 MATED CAMTAL COST AND OPERAT10NAL SCHEDULES FOR NUCLEAR PLANTS IN TNE DestiTD STATES FIGURE PROVIDED BY LP&L
FIGURE J-18 GROWTH OF ENGINEERING AND CONSTRUCTION MANHOURS O Figure 8. Changes in Craf2, Engineering, and Field Service Requirements for Nuclear Power Plants,1967-1960 - (Million Hours)
! Craft Engineering and Field I'
20 - 15 - g 13.0
=
0 I , c 10 - 9.2 s l
.9 h 6.2 \
\
e ' fl 5 - 5.5 l . ' _,,/ 3.5 3.4 h 0 WASH WASH EEDB EEDB 1082. 1230 Phase-1 Phase-III - 1,000 MWe 1,000 MWe 1,139 MWe 1,139 NIWe ! (6/67) (6/72) (l/78) (1/80) i Source: United Engineers and Constructors. " Energy Economic Data Base (EEDB) Program." U.S. Department of Er.ergy, Vol. I, Contract No. DE-AC02-78ET3202 (Washington, D.C ), April 1981. i FIGURE PROVIDED BY LP&L i
FIGURE J-19 COST GROWTH AND BREAKDOWN Nuclear Powerplant Investment Cost Estimates Single 1000 MWe Light Water Moderated Reactor Plant 1150 , 1100 - 1050 -
- INTE REST DURING 1000 - - </^ CONSTRUCTION
~ 3 f ff
> /5 ESCAL ATION DURING j'/ff>A$'
' CONST RUCT IOt>
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y _ l 8% - -
// ,/ ,, /f' CONTING E NCY / /,/
800 - : / / ,/, 150 -
's '/ /, '/ / ', ' l
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// ', '/ f sa 700 - ONSTRUCTION COSTS l //f /
j// I IoGa'ric h (olg . ', / // , // /
.3 650 -
//
j /// N ADDE RS DUE To SAF ETY f j/ o N AND ENVIRONMENT RELA 1ED ITEMS ,,j.f, jff/ j 77 o 600 - s\ \
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l '/ / l/ l ' O 550 -
/ / -
O BOO Di R E CT CONSTRUCTION COSTS y ,,l//g sj'/s - ; /llb/,- /// i 450 -
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500 - cosn 50 - 0 WASH-1)d$ W ASH-t)4s w ASH -1230 EVALUATION w ash-tos2 wass ttso w ash-123o wash-1230 w ASH -1230 REVISED REVISED REVI5ED REvtSED RE VISE D int ins ina ins Experience 357 sine ins uiD-is ts int ina piD-74 347 stee int Start-of-project Commercial JAN. inst JAN toss JAN. toss wiD-tsee JAN tsis JAN. ters Operation LATE is72 miD-ts rs Note: " Adders" are costs nttributable to new safety and environmental equipment required by new or revised regulations. Sou ce: Crowley, John H., "Results of Recent USA Studies on Nuclear Power Reactors", United Engineers and Constructors, Inc., Philadelphia, Pennsylvania, October 1977. FIGURE PROVIDED BY LP6L
FIGURE J-20 CHANGE IN C01' POSIT 10N 0F CAPITAL COST g
)
(O Figure 10. Change in Composition of Nuclear Power Plant Capital Costs, 1972-1992 _ 1973 Operation 1983 Operation 1992 Operation 100 AFUDC Time-Related Time-Related Costs AFUDC Costs EDC AFUDC CN1 *s N s PS EDC
- C '% ,CNTG CL s Osfg m w
% s O s CN1 s EDC s
N o 's co CN1E 's ' PS 3 , 'hf s. CNTG y 's Coy,[#f 'Cr
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$ ,TG 's CN1 g- D,i rect Costs CN1E
's's '
PS Direct CL os s NSSS ( TG CN1E NSSS TG -. _- NS55 0 NSSS - Nuclear Steam Supply System CN1 - Construction roots & N1sterial TG - Turbine Generator CNTG - Contingency CN1E - Construction N1aterial & Equipment EDC - Esca;ation During Construction CL - Craft Labor AFUDC - Interest During Construction PS - Professional Services l Source: United Engineers and Constructors, " Energy Economic Data Base Program," U.S. Department of ! Energy, Vol. I, Contract No. DE-AC02 78ET3:02 (Washington, D.C.), April 1981. l l FIGURE PROVIDED BY LP&L m I
FIGURE J-21 WATERFORD COST ATTRIBUTABLE TO MAJOR REGULATORY CHANGES COST OF REGULATORY CHANGE REGULATORY IMPACT AREA A Millions A. Piping / Pipe Supports 222 3 B. ALARA (As Low As Reasonably 64.6 Achievable) C. Fire Protection 36.1 D. Three Mile Island 28.2 E. Quality Assurance 79 1 F. Licensing 100 8 TOTAL 531.1 O FIGURE PROVIDED BY LP&L O
FIGURE J-22 SEFr 83 BUDGET / SCHEDULE
SUMMARY
~ t LOUISIANA POWER & LIGHT COMPANY WATERFORD SES - UNIT NO. 3 4 SCHEDULE / COST
SUMMARY
APPROVED 8/82 PROPOSED VARIANCE SCHEDULE: FUEL LOAD 5/83 3/84 10 MONTHS COMMERCIAL OPERATION 1/84 11/84 10 MONTHS O BUDGET ($ MILLIONS): C0ST EBASCO 1406 1645 239
- LPSL 291 449 158 AFUDC 360 508 148 SUBTOTAL 2057 2602 545 SCHEDULE LONTINGENCY -
47 47 TOTAL 2057 2649 592 FIGURE PROVIDED BY LP&L !O 6
, - , - , _ _ . ,,_,n, -, , . . - -
FIGURE J-23 SEFI 83 BUDGET CASH FLOW LOUISIANA POWER & LIGHT COMPANY FIGURE PROVIDED BY LP&L WATERFORD SES - UNIT NO. 3 PROPOSED CONSTRUCTION BilDGFT TilRU 1182 1983 1984 1985 TOTAL EBASCO 1233.8 273.3 132.8 5.3 1645.2 LPal _193.5 137.0 118.6 __ 449.1 TOTAL CASH 1427.3 1110.3 251.11 5.3 2094.3 A/P-RET 29.5 _UL21 12131 - - TOTi.L COST 11156.8 406.1 226.1 5.3 2094.3 AFUDC _269 1 971 'L llLLij - 507.9 SUBTOTAL 1725.9 503.5 367.5 5.3 2602.2 SCHEDULE CONTINGENCY - - _4L 0_ - 47.0 PROPOSED BUDGET 1725.9 503.5 11111. 5 5.3 2649.2 APPROVED BUDGET 1705.1 337.6 14.3 - 2057.0 VARIANCE 20.8 165.9 400.2 5.3 592.2
- 9 9
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FIGURE J-25.1 SEPT 83 LP&L BUDGET VARIANCE LPAL BUDGET VARI ANCE EXPLANATION VARIANCE % OF TOTAL
- 1. 26.7M 16.8%
LPat STAFFIM 0 DELAY IP SCHEDULE 8 INCREASE OF APPR0XIMATELY 100 PEOPLE IN ANTICIPATED STAFFING LEVELS 58.9M 37.0%
- 2. CONTRACT STAFFING 0 DELAY IN SCHEDULE RESULTING IN CONTINUED HIGH LEVELS OF CONTRACT STAFF TO SUPPORT STARTUP ACTIVITIES AND MAINTAIN TRANSFERRED SYSTEMS 0 HIGHER THAN ANTICIPATED LEVEL OF OVERTIE NECESSARY TO SUPPORT STARTUP G DIFFICULTIES IN RECRUIT!NG PERMANENT LPal PERSONNEL RESULTED IN HIRING, OR RETAINING, CONTRACT STAFF TO PERFORM THE WORK 0 MAGNITUDE OF SYSTEM TRANSFER EFFORT NOT APPARENT AT TIME OF 8/82 BUDGET DEVELOPMENT S STARTUP ASSUMED RESPONSIBILITY FOR SOME ELECTRICAL AND MECHANICAL WORK FROF EBASCO
- 3. OUTSIDE SERVICES S DELAY IN SCHEDULE RESULTING IN INCREASES FOR 17.6M 10.8%
" LEVEL OF EFFORT" TYPE SERVICES SUCH AS MIDDLE SOUTH, LEGAL, MAINTENANCE REPAIR AND TESTING G INCREASED REQUIREENT FOR SUPPORT OF PLANT MONITORING COMPUTER TESTING AND INTEGRATION EFFORT S PROCUREMENT EVALUATION NOT PREVIOUSLY BUDGETED 0 JANITORIAL CONTRACT NOT PREVIOUSLY BUDGETED 0 Q.A. VEND 0R SUPPORT NOT PREV!00 SLY BUDGETED 0 STARTUP DEMINERALIZED WATER SERVICES NOT PREVIOUSLY BUDGETED 8 INSTALLATION AND MAINTENANCE OF SIREN SYSTEM S INCREASED ANALYTICAL SERVICES FROM CE DUE TO FEED / BLEED, PORV AND ATWS ISSUES FIGURE PROVIDED BY LP&L
FIGURE J-25.2 ; SEPT 83 LP&L BDDGET VARIANCE j l O Q LP&L BUDGET VARIANCE EXPLANATION (CON'D) VARIANCE % OF TOTAL
- 4. OFFICE EQUIPMENT AND SUPPLIES 3. lfi 2.0%
0 DELAY IN SCHEDULE AND ACCOMPANYING INCREASE IN NUMBER OF PERSONNEL REQUIRING EQUIPENT t SUPPLIES S IBM DISPLAY WRITER SERIES AND IBM 5520 SYSTEMS 9 INCREASED NUMBER OF TRAILERS ON SITE TO HOUSE ADDITIONAL CONTRACT PERSONNEL
- 5. PERMANENT PLANT EQUIPMENT ? . 9 51 1.8%
8 PRESSURIZER HEATER REPLACEMENT 8 PAYMENTS MADE FOR ITEMS BUDGETED FOR PAYMENT IN 1982 1 ADDITIONAL RADWASTE EQUIPMENT 4 NEW CABINETS FOR WAREHOUSE
- 6. SPARE PARTS
,) 0 HIGHER COMPONENT FAILURE RATE DURING STARTUP 13.5M 11.6%
THAN EXPECTED 8 COSTS OF PARTS WHICH WERE BUDGETED FOR PAYMENT IN 1982 BUT WERE NOT DELIVERED / BILLED AS SCHEDULED
- 7. IfK!LS .8M .5 9 DELAY IN SCHEDULE
- 8. CONSUMABLES 4.5M 2.7%
9 DELAY IN SCHEDULE 8 HIGHER RATE OF CONSUMABLES REQUIRED TO SUPPORT STARTUP THAN ANTICIPATED
- 9. OltffRS 8.3M 5.2%
0 INSURANCE 9 RECRUITING COSTS 0 UTILITIES 16.6M 10.3% A10. CONTINGENCY U FIGURE PROVIDED BY LP&L
i FIGURE J-26 SEPT 83 LP&L VARIANCE BREAKDOWN 1983 DETAILED LP&L BUDGET VARIANCE EXPLANATION TOTAL VARIANCE CONTRACT STAFFING $58.9 M DELAY IN SCHEDULE RESULTING IN CONTINUED HIGH LEVELS $33.7 M OF CONTRACT STAFF TO SUPPORT STARTUP ACTIVITIES AND MAINTAIN TRANSFERRED SYSTEMS ELECTRICAL - $9.6 M MECHANICAL - 6.6 M I&C - 4.8 M STARTUP - 12.7.M DELAY IN SCHEDULE RESULTING IN MAINTAINING SECURITY $3.9 M STAFF FOR LONGER PERIOD DELAY IN SCHEDULE RESULTI'iG IN MAINTAIN?.G TEMPORARY $3.0 M CLERICAL FOR LONGER PERIOD HIGHEli THAN ANTICIPATED LEVEL OF OVERTIME NECESSARY $5.9 M TO SUPPORT STARTUP FLECTRICAL - $2.1 M MECHANICAL - .3 M STARTUP - 3.5 M DIFFICULTIES IN RECRUITING PERMANENT LP&L PERSONNEL $2.5 M RESULTED IN HIRING OR RETAINING CONTRACT STAFF TO PERFORM THE WORK MAGNITUDE OF SYSTEM TRANSFER EFFORT UNDER ESTIMATED $ .8 M AT TIME OF 1982 BUDGET DEVELOPMENT STARTJ ASSUMED RESPONSIBILITY FOR CERTAIN ELECTRICAL $2.0 M AND MECHANICAL WORK FROM EBASCO ELECTRICAL - $ .8 M MECHANICAL - 1.2 M ADDITIONAL CONTRACT STAFF TO PERFORM ADDED DEPARTMENTAL $7.1 M DUTIES SUCH AS PROCEDURES FOR CONTRACTS; AIDING IN PROCUREMENT; COMPUTER SOFTWARE DEVELOPMENT; TRAINING ASSISTANCE; PLANNING & SCHEDULING ASSISTANCE; LICENSING ASSISTANCE; WAREHOUSING; AND NUMEROUS OTHER FUNCTILNS REQUIRING EXPERTISE OF CONTRACT STAFF.THESE REQUIREMENTS WERE ERPONEOdSLY BUDGETED PREVIOUSLY AND/OR HAVE SINCE BEEN ILENTIFIED AS NEW REQUIREMENTS. FIGURE PROVIDED BY LP&L L
FIGURE J-27 SEPT 83 EBASCO BUDGET VARIANCE AUGUST 1982 AUGUST 1983 BUDGET COST REPORT VARIANCE Total Purchase Orders 345,020 363,579 18,559 Total' Construction Contracts 534,140 620,842 86,702 Total Indirects 176,419 225,408 48,989 Ebasco Home Office 192,614 391,519 98,905 Sub-Total 1,348,193 1,601,348 253,155 Identified Exposures 27,700 16,215 (9,485) Contingency 27,700 18,215 (9,583) Commercial Operation Support - 4,641 4,641 TOTAL 1,406,436 1,645,184 238,748 I TOTAL SCHEDULE REMAINING VARIANCE DELAY VARIANCE Material 18.6 million 1.5 17.1 ( Contracts Indirects 86.6 million 49.0 million 37.9 38.5 48.7 10.5
\- Ebasco Service, Inc. 98.9 million 52.5 46.4 Exposures (includes operational support) (4.8) -
(4.8) Contingency (9.5) - (9.5) TOTAL 238.8 million 130.4 108.4 I l I CONTRACTOR SCOPE VARIANCE' UvilLLIONS) Tompkins-Beckwith piping / hangers 26,310 l Mercury instrumentation 21,082 ! Sline painting 7,170 AIS insulation 13,361 B&B- fire protection 4,722 l Insulation Sub-Total - 72,645 l Other Contracts - 14,057 TOTAL - 86,702 FIGURE PROVIDED BY LP&L
]
FIGURE J-28 COST COMPARISON OF WATERFORD 3 AND CONTEMPORAR'l PLANTS LOUISlANA POWER 8 LIGHT COMPANY WATERFORD S E. S. UNIT 3 ! CONSTRUCTION COST PER KILOWATT INCLUDING AFUDC IN D. M S M STD. FIGURE PROVIDED BY LP&L DEVIATION 079 MEAN 847 DEVIATION 615 DOLLAR PER KILOWATT ' ^ PLANT 5g0 10,00 15,00 20po 25p0 30p0 35pO' 4q00 I I I j 1 1 I SUMMER 14 58 ' ' ' j i i i aiG4 I I { SUSQUEHANNA I I I I BELEFONTE I 2355 ' '
- I i i FIRMI 2 I I 2370 I I I WATERFORD 3 240o i I 1 1 1 I
SAN ONOFRE 2
---2454 i l 1 MIDLAND 2 2599 I I I i i I '
WPPSS 2 26 9 % I I i 1 MILLSTONE 3 3078 ' i 1 l l BEAVER VALLEY 2 '3692 I I 1 j i i I WPPSS 3 ' 3725 e i i
- ZIMMER I 3a2r i 1 1
~ ' ~~
SHOr1EHAM l I l t i I
# 9 - - -
9
FIGURE J-29 COST COMPARISON OF WATERFORD 3 AND CONTEMPORARY PLANTS m ( COST OF WCLEAR UNITS LWDER CONSTRUCTION (0VER 80% COMPLETE) COMMERCIA'. TOTAL 4 PRIOR PERCENT OPERATION OF NUCLEAR OPERATING UTILITY UNIT SIZE (MW) COST /KW COMPLETE DATE UNITS EXPERIENCE LONG ISLAND LIGHTING SNOREHAM 819 3,900 99 1/84 1 NO ILLIN0IS POWER CLINTON 950 3,000 81 11/84 2 NO PHILADELPHIA ELECTRIC LIMERICK-1 1,055 3,000 86 4/85 4 YES WPPSS WPPSS-2 1:100 2,900 93 2/84 3 NO CONSUMERS POWER MIDLAND-1 1,811 2,700 85 8/85 4 TES DETROIT EDISON FERMI-2 1,100 2,500 95 6/84 1 YES UNION ELECTRIC CALLAWAY 1,150 2,500 90 4/84 1 NO CINCINNATI S&E ZIMMER 810 2,400 98 INDEFINITE 1 NO MISSISSIPPI P&L GRAND SULF-1 1,250 2,300 99 12/83 2 N0 ARIZONA PS PALO VERDE-1 1,270 2,253 99 5/84 3 NO ARIZONA PS PALO VERDE-2 1,270 2,250 98 2/85 3 NO CAPC0 GROUP (OHIO) PERRf-1 1,250 2,200 84 5/85 2 NO KANSAS S&E/KCP&L WOLF CREEK 1,150 2,200 87 2/85 1 40 LOUISIANA P&L WATERFORD 3 1,104 1,900 98 10/84 1 NO SO:AL EMSON SANONCFI-3 1,100 1,900 100 1/84 3 fE5 TVA BELLEFUNTE-1 1,213 1,900 83 11/86 14 TES DUKE POWER CATAWBA-1 1,145 1,700 94 4/85 7 TES 7 PACIFIC 6&E DIABLO CANYON-1 1,084 1,700 100 3/89 2 NC g
'v') PACIFIC 6&E DIABLO CANT 0W-2 COMMONWEALTH EBISON BYRON-1 1,106 1,700 1,120 1,500 100 86 11/84 2/84 2
15 NO YES TEXAS UTILITIES CONANCHE PEAK-1 1,150 1,500 96 1984 2 N0 TVA NATTS BAR-1 1,177 1,500 95 7/84 14 YES COMMONWEALTH EDIS0N LA SALLE-2 1,078 1,100 97 12/83 15 YES v l l
Chapter K SCIIEDULING (/ The term wheduling refers to the process of developing time-phased plans for execution of engineering, procurement, construction and start-up activities. The purpose of this chapter is to determine how this process was implemented on the Waterford 3 project and to assess whether LP&L will be able to place Waterford 3 on line as scheduled. Chapter S is subdivided into three snetions: the first section presents a generic overview of scheduling methodology; the second discusses Ebasco/LP&L's scheduling practices as contrasted with the general industry practices; and the third evaluates the adequacy of Waterford 3 schedule performance and realism of the current project schedule. l 1.0 Overview of Scheduling The objective of the scheduling function is to establish how (in what order) the work will be performed, and when it should be done. This objective is accomplished through development of project execution logic diagrams and a hierarchy of schedules. DI!SCRIPTION The following paragraphs describe the scheduling methodology commonly used in the utility industry. The subjects addressed include development of project control networks and various types of ( ,- schedules. PROJECT CONTROL NETWORK The project control network is a device defining the relationship of various project elements and interfaces among project participants. In order to assure that all interfaces and relationships are identified and defined, the network should address the entire project life cycle, including engineering, procurement, construction, and start-up activities. The project control network should be prepared by an organization having an overview of the entire project life cycle. In the utility industry this is usually done by either the Architect-Engineer or the Construction Manager. PROJECT SCHEDULES Following the development of project control networks, the scheduling team estimates the duration of individual activities; determines lead time f or material equipment; identifies project G milestones and determines the milestone dates; and computes the
) Project Master Schedule. The Project Master Schedule (PMS) may be Page K-1
prepared either manually or with the help of a computerized network processor. The primary data contained within the Project Master Schedule includes start and completion date of project activities and significant events (milestonas). This information may be present ed in several formats: bar graph, a tabular listing or a time phased logic diagram. The Project Master Schedule serves as the basis for the development of intermediate schedules, contractors' schedules and detailed work plans. The purpose of these Icwer level schedules is to refine scheduling detail to the level necessary for execution of engineering, procurement and construction activities. In order to understand the relationship between various levels of scheduling, it is useful to visualize a contract as a micro-project witMn a larger macro-project. Obviously, to accomplish schedule objectives of the macro-project, each micro-project must be accomplished within a given time period. Therefore, the milestones established by the project level schedule define boundaries in which to plan detailed engineering, procurement and construction activities. DISCUSSION The development of reasonable and accurate schedules is conditioned upon the knowledge of project scope of work, and the ability to estimate external f actors such as material lead times, labor availability, regulatory milestones, etc. During tha Waterford 3 project life cycle, neither the scope of work nor the outside factors could be determined within a reasonable degree of accuracy. o The project scope of work was a " moving target" in every sense of that term. o Due to the factors described in Chapter Q, Procurement, material delivery lead times were difficult to predict. o Because of the rapid growth of nuclear and other industries, competition for labor increased exponentially, and the availability of skilled personnel decreased. o Because of the events discussed in Chapter N, Licensing, regulatory milestones suffered significant delays. It is common practice in the construction industry to schedule new projects in the same manner as recently completed projects of the same type. In accordance with that practice, nuclear power plants started in the early seventies were scheduled based upon experience gained on projects completed in the late sixties. Differences Page K-2
between scheduling assumptions and the actual conditions, rendered [ the early schedules prepared for Waterford 3 and its contemporaries (],/ were inaccurate and impossible to follow. Changes affecting Waterford 3 and other nuclear power plants did not occur at once (at the same point in time). They happened over a long period of time and, generally, followed the industry learning curve shown in Figure K-1. As indicated in the figure, the industry learning curve consists of technological and regulatory development periods (slanted lines) interrupted by several industry wide shocks. We believe that the fact that these changes altered project scope and affected schedules requires no additional proof. It should also be noticed that the effect of changes on project scope, schedule ad cost grows exponentially as a function of time. It is intuitively clear that if the project is close to completion even a minor change can cause severe perturbances. During the 1970s, the above factors combined to make scheduling of nuclear power projects a futile exercise. It is highly unlikely that anyone (the government, industry, or its opponents) had or could have predicted the events of the 1970s based on a logical analysis of the conditions and circum. stances which existed at the time. EVALUATION The adequacy of Waterford 3 schedules was evaluated in light of V} conditions / industry practices in the early 1970's, and the evolution of these conditions and practices over the intervening time period. Questions addressed in our evaluation include the following:
- e. Were Waterford schedules (and assumptions upon which they were based) reasonable as compared to nuclear industry norms?
- b. Were schedule delays caused by events within or outside LP&L's control?
- c. Was Waterford 3 schedule performance higher or lower than the industry norm?
- d. In light of the project status and present environment end conditions, will LP&L complete the project in accordance with the current schedule?
The following paragraphs present our evaluation of the above issues and provide related findings and conclusions.
- V Page K-3
2.0 Waterford 3 Scheduling Process DESCRIPTION This section contains a description of the methods and procedures used in the development and control of Waterford 3 schedules. The section addresses three subjects: types of scheaules used on Waterford 3; schedule control methodology; and scheduling focus evolution. TYPES OF SCHEDULES USED ON WATERFORD 3 DurIng the course of Waterford 3 construction, several types of schedules were prepared by Ebasco and by various construction contractors. These schedules were developed at four levels of planning detail. The following paragraphs describe the four levels of scheduling used on Waterford 3.
- a. Milestone Schedule The Milestone Schedule (See Figure K-2) represents Ebasco's top level schedule control tool. The Milestone Schedule for the Waterford 3 project was developed in mid-1970. Its first issue reflected the conceptual understanding between Ebasco and LP&L of the size and scope of the project. The schedule was based upon Ebasco's nuclear project experience, the industry norms of the late 1960s and LP4L's requirements,
- b. Project Schedule The second level schedule used by Ebasco is referred to as the Project Schedule. 'Ihis schedule is based upon a computerized critical path method (CPM) network integrating engineering, procurement, construction and start-up activities. The Waterford 3 Project Schedule was developed prior to the start of construction. This schedule was initially maintained in Ebasco's New York office because of the project emphasis on l
engineering and procurement. Later, as the emphasis shifted from engineering to construction, the Project Schedule responsibility was transferred to the Waterford 3 site. In addition to defining start and completion dates for over 10,000 i activities, this schedule provided Ebasco with extensive sorting capabilities. Sorting capabilities included the functional sort (by discipline or contractor performing the work), and the area sort (by building where the work was performed). A sample Project Schedule is shown in Figure K-3. l l c. Intermediate Schedules DMC will refer to the third level of Waterford 3 schedules as Page K-4
d i- " Intermediate Schedules". The intermediate schedules included Drawing Schedules, Specification and Procurement Schedules, "Close Out", "Six Month Look Ahead" and contractors' schedules. t Drawing Schedules A sample Drawing Schedule is shown in Figure K-4. The I- - schedule was prepared by the Project Scheduling gr2up in New York based upon 1' data provided by the Engineering / Design, Procurement 'and Construction groups. Its purpose was.to define drawing completion dates necessary to support construction, and to document drawing status, forecasts and planned / actual manhours. This report , was reviewed and approved by Ebasco's Project Manager and Project Engineer. Speelfication and Procurtament Schedules This schedule containad planned and actual i- dates for completion of specifications, bid release, purchase order placement and F material / equipment delivery required to support construction. The report was I prepared by the Engineering / Design, procurement, construction, and New York project scheduling groups, and reviewed by the Ebasco Project Manager and Project Engineer. ' A sample of the Specification and Procurement schedule is shown in Figure K-5. - l t Close Out Schedule: The purpose of this schedule was to maintain close control over the final stages of engineering and procurement. The Close Out Schedule was based upon a level 3 CPM network constrained by Project Schedule milestones. Six Month Look Ahead' Sehedule This schedule was prepared by Ebasco's ! construction group. The schedule defined construction activities at the system / area . detail, and increased planning detail by about a factor of 10. The Six Month Look Ahead Schedule wcs updated in accordance with the " rolling wave" technique. ; 3
- d. Detailed Schedules
, . Detailed schedules used on Waterford 3 include contractors' schedules and Detailed Work Area schedules. 1 i . Contractors'. Schedules: As described above, the Project Schedule covered the entire Waterferd 3 life cycle and included the' effort of all construction contractors. These schedules , established the constraints within which to plan the contract I scope:of work. - A typical contractor's schedule is shown in l Figure K-6. As li:dicated in the figure, contractor schedules increased the level of detail of planning both by identifying l-detailed activities necessery to complete the contract scope of , work and by scheduling them on a day-to-day basis. , DetaDed Work Area Schedules: Detailed Work Area schedtdes I were-developed by Ebasco to coordinate the efforts of the j1 contractors working in the congested areas of the reactor auxiliary and containment buildings. The objective of these plans was to time-phase various contractors and construction ; i L r l= Page K-5 L l I
crews and prevent their interference. A simple detailed work area schedule is shown in Figure K-7. As indicated in the figure, the schedule defined the location of the work area; identified drawings necessary to perform the work; prioritized contractors based on the importance of their work on the overall project schedule; and specified area availability dates. Detailed Work Areas schedules were used extensively during the period from 1978 through 1980. Later in the project, these schedules were replaced by equally detailed plans designed to focus on completion of plant systems, tasks and start-up events. SCHEDULE CONTROL METHODOLOGY The method used in preparation, review and approval of Waterford 3 schedules is shown in Figure K-8. The procedure included the following key steps:
- a. Project scope of work was reviewed in light of the then current status, and an estimate of remaining quantities was prepared.
- b. Performance of contractors and trades was evaluated in parallel with step (a), and unit productivity rates revised to reflect tcxlate performance and LP&L's/Ebasco's objectives,
- c. Information developed in steps (a) and (b) was sent to the Cost Engineering group who developed a forecast of the remaining labor hours. This forecast was reviewed, revised as and if required, and used as a basis for development of the Project Schedule.
- d. In parallel with steps (a) and (b), the Planning & Scheduling, Construction, Procurement and Engineering groups reviewed project plans and determined availability of drawings, materials and work areas within individual plant buildings.
- e. Information generated in steps (c) and (d) was used to adjust project networks and prepare the revised Project Schedule.
The revised schedule was sent to various project participants for review and approval.
- f. The schedule review and approval process involved three steps.
As the first step, the new schedule was evaluated by Ebasco's construction supervisors and project superintendent; by Waterford 3 contractors; and by LP&L construction coordinators. Following their approval, the schedule was presented to Ebasco's project executive management. If the Page K-6
schedule was acceptable to Ebasco, it was presented to LI'&L's management. If the new schedule was found to be unacceptable during any of the above steps, it was revised to [V] incorporate reviewers' comments and correct deficiencies. Project baselines were reset and new schedules issued only after the approval by LP&L management. SCHEDULING FOCUS EVOLUTION As Waterford 3 evolved, the project schedule changed to address the unique needs of each individual phase. Scheduling tools used during various phases are shown in Figure K-9. The following is a brief overview of how this evolution took place. o Engineering Phase (1971-1977h During the engineering and procurement phases the responsibility for schedule development rested with Ebasco's New York staff. These early project level schedules depicted engineerbg and procurement activities by engineering discipline and by the type of commodity being procured. The primary focus of scheduling efforts was on defining and controlling material and equipment delivery dates, o Civil Phase (1974-1977h V Coincident with the scheduling effort which took place during the engineering phase, Ebasco enhanced the Project Schedule to include detailed civil construction activities. Work of various project participants was defined by discipline (or contractor) and by work area. Milestone dates defined by this schedule were used as a basis for development of contractors' schedules. Ever though the initial construction contracts were of the lump sum type, Ebasco reviewed and evaluated each contractor's schedule to assure their compliance with the overall Project Schedule, o Bulk Quantity Installation Phase (1977-1G81h During that time period the focus of scheduling effort shifted from civil construction to installation of bulk commodities. Contracts in effect during that time frame were, primarily, of the cost-reimbursable type. Initially, Ebasco reviewed contractors' schedules to assure their compliance with the overall project schedule. Later on, as various contractors began experiencing problems with maintaining their schedules, Ebasco integrated its scheduling staff with the contractors' staff in order to increase lq scheduling expertise on the problem contracts. k t i Page K-7 l l
y o Bulk Quantity / System Phase (1979-1983h In Mid-1979, as the project start-up date drew closer, LP&L developed a detailed Waterford 3 start-up schedule. The start-up schedule was developed by enhancing the level of detail of a more generic start-up schedule which was in effect up to that point in time. The emphasis of this new schedule was to focus on the completion of systems necessary for the initiation of testing and stert-up activities, o System / Area Phase (1983-Presenth The focus of these schedules is on completion of various plant systems and areas and their turnover to Louisiana Power & Light Company. Their objective is to provide the means for completing construction clean-up work in a logical manner and to assure the plant licensing commitments are met. System / Area schedules are still in use as of the date of this report. DISCUSSION The scheduling process utilized by Ebasco and Louisiana Power & Light Company on the Waterford 3 project is fairly similar to the common industry practice. The fact that similar methods were employed on both very successful and very unsuccessful projects suggests that scheduling tools, by themselves, have relatively little to do with the overall realism of project schedules. Factors which, in our opinion, are of far greater importance to the quality of schedules include: the company's ability to determine the remaining scope of work; the realism of scheduling assumptions; and the quality of scheduling personnel. As discussed in section K-1, the ability of the utility industry to accurately determine project scope was severely hampered by industry-wide events which took place between the early seventies I and today. This, we believe, is the predominant reason for poor scheduling adequacy on all nuclear power projects. ~ The realism of scheduling assumptions is the second important factor in scheduling accuracy. The key scheduling assumptions include material delivery lead times and labor productivity rates. As Waterford 3 was not significantly delayed by late material deliveries, we conclude that LP&L and Ebasco made accurate assumptions and took appropriate actions to assure they became reality. Waterford 3 labor productivity rates were initially determined based upon the knowledge of national and local labor productivity. As the i 1970s were indeed an uncharted area, historical averages were proven to be grossly incorrect. LP&L and Ebasco monitored actual labor rates and made adjustments necessary to recognize the i Page K-8
complexity of nuclear power plant construction. It should be noted that rates were not adjusted. to make plans reflect actual , +
-performance; this approach would be very detrimental to project
- results because the lower planned rates would probably result in even lower performance. Instead of expecting lower. performance as the norm for the future, LP&L and Ebasco set productivity goals that Waterford 3 contractors and labor should achieve. In addition, Ebasco performed labor utilization studies deigned to determine the reasons for low productivity.
While the above approach to productivity goals setting usually results in cost savings, it also entails one serious drawback. The ! drawback is that unrealistically high labor rates translate into shortened activity durations and, ultimately result in unrealistic schedules and budgets. Unless management is fully aware of unrealistic assumptions, this erroneous information may form the basis for management decision making. We have determined through interviews- that LP&L management personnel were aware of the assumptions which formed the basis for Waterford 3 schedules, and made key. decisions in light of that knowledge. The third and, perhaps, the most important factor in adequacy of schedules is the quality and experience of project planning and control personnel. Through interviews and meetings with LP&L's and
.y](~ Ebasco's planning and control staff, DMC, Inc. developed confidence in their knowledge and respect for their experience. We find them to be fully competent to develop realistic project schedules and to j bring Waterford 3 to a succesr'ul completion.
CONCLUSIONS Decision Management Company, Inc. reviewed Waterford 3 schedules in light of the criteria defined in Section K-1. Based upon this analysis, we have determined the following: E a. The methods and procedures used in Waterford 3 scheduling were adequate in light of the utility industry practice. These niethods, however, are not completely appropriate for the management of projects engineered, procured, and constructed in an unstable environment.
- b. Waterford 3 schedules were based. In general, upon realistic assumptions. Where this realism was lacking, unrealistic goals were established for the purpose of enhancing project performance. LP&L was aware of the assumptions underlying L the Waterford 3 senedules.
- c. Waterford 3 schedules were developed by experienced and knowledgeable personnel.
O Page K-9 l 1
- d. The evolution of the Waterford 3 scheduling methods and tools (network processor systems) was reasonable in light of industry practice.
Based upon the above considerations, Decision Management Company concludes that LP&L and Ebasco acted reasonably and prudently with regard to the scheduling function. 3.0 Evaluation of Waterford 3 Schedules DESCRIPTION From 1970 to date Waterford 3 schedules were revised twelve times. This history of the first 11 schedules issued is shown in Figure K-10. The eleventh revision, issued in September of 1983, delayed the project fuel load date and commercial operations by ten months. The objective of the section is to evaluate the adequacy of Waterford schedule performance in light of the criteria defined in Section K-1, and against the background of schedule performance achieved on other nuclear power plant projects. This objective will be accomplished through evaluation of three subjects: Waterford 3 schedule history; comparison of Waterford 3 schedule performance with other similar projects; and the current Waterford 3 schedule. WATERFORD 3 SCHEDULE HISTORY
- a. Initial Schedule: The initial Waterford 3 schedule was issued in July of 1970. The schedule was preconditioned upon issuance of the Construction Permit on March 1,1972. The schedule planned completion of site operation activities within a period of three months, and the total construction duration (from first l concrete to fuel load) of 50 months. Core loading was planned l for July of 1976, and the commercial operation six months thereafter on January 1,1977.
- b. Revision 1: The first official schedule revision was issued on March 17,1971. The schedule kept the same fuel load date but extended the overell project duration by seven months.
This extension was required to accommodate extensive excavation. A larger than expected excavation was the result of two conditions: increasing knowledge of actual site soil conditions, and common foundation mat design necessary to m eet licensing requirements. O Page K-10
t t
- e. Revision 2: The second revision of the Waterford 3 schedule was
[] V issued on June 1,1972. This revision incorporated the projected delay in issuance of the Construction Permit from July 1,1972, to March 1,1973. The total project duration shown iri this schedule remained the same; the site operation was shortened and the ' concrete-to-fuel load period lengthened by six months respectively.
- d. Revision 3: Revision 3 of the Waterford 3 schedule was issued on April 27, - 1973. 'Ihis schedule reflected the projected delay in the '
issuance of the Construction Permit from March 1,1973, to May 1, 1974. The total project duration remained the same.
- e. Revision 4: This revision of the project schedule was issued in December of 1974, one month after the issuance of the Waterford 3 Construction Permit. This schedule reflected a 33 month delay in <
the start of site work, which resulted from the lengthy regulatory proceedings. The overall project duration was extended by 11 months'to reflect the latest regulatory requirements affecting civil
- . design.
- f. Revision 5: This schedule revision was issued in April of 1976.
The entire constmetion duration was shortened by two months to reflect time savings possible under the " tops-off" versus " top-on" ( . constmetion technique for containment vessel erection. L i g. Revision 6: Revision 6 of the Waterford 3 schedule was issued in ! March of 1978. The overall project duration was extended by 8 months, and core loading planned for May of 1981. This schedule extension was required because of an increase in bulk commodities due to lower than expected labor productivity rates and work area manloading limitations.
- h. Revisica 7: This schedule revision, issued in September of 1979, l was caused by a shortage of skilled craftsmen in the New Orleans area. The new schedule extended construction duration by four months and delayed the fuel load date to September of 1981.
- i. Revision 8: Schedule revision 8, issued in August of 1980, was caused primarily by the financially induced 50 percent cutback in the constru'etion work force which took place between March and May of 1980. The second major retson for this delay was due to the fact that, in the wake of the Three Mile Island (TMI) accident, the NRC was not supportive of project licensing efforts. This ,
schedule revision delayed the Waterford 3 completion date by 14 months, with core loading planned for October of 1982. f J. Revision 9: This schedule revision (not shown in Figure K-10), , J issued in February of 1981, increased the project duration by three i Page K-11 1
months. The scheetle was delayed due to TMI-related impacts, Appendix R (Fire Protection) requirements, and additional requirements for inspection of pipe hangers and testing of plant systems.
- k. Revision 10: Revision 10 of the Waterford 3 schedule was issued in August of 1982. The r.verall project duration was delayed by six months due to the impact of Appundix R fire protection requirements and the increased scope of pipe hanger inspection and system testing.
- 1. Revision 11: Revision 11 of the Waterford 3 schedule was issued in January, 1983. This revision increased the project duration by approximately three months.
- m. Current Schedule: Revision 12 of the Waterford 3 schedule, which is presently in effect, was issued in September of 1983. The overall project duration was increased by ten months, and core loading is presently planned for March of 1984, with a two month management contingency. The causes of their delay included the following:
o Inability to achieve the start-up engineer manpower levels required to support the schedule o Increase in the amount of retest due to turnover of start-up test engineers and because of design modif; cations resulting from retesting o Addition of a formal transfer process for start-up systems from start-up to Plant Staff o Increase in number of start-up systems to be transformed 60 days prior to fuel load (from 48 to 116) o Testing delays due to lack of replacement parts o Design modifications necessitated by problems identified during Hot Functional Testing o Completion of several tasks that were previously considered tt, be retrofit WATERFORD 3 SCHEDULE PERFORMANCE A comparison of nuclear power plant schedule performance is extremely difficult because schedule performance is affected by numerous factors. In order to make a valid schedule comparison, it is necessary to select plants of similar design, which were designed and constructed under Page K-12
'similar economic conditions and in the same regulatory environment.
Because of the differences in nuclear steam supply systems, architect-engineer design philosophies, and site conditions, no two plants are exactly alike; a one-to-one comparison, therefore, is impossible to make. Because of these limitations, the following analysis should be regarded as an order of magnitude comparison of Waterford 3 schedule performance with schedule performance of similar power plant projects. Figure K-11 presents a comparison of the Waterford 3 construction duration with that of similar power plant projects. 'Ihe comparison was prepared by Ebasco Services, Inc. based on the following data scurecs: o TVA's $KW report, dated Septemtc,1983, t o Telephone conversaticas with various utilities, ! o A December,1981, Southern California Edison Company survey, and o NRC Yellow Book, dated December,1977. ! The data sample for this comparison was selected based on the ! construction start date. The plants shown in the sample received their ! construction permits between early 1972 and late 1974 The 120-month , construction duration for Waterford 3 shown in the chart is based on the l y . September,1983 schedule. The chart indicates that Waterford 3 g performed 13 percent better than the average plant from the 35 plants . reviewed in this sample. It should be noted that the above analysis is somewhat distorted 1,ccause of the following limitations: o The list includes a combination of BWR and PWR plants, with megawatt ratings from 400 MW to 1300 MW. o Some of the plants shown in the sample received limited work authorization permitting site preparation to begin prior to the issuance of the Construction Permit. o Because of site differences, the length of time required for site preparation excavation could vary substantially between the plants shown in the sample. o The semple includes both single unit and multiple unit plants. L Because most of the above factors put Waterford 3 at a disadvantage with respect to the other projects, the 13 percent better schedule performance is significant. p . Figure K-12 presents a comparison of Waterford 3 schedule growth with the schedule growth of other power plants shown in the sample. This ! Page K-13
comparison is significant because it tests the realism of Waterford 3 schedule assumptions. The chart depicts differences between the present schedule duration with the schedule duration announced at the time site work was started. This comparison is meaningful because project schedules issued at the time of the start of site work should have incorporated variations due to site conditions, plant type, megawatt rating, and othet factors. Based upon the overall sample, Waterford 3 schedule performance is 44 percent better than the average of the 33 plants. If the three plants with the highest growth, as well as the plants with the smallest growth are removed from the analysis, Waterford 3 still performed by 38 percent better than the average. Figure K-13 presents a comparison of Waterford 3 performance from the first concrete pour to comc'ercial operations. This comparison was made to eliminate the effects of limited work authorizations and site soil differences. Based upon this analysis Waterford 3 project performance was 16 percent better titan that of the average plant in the sample. Figure K-14 comparts Waterford 3 performance from the first concrete pour to Commercial Operation for a few select plants. The sample was selected in order to eliminate variances resulting from multiple units and site differences. Ebasco Services, Inc. Indicated that it believes that this comparison is the most accurate measure of Waterford 3 performance. Ebasco also stated that in preparation of this data, some of the utility companies interviewed indicated that they are planning further delays. De conclusion that can be derived from this chart, therefore, is that Waterford 3 schedule performance was at least 12 percent better than the average of the 11 plants shown in the sample. THE CURRENT WATERFORD 3 SCHEDULE De current Milestone Schedule for completion of the Waterford 3 project is shown in Figure E-15. The schedule depicts activities which ought to be completed by March 31, 1984, in order to prepare for core loading. In addition, the schedule shows activities to be accomplished between the 1st of April,1984, and November,1984, when the plant is scheduled to go into commercial operation. The Milestone Schedule is supported by two additional scheduling levels: Intermediate and Detailed. Schedules at all three levels are fully integrated. The Detailed schedule is computed based upon a resource-loaded network by means of the Project 2 computerized project management system. DECUSSION WATERFORD 3 SCHEDULE HETORY As indicated earlier in this section, the Waterford 3 schedule history was evaluated to determine whether or not scheduling assumptions were realistic, and if schedule delays were within LP&L's controi. The first Page K-14
subject was analyzed in light of average actual durations reported in Volume 5 of the NRC's " Yellow Book" (NUREG-0030) depleting nuclear power plant construction status as of September 30, 1981. The subject document contains, among other data, information regarding average construction duration for plants completed through 1980, as well as projected construction durations for plants scheduled for completion from 1981 onwards. This information, together with certain Waterford 3 statistics, is slown in the following table: YEAR OF AVERAGE DURATION WATERFORD 3 YEAR FUEL LOAD FOD FOR PAST PLANNED EST. FLY * 'FOUR YEARS DURATION 1960s 45.0 46.0 53 1970 1970 47.6 46.4 60 1971 1971 55.7 48.6 60 1972 l- 1972 60.9 51.3 60 1973 1973 71.1 62.5 1974 72.1 67.7 72 1975 1975 78.7 70.4 70 1976 l 1976 94.3 76.6 1977 90.0 80.9 78 1978 1978 102.7 92.2 82 1979 1979 95 1980 1980 130.4 102.8 98 1981 1981 121.1 112.2 102 1982 1982 112.8 116.1 112 1983
- Fuel Load Year 4
t The above table defines the average construction duration for plants completed from 1960 through 1980. Two averages are given: l o The FLY duration represents the average of the plants completed l during that year only c The Four Year duration represents the average of the plants completed during the year shown and during the previous three years. In addition, the table indicates Waterford 3 schedule forecasts and the year in which each forecast was made. Analysis of data shown above shows that prior to 1975, Waterford 3 schedule forecasts adhered very closely to actual average duration of plants constructed prior to that time. Throughout that time period Waterford estimates were conservative, reflecting Page K-15 3 1
LP&L/Ebasco's understanding of site specific differences among Waterford 3 and other nuclear projects. During the period from 1976 through 1982, the accuracy of Waterford 3 schedules showed some dete foration. This decline in accuracy was caused by the following events / conditions: o liigher than predicted impact of regulatory changes o LP&L cash flow restrictions o Use of early optimistic labor productivity rates o Extreme competition among the utilities for experienced start-up and operation personnel The latest schedule, issued in September of this year is, again, very close to the NUREG-0030 averages. The above tabie indicates that the only period in which reasonableness of Waterford 3 schedules could be questioned is the period from 1979 to 1982. We believe that events which occurred during this time -- the Three Mile Island, Diablo Canyon, South Texas Project and Zimmer -- could not have been predicted based upon the information available to LP&L and Ebasco at that time. The second subject analyzed by DMC, Inc. concerns the question as to whether or not the causes of schedule delays reported by LP&L were within the company's control. The first four schedules issued prior to Construction Permit (CP) issuance were delayed by lengthy licensing proceedings. The U.S. Department of Energy's publication entitled " Nuclear Power Regulationd (issued in May of 1980) reports that plants which applied for the Construction Perniit of the same time as Waterford 3 received the CP after 43 months of deliberation. Waterford 3 safety anS environmental issues were resolved on April 30, 1974, after 40 months of review. The anti-trust matters were resolved six and one-half months thereafter, or three and one-half months below l the everage. These statistics suggest that LP&L could have received the permit to construct Waterford 3 six months earlier and, conceivably, completed the project six months ahead of the current schedule. Ilowever, to achieve that, LP&L would have had to relinquish some of its fundamental rights and interests, and suffer a deterioration in its competitive position. l We believe that LP&L's decision to protect its interests was prudent even theugh it resulted in a delay of CP issuance. The effect of I Page K-16 9 i
- .. . _ - - . ~ _ - .-.. _--_- . .. . -- -
that delay on the overall project cost is impossible to predict because of many events which occurred between 1974 and today. g Indeed, it can be argued that thic delay benefited the project by permitting plant design to advance further and take into ! consideration the effect of new codes issued during that time period. Some.of the projects which started constructica with less advanced design than Waterford 3 are among the most expensive power plants in the country today. l Waterford 3 schedule delays from 1975 to date were caused by events both within and without LP&L's control. Events within the company's control - labor productivity, contractor's performance, etc. - were controlled in an adequate manner. This conclusion is supported by the fact that Waterford 3 schedule performance is above the industry norm. WATERFORD 3 SCHEDULE PERFORMANCE Decision Management Company, Inc. evaluated Waterford 3 schedule performance in light of data reported in Volume 5 of NUREG-0030. The Icgic supporting this approach is that if ranking obtained through this evaluation shows the same trends as Ebasco's study, i then the latter represents an accurate comparison of Waterford 3 and other power plant projects. Plants selected for the purpose of schedule comparison with ( Waterford 3 were selected based upon the following criteria: i i o Plants included in Volume C of NUREG-0030 l l o Pressurized Water Reactors o Construction Permit issued between January 1,1973, and December 31, 1975. The twenty six nuclear power plant units which met the above criteria are shown in Figure K-16. They were all affected by the same industry-wide events and experienced similar economic, labor l and regulatory _ environments. The sample includes all PWR manufacturers and several A-E/CM firms. The information presented in the figure includes the following:
.o Plant name L
o Unit number - o State in which plant is located Page K-17 l
o Plant capacity (MWe) o NSSS vendor o Architect-Engineer o Construction Manager The first comparison of Waterford 3 schedule performance is shown in Figure K-17. This comparison ranks the 26 plants selected for the study based on duration time from filing of the Construction Permit Application to the fuel load date. The figure depicts the following information: o Plant rank o PSAR submittal date (Milestone 1) o Construction stsrt date (site preparation) (Milestone 2) o Construction Permit Date (Milestone 3) o Start of foundation construction (first concrete) (Milestone 4) o Fuel loud date (Milestone 5) o Durations between various milestones o Schedule performance expressed as a percent of average performance The above comparison indicates that Waterford 3 schedule performance through issuance of the Construction Permit was 1.88% or 3 months below the average. This under-performance we? caused by lengthy anti-trust proceedings and, as dis %ssed earlier, we find it as justified. The second comparison (see Figure K-18) measured Waterford 3 performance from CP issuance to fuel load date. This comparison is more meaningful because it eliminates uncertainties of the construction permit review process. As shown in the figure, Waterford 3 ranks fif th among the 26 plants, with schedule performance of 15.56%, or eighteen months better t'lan the hverage. The third comparison (See Figure K-19) measured Waterford 3 perforr. lance from the start of foundation construction to the fuel load date. This comparison is the most meaningful because it eliminates some of the site-related differences among the plants in Page K-18 9 1 ..
the sample. Based on this comparison, Waterford 3 ranks third among 26 plants, with a performance of 18.22%, or 18 months, better than the average. b Data shown in Figures K-17 through K-19 are consistent with information provided to DMC by Ebasco. The consisteney of results derived from two different samples offer solid proof that Waterford 3 performance was and is above the industry norm. Even if the current Waterford load date is compared with fuel load dates shown in Figure K-19, Waterford 3 performance would be one month ahead of the average performance. THE CURRENT SCHEDULE As indicated earlier in this section, the current Waterford 3 schedules were evaluated to determine whether or not the plant can be completed to load fuel in March 1984, and begin commercial operation in November of the same year. DMC, Inc. believes that, barring unforseeable developments, the subject schedules are reasonable and achievable. This conclusion is based on the fact that all levels of schedules are fairly well developed and mutually supportive; that the remaining scope of work has been defined precisely and clearly; that there are not major unresolved licensing issues; and that project / plant staff consists of very capable and i experienced personnel.
\ /
V However, as discussed earlier in this section and other parts of this l l report, during the past decade nuclear power plant construction was l a highly unpredictable business. The current Waterford 3 schedule, ! therefore, is still subject to the same type of cvents and conditions which caused its delays over the past thirteen years. In order to address the possibility that some new event or condition may affect completion of Waterford 3, we have considered several scenarios depicted by graphs shown in Figure K-20. Graph A represents the actual average construction duration of nuclear plants liccnsed to operate during the 1970s and 1980s. l Tnese durations were determined as average for all plants licensed during a given year and the previous three years. Graph B depicts forecasts of Waterford 3 construction duration from 1970 to date. Graphs E and F present a "line of balance" l extrapolation of Graph B from 1970 to 1984 and 1976 to 1984, respectively. Graphs C and D represent forecasts of average construction duration for plants which have or will receive the Operating License between iv )
- Page K-19
1981 and 19P4. Graph C was developed assuming that the construction duration will grow from 1980 onwards at the same pace as from 1978 to 1980. In the event thct this trend prevails a plant licensed in March of 1984 would have had an average construction duration of approximately 136 months. Graph D was prepared based on data reported in Volume 5 of NUREG 0030 for 1981 and 1982. In the event this trend prevails, the average construction duration would amount to approximately 124 months. Because of the better than average schedule performance which Waterford 3 has achieved to date, it is reasonable to assume that this trend will continue in the future. The following table was developed based upon these assumptions and forecasts shown on Graphs C and D. Graph C Graph D Average Forecast 130 mes 124 mos Construction Duration W3 Performance Factor 19 mos 17 mos (14% above average) Waterford 3 Forecast 117 mos 107 mos Construction Duration Current Planned 112 mos 112 mos Construction Duration Likely Early Completion (5 mos) 5 mos or (Delay) The above table suggests that Waterford 3 will load fuel on time unless some major event, such as the Three Mile Island accident, occurs during the next several months. Similar results are derived from analysis of "line of balance" trends which indicate that the current estimate is the average of the Best/ Worst case scenarios reresented by Graphs E and F. CONCLUSIONS Decision Management Company, Inc. reviewed Waterford 3 schedules in light of criteria defined in section K-1. Based upon this analysis, we have determined the following:
- a. Waterford 3 scheduling assumptions were reasonable when compared with the industry norm.
- b. Louisiana Power & Light Company acted prudently in controlling events and conditions causing schedule deleys which were within the company's control.
O Page K-20
- c. Waterford 3 schedule perforraance is at least 12 and perhaps s over 20 percent better than the industry norm.
- d. The current Waterford schedule is reasonable and achievable barring the occurrence of major events on the project or in '
the industry as a whole. Based upon the above considerations Decision Management Company concludes that Louisiana Power & Light 9eted prudently with regard ; to scheduling of the Waterford 3 project. Our analysis indicates that the plant can be completed as scheduled. It should be noted 4 however that the current schedule is sensitive and its attainment subject to many factors including, but not limited to causes of the latest delay. It is therefore mandatory that status of remaining activities be monitored closely and precisely. A mechanism which could provide LP&L with early warning of potential difficulties is described in Chapter U. 4
'o b.
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FIGURE K-3 PROJECT SCHEDULE jNPUT FjlfeNAtER/MST3399065 P40C 901 NETweRR NAME esseesseen NATERFORD SES UNif 3 Ae&ee8ee OUTPUT PILEeWATER/MST3420609 REPORT DATE.15 OCT 75 ESASCO SERVICES 86799 PERT RUN MONOAY 12/ 8/75) TIME 18 19023 AN. vaRIANCte .o.1 NEERg
! PRED SUCC DURA ACTIVify REO EARLY CRITICAL TOTAL EAntf CRITICAL OTR/SCM OATE EVENT EVENT fl0N e e A A eeoe DESCRIPTION eeeA eA A A (0) START ST ANT- glatR FINISH FINI5H DATE TYPE 188995 191999 0.5 PREP PROP. CONCRETE CONSTRutfl04 PMASF I Noa IS OCT 75 15 OCT 75 0.0 15 oCT 75 15 OCT 75 +
181999 198085 0.9 EBAS REvM-CONCRETE CONSTRUCTION PNASE I N04 J5 OCT 75 IS DCT 75 0.0 15 OCT 75 IS OCT 75 ' l 181913 191017 9.9 LPat REvW. CONCRETE CONSIRUCTION PH48E I NOS 15 0CT 75 15 OCT 75 0.0 15 OCT 75 15 OCT 75 i 188117 1918tf 0.0 0 15 OCT 75 15 DCT 75 6.0 IS OCT 75 IS OCT 75 191017 191021 0.0 ISS PROPL-CONCRETE CONSTRUCil0N pHA$E 1 N04 15 OCT 79 15 Otf 75 0.0 15 OCT 75 15 OCT 75 181921 191025 0.9 Ev&L 3105. CONCRETE CONSTRUCTION PNASE I N9e IS OCT 75 15 OCT 75 0.0 15 OCT 75 IS OCT 75 191025 198929 0.8 LPAL APPR*CONCRffE CONSIRUCTION PHA3! ! Nos 15 OCT 75 15 UCf 75 0.0 15 OCT 75 15 OCT 75 Isle 29 191933 9.9 MORILIZAT.CONCElfE CONSTRUCTION PHASE I Noe 15 OCf.75 15 007 75 0.0 15 OCT 75 15 OCT 75 191013 191113 0.0 0 15 OCT 75 15 OCT 75 0.0 15 otf 75 IS OCT 75 l 198883 191417 9.9 FNAL REVN-CONCRETE CONSTRUC?l0N PNA$E I kos 15 OCT 79 15 OCT 75 0.0 15 OCT 75 IS OCT FS l 191495 198499 9.9 PNEP PROP SARGE UNLDAOING FACILITIES NOS 15 oCT 75 29 APR 76 2R.I 15 OCT 75 29 APR 76 1 198899 191413 9.9 E848 REVW SARGE UNLOAOING FACIL!flES N08 15 OCT 75 29 APR 76 28.8 15 OCT 75 29 APM 76 191483 191484 e.0 0 15 0CT 75 29 APR 76 28.1 15 OCT 75 29 APM 76 telete Iglele 0.P FINAL REY g&RGE UNLOAOING FACILif!EO "- NOP 15 OCT 75 29 APR 76 28.1 15 OCT 75 29 APR 76 i 108415 19tely e.9 (PAL REyW gARgE UNLOADING FACILiflES WOB 15 OCT 75 29 APR 76 2R.I 15 oCT 75 29 APR 76 198416 193417 0.0 D 15 0Cf 75 29 APR 76 28.1 IS OCf 75 29 APR 76 '! 19 t al7 16 f428 0.0 ISS PROP 84RCE UNLOADING FACILITIES N08 IS OCT 75 29 APR 76 28.1 15 OCT 75 29 APR 76 188421 198e25 0.0 EVAL SIOS BARGE UNLOADING FACILifIES N08 15 OCf 75 29 APR 76 28.1 IS OCT 75 29 APR 76 181425 198429 0.0 LPSL APPR SARGE UNLOADING FACILiffES NOB 15 OCT 75 29 APR 76 28.1 IS DCT 75 29 APR 76 g 191829 108433 4.5 MOSILIIATION BARGE UNLOADING FACILIf]E3~~ ~ N08 IS OCT 75 29 APR 76 28.4 14 NOV 75 29 Maf 76 181599 108599 0.6 FREP PROP PRELIMINARY ELECTRICAL N06'l3 OCT 75 is 0Cf 75 0.0 15 DCT 75 15 OCT 75 l lel509'lel51f 0.0 E848 REVW PRELIMINARY ELECTRICAL N06 15 OCT 75 IS OCT 75 0.9 15 OCT 75 15 OCT 75 191513 191514 0.9 0 15 OCT 75 15 OCT 75' e.9 15 OCT 75 IS UCT'75 191584 198518 9.8 FNAL REVN PRELIMINARY ELECTRICAL N06 15 OCT 75 15 OCT 75 0.0 15 OCT 75 15 OCT 75 191513 198517 0.9 PNAL REVN. PRELIMINARY ELECTRICAL N06 15 OCT 75 IS OCT 75 0.8 IS OCT 75 15 OCT 75 1 198536 191517 0.0 0
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IS OCT 75 15 OCT 75 0.9 15 oCf 75 15 OCT 75 881517 181921 0.9 Ist PROP PRELIMINARv ELECTRICA L - No6 15 OCf 75 15 0CT 75 0.9 15 OCT 75 IS OCT 75 m 108521 198525 9.9 EVAL BIOS PRELIMINARY ELECTRICAL N06 15 OCT 75 39 OCT 75 0.0 15 OCT 75 15 OCT 75 E 191525 198529 9.9 LPEL APPR PRELIMINARY ELECTRICAL N06 IS OCT 75 15 OCT 75 0.0 IS OCT 75 15 OCT 75 c: 191529 198533 0.0 MOSILIZATION PRELIMINARY ELECTRICAL N06 15 OCT 75 15 OCT 75 0.0 11 DCf 75 15 OCT 75 $ 101605 191609 9.9 PREP PROP.PRtLIMINARY PLUMSING E DRAINAGE N07 15 OCT 75 15 OCT 75 0.0 15 UCT 75 15 OCT 75 1916C9 198613 0.0 ESAS REvW PRELIMINARY PLUMBING E ORAINAGE N07 IS OCT 75 15 CC T 75 0.0 15 OCT 75 15 OCT 75 y 198613 191617 6.9 LPSL REvW. PRELIMINARY PLUNOINO & DRAINAct NOF 15 Oct 75 IS OCT 75 0.0 15 oCT 75 15 OCT 75 - 191787 lettif e.0 0 15 oCT 75 15 OCT 75 0.0 IS OCT 75 15 oCT 75 191617 101628 9.5 Its PROPL-PRELIMIpaRy PLUMgING & ORAINAct N0Y 15 OCT 75 IS OCf 75 0.0 15 UCT 75 15 OCT 75 es tel628 191625 191625 191629 0.0 Ev&L BIOS =PRELIMINART PLUMMINC 4 ORAINAct NOT 15 OCT 75 15 OCT 75 0.0 15 OCT 75 15 OCT 75 y 0.9 LPtl APPR.PRELIMINARf PLUMBihD & ORAINAGE NOT 15 OCT 75 IS OCT 75 0.0 IS UCT 75 15 OCT 75 198629 198633 9.9 M081LIZAT* PRE (IMINARY PLUMglNg & ORAINADE NOT IS UCT 75 15 UCT 75 0.0 IS DCT 75 IS OCT 75 $ 191683 198711 0.0 0 IS OCT 75 15 0Cf 75 0.0 15 OCT 75 15 OCT 75 191713 198787 0.0 FNAL REVWePREllMINARf PLAMglNC E ORAINAGE N07 15 OCT 75 15 OCT 75 0.0 15 OC T 75 15 OCf 75 191#85 191899 4.3 PREP PROP =lt0 STRUCT CN PIPEL RIVER FRONT FAC Nie 15 OCT 75 25 NOV 76 58.8 le NOV 75 25 0FC 74 (l o. 191809 191881 4.4 ESAS REvW* ISO STRUCT CM PIPEL RIVER FRONT FAC Nia le NOV 75 25 OEC 76 58.5 15 DEC 75 25 JAN 77 M 198883 198817 4.3 LPSL REvM-It0 STRUCT CN PIPEL EIVER FRONT r&C Hl4 15 DEC 75 25 JAN 77 58.8 $4 JAN 76 24 PFH 77 198987 101817 8.9 0 le JAN 76 is Fte 77 58.1 34 JAN 76 24 Ftp 77 198817 181521 8.7 ISS PROPL=It0 4TRUCT Cw PIPES RIVER FRoyf FAC Nie 14 JAN 76 24 Fts 77 58.1 15 MAR 76 26 APR 77
r -- FIGURE K-4 EBASCO DRAWING SCHEDULE E eA SC0 0R A w 1HG SCH EDULE REPORT P-390U PAS 0571 UPDATE APPR U . P .. $ . A 1568 LOUleIANA PodER AND LIGHT Co. PAGE 021 JOB ENGINEER C SECANE ........., BY L.R MATEHrORD 3 E S UNIT 3 (630)MELMANICAL DEPARTMENT GNUUP SUPERvl30R A 8 VAN FELIK .......... ORIG 03-31-78 1865 MW INSTALLA1104 ISSUE 21 PROJ C00RDIN410R P CAPITELLI .......... C0m1EkCI AL UPN. s3:50-15-81 STATUS AS OF 06-30-82 PROJECT DESIGNER J MC CASE .......... DRAWIAG R CLOSE DUE EST APPR *eeseeeees N OR4 DA TS **********c NUMBER E MDYS DATE PERCENT DATE 'DATE' DATE FOR ORIG ACT CUR eCAST TOTAL ICT ACT LOU V TITLE --------------- COMPLETE SENT TO APPROVED DELINQT 8UDGET MONTM TO ACTUAL TO DATE 1564 4 (EQUlv FACTUNS) PREV CUR ENGR DRAMING. (REv!SE) IS L 03 COMPLETE OS !$ $ Ot (00C I CMPLT) (ho I EIP) G 196303 m ASTE M AN AGEMEffe PIPING 04-30-73 DES too 100 co-26-73 04-30-73 50.0 24.4 104.4 AGS 5 SMFET-3 CNN 100 100 (100.0%) (208.801) G 197508 UORON MANAGEMENT P! PING 08-31-72 DES 100 800 08-29-72 08-31-72 55.0 39.8 ~ 100.2 AGS 5 CHM 100 800 (100.02) (182.181) G 197b0g 30RON MANAGEMENT PIPING 08-31-72 DES 100 100 06-29-72 08-31-72 50.0 45.5 808.7 AGS 5 CME 100 100 _ (l00.0%) (217.401) G 197b03 80RON MANAGEMEHT PIPING 08-3t=72 DES 100 100 09-29-72 08-31-72 e5.0 29.2 91.9 AGS 7 CMn 100 800 (100.01) (208.572) G 19780e BORON MANAGFHENT PIPING 08-31-72 DES 100 100 05-29-72 08-31-72 e5.s 33.8 88.5 AGS 5 CHK 100 100 (100.05) (181.113) G 198308 FUEL PUOL COULING AND 06-15-75 DES 100 100 06-27-75 07-07-75 50.0 60.7 110.9 AGS e PURIFICAT10N SYSTEM-SHI CMK 100 100 (100.01) (261.803) G 198302 FUEL POOL COOLING AND ou-15-75 DES 100 100 06-27-75 07-07-75 ' 50.0 57.7 103.8 AGS 6 PURIFICATION PIPING-SHEET 2 CMK 100 100 (100.0%) (207.603) 08=31-75 DES 100 100 10-09-75 19-15-75'- - 76.9-G 199- ~ PIPING AT INTAKC STRUCTURE - 45.0 ' -~ ~ ~ 6 8. 3 AGS 7 SH I CHK 100 100 (100.01) (170.891) G 200$08 CONTalNMENT SPRAY PIPING 08-31-72 DE9 100 100 08-03=72 08-10-72 50.0 29.e 84.9 AGS 7 SMEET-3 CHN 100 100 (100.01) (169.803) FIGURE PROVIDED BY LP&L
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MAN-HotlRS FL Ov4 CHART COST ENGINEERING ArrRovtD WITH: ESTABL I,$H f N OT Affit 0VED DEVELOP MANPOWER EB CO UNIT RATES L D ADE.D SCHEDULE PROJECT 4 CONSTRUCTtDN
# 2) C COST E NGI NEE R l MG PLANNING { ScHEDULlHG s'R OJ t (.T CONSTRUCTIDH COST ENGI NEER ING 60PT Aprio/st Ac oN TRAC. 7 02 "
6U PERV IS I DN A 6UPRVtH ( PRESE.NT MAN 4GEME NT TO 4)LP(L CONSTR LP(1 DDERNING A R C_ A i CDOR DINATDR S MAN 44tteil MATERI AL ( DR AWING AVA I L ABI L l 1Y HDT AfTaoVED enyertov89 PLANfil NG ( SCHEDOUNG
.sor Aff R9JE D CON STROCTI ON P ROCD R EtAENT tNGlNEERI HG R E SET PPOJE4T 4 FIGURE PROVIDED BY LP&L l B A SELI NES I
I O O O
14GURE K-9
.(G)
LOUISIANA POWER & LIGHT COMPANY WATERFORD SES UNIT NO. 3 1983 - 1165 MW INSTALLATION - UNIT NO. 3
SUMMARY
CHRONOLOGY OF SCHEDULING TOOLS CPM SCHEDULES Civil Phase - Established CPM to provide engineering and procurement data by discipline and material specification; and construction data by discipline, by building, by contractor. Extensive detailing of civil work effort.
- Used extensively to establish material delivery priorities.
Bulk Phase - Area and contractor bar charts utilized. </ ( - Began startmap system logic development. Bulk / System - Primarily utilized tc 2stablish start-up system Phase completion forecasts.
- LP&L detailed start-up. schedule using Project II System.
Total System & - Construction provided skeletal resource loaded logic System / Event to Project II system to evaluate achievability of Phase start-up dates. Construction utilized CPM for retrofit items and for added licensing tasks. System / Area - Resumed utilizing Project Il CPM for scheduling of System Phase Completion Area Close-out and Task Completion Schedules. MANUAL SCHEDULES
, Engineering & - . 0verall Project Milestone Schedule
- Drawing & Specification Schedule Procurement Schedule FIGURE PROVIDED BY LP&L
FIGURE K-9, continu:d Civil Phase - Six Week and Six Month Schedules developed by contractor and reviewed by Ebasco. Initiated Site and New' York Critical Items List (1977). Area Interface Schedules developed by Ebasco. Bulk Phase - Cost / Schedule plans developed end maintained by Ebasco. Weekly update by contractors, of six week contractor schedule for both building and area. Began developing system completion schedules. Bulk / System - Maintain Cost / Schedule Plans by Ebasco. Phase Develop monthly schedule, jointly prept. red by Ebasco and contractors. Continued developing and revising start-up completion schedules. Total System - Task Schedules and System / Event Phase - System Schedules
- Area Schedules by Contractor and utilizing MTS data.
Developed task schedules especially for licensing items.
- Began intensive start-up system punchlist scoping and monitoring (mid-1982).
Established milestone event schedules. System / Area - Area Close-out Schedules were implemented. Phase Task Completion Schedules. FIGURE PROVIDEE BY LP&L s 9
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, FIGURE PROVIDED BY LP&L SCHEDULE GROWTH COMPARISON M (+1 STANDARD DEVIATim DATEqPeOVElfSCR 2,1W3 (-l STANDARO DEVIATION SOUNDARY=18).44 900NOARY = 21.4s MEAN = 100 44 3 I l ;'PtRCENT AGE INCRE ASE FROM DURATION AT CONSTRUCTION ETART 4 I I I j l MCTMlf -10 '20 '30 a 40 '.50 150 '70 '80 '90 10 \110 1120 1130 1140 'Is0 .IsJ 1170" 100 1190 h!00 1 210 1220 l230 1240 1200 1200 32M
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FIGURE K-13 LOUIS.IANA ATERFORDPOWER & LIGHT S El UNIT 3 COuPANY CONSTRUCTION DURATIONS: (FIRST CONCRETE) TO (COMMERCIAL OPERATION) (FIRST NUCLEAR UNITS) oATE: NovtusER 2. iss FIGURE PROVIDED BY LE6L '-i sTANoARo of vi ATioN (+) STANoARD DEVIATION souNoAR v - 102.i , ut AN - 122.is ysouNoARv - 14tre i PRC, JECT / vEAa3 @ @ @ @ @ @ @ @ @ @ l@ @i @ @ @ @ @ @ UN6T uONTHS g i te 24 v2 , 40 48 54 M 72 M M ,y 96 112 1 1 1M 1 1 1 178 1 192 200 i i I I ,I, I,l il i i i ..i . .
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O o O FIGURE K-14 LOUISIANA POWER & LIGHT COMPANY WATERFORD S.E.S. UNIT 3 CONSTRUCTION COST PER KILOWATT INCLUDING AFUDC PLUS ONE MINUS ONE STD. STANDARD DEVIATION
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-------=====================----------
AAPLt.NT NAME UN ST NW NS A/E C-H AAG NO SS AAR ! AAS===--------- == == ----- == === === 1 Beaver Valles 2 PA B52 W SW SW 2 Bellefonte 1 AL 1235 B TV TV 3 Bellefonte 2 AL 1235 B TV TV 4 Brz;dvood 1 IL 1120 W SL CE 5 Braidwood 2 IL 1120 W SL CE 6 Bsron 1 IL 1120 W SL CE 7 Bsron 2 IL 1120 W SL CE 8 . Catauba 1 SC 1145 W EU DU 9 Catawba 2 SC 1145 W DU DU >(N ( ' 10 Coeanche Peak 2 TX 1150 W GH R0 11 Comanche Peak 1 TX 1150 W GH R0 I 12 Nt6uire 2 NC 1180 W BU DU 13 Millstone 3 CT 1150 W SW SW 14 North Anna 3 VA 907 B SW SW 15 North Acna 4 VA 907 B SW SW 16 San Onofre 2 CA 11(0 C BE BE 17 San Onofre 3 CA 1140 C BE BE 18 South Texas 1 TX 1250 W R0 RO l 19 South Texas 2 TX 1250 W R0 K0 20 Summer 1 SC 900 WGADA 21 Vostle 1 6A 1100 W BE 6P 22 Vostle 2 GA 1100 W BE 6P 23 181P 1 WA 1267 8 UE UE 24 Waterford 3 LA 1165 C EB EB l- 25 Wattsbar 1 TN 1165 W TV TV 26 Wattsbar 2 TN 11o5 -W TV TV .
======-----, --==----- -- - -.
m ----- a
m O FIGURE K-17 SCHEDULE PERFORMANCE OF PWR POWER PLANT PROJECTS WITH CONSTRUCTION PERMIT RECEIVED BETWEEN 1-1-1973 AND 12-31-1975 RANKEB BY DURATION FROM PSAR FILIN6 TO FUEL LOAD Pkf( AAPLANT WAME SUBMIT START CNSTRN START LOAD DUR DUR DUR BURPERCENT AAG PSAR CNSTRN PERMIT F0llDIN FUEL 1-2 2-3 3-4 1-5 0F AAR YR MO YR M0 YR M0 YR MO YR M0 MOS MOS AOS MOS NORM
=====AA5:========== === === == == == === == === === === ==== ==== ==== ==== ======
1 Coeanche Peak 73 6 74 10 74 12 75 4 82 8 16 2 4 110 78.92% 2 South Texas 74 5 75 9 7512764 83 9 16 3 4 112 80.35% 3 ComanchePeak 73 6 74 10 74 12 75 7 83 6 16 2 7 120 86.09% 4 Marth Anr.a 71 9 72 7 74 7 76 1 81 11 10 24 18 122 87.53% 5 Byron 73 2 75 4 75 12 75 12 83 4 26 8 0 122 87.53% 6 Suaner 71 6 73 4 73 3 74 3 82 2 22 -1 12 128 91.83% 7 WNP 74 8 75 8 75 12 76 4 85 8 12 4 4 132 94.70% 8 Bellefonte 73 5 74 9 74 12 75 6 84 6 16 3 6 133 95.42% 9 Catawba 72 7 74 5 75 8 76 4 83 8 22 15 8 133 9L42% 10 Byron 73 2 75 4 75 12 76 2 84 4 26 8 2 134 E14% 11 Wattsbar 71 5 72 12 73 1 74 5 82 8 19 1 16 135 96.85% 17 Wattsbar 71 5 72 12 73 1 74 4 82 8 19 1 15 135 96.85% 13 North Anna 71 9 72 7 74 7 76 3 82 12 10 24 20 135 96.85% 14 South Texas 74 5 75 9 75 12 77 3 85 9 16 3 15 136 97.57% 15 San Ono!re 70 5 74 2 73 10 74 11 81 10 45 -4 13 137 98.29% 16 Bellefonte 73 5 74 9 74 12 75 6 85 2 16 3 6 141 101.16% 17 Waterford 70 12 74 11 74 11 75 12 82 10 47 0 13 142 101.88% 18 Braidwood 73 2 75 8 75 12 76 3 85 5 30 4 3 147 105.46%
- 19 San Onofre 70 5 74 2 73 10 74 11 82 10 45 -4 13 149 106.90%
20 McGuire 70 9 71 4 73 2 72 5 83 4 7 22 -9 151 108.33% 21 Catawba 72 7 74 5 75 8 76 8 85 2 22 15 12 151 108.33% 22 Millstone 73 2 74 5 74 8 74 10 85 12 15 3 3 154 110.49% 23 Braidwood 73 2 75 8 7512763 86 4 30 4 3 158 113.36% 24 Beaver Valles 72 5 74 5 74 5 76 11 85 12 24 0 30 163 116.94% 25 Vostle 73 2 76 8 74 6 78 8 86 9 42 -26 50 163 116.94% 26 Vostle 73 2 76 8 74 6 78 8 38 3 42 -26 50 181 129.86%
==========================------ =====================---------=r:=====================
24 3 12 139 100.00% l 9
FI63tE K-18 SCHEDULE PERFORMANCE OF PWR POWER PLANT PROJECTS WITH CONSTRUCTION PERMIT RECEIYED KTEEN 1-1-1973 AND 12-31-1975 RANKED BY BURATION FROM CP BATE TO FUEL LOAD DATE RANK AAPLANT NAE SUBMIT STAS.I CNSTRN START LOAD DUR DUR BUR BLR PERCENT AAG PSAR CNSTRN PERMIT FOUBTN FUEL 1-2 2-3 3-4 3-5 0F 4Af TR MO YR MO YR MO YR MO YR M0 MOS MOS MOS MOS MORM
=====,; u---===== =n =================un=============
1 North Anna 71 9 72 7 74 7 76 1 81 11 10 24 18 88 78.22% 2 Byron 73 2 75 4 75 12 75 12 83 4 26 8 0 88 78.22% 3 Comanche Peak 73 6 74 10 74 12 75 4 82 8 16 2 4 92 81.78% 4 South Texas 74 5 75 9 75 12 76 4 83 9 16 3 4 93 82.671 5 Waterford 70 12 74- 11 74 11 75 12 82 10 47 0 13 95 84.44% 6 Catauba 72 7 74 5 75 8 76 4 83 8 22 15 8 96 85.33% 7 San Onofre 70 5 74 2 73 10 74 11 81 10 45 -4 13 96 85.33% 8 Bsron 73 2 75 4 75 12 76 2 84 4 26 8 2 100 88.89% 9 North Anna 71 9 72 7 74 7 76 3 82 12 10 24 20 101 39.78% 10 Comanche Peak 73 6 74 10 74 12 75 7 83 6 16 2 7 102 90.67% 11 Suener 71 6 73 4 73 3 74 3 82 2 22 -1 12 107 95.11% V 12 Saa Onofre 70 5 74 2 73 10 74 11 82 10 45 -4 13 108 96.H% 13 Braiducod 73 2 75 8 75 12 76 3 85 5 30 4 3 113 100.44% 14 Bellefonte 73 5 74 9 74 12 75 6 84 6 16 3 6 114 101.33% 15 Catauba 72 ' 7 74 5 75 8 76 8 85 2 22 15 12 114 101.33% 16 Wattsbar 71 5 72 12 73 1 74 5 82 8 19 1 16 115 102.22% 17 Wattsbar 71 5 72 12 73 1 74 4 82 8 19 1 15 115 102.22% 18 181P 74 8 75 8 75 12 76 4 85 8 12 4 4 116 103.111 19 South Texas 74 5 75 9 75 12 77 3 85 9 16 3 15 117 104.001 20 Bellefonte 73 5 74 9 74 12 75 6 85 2 16 3 6 122 108.44% 21 Mt6uire 70 9 71 4 73 2 72 5 83 4 7 22 -9 122 108.44% 22 Braidwood 73 2 75 8 75 12 76 3 86 4 30 4 3 124 110.22% 23 Millstone 73 2 74 5 74 8 74 10 85 12 15 3 3 136 120.89% 24 Beaver Valles 72 5 74 5 74 5 76 11 85 12 24 0 30 139 123.56% 25 Yostle 73 2 76 8 74 6 78 8 86 9 42 -26 50 147 130.67% 26 Vostle 73 2 76 8 74 6 78 8 88 3 42 -26 50 165 146.67%
===============n-------------=------=====-----=-- =----=---------u=--------=
24 3 12 113 100.00%
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r I 4 FIGURE K-19 SCHEDULE PERFORMANCE OF BIR POWER PLANT PROJECTS WITH CONSTRUCTION PERMIT RECEIVED BETWEEN 1-1-1973AND12-31-1975 RANKED BY DURATION FROM FIRST CONCRETE POOR TO FL'EL LOAD PAFK AAPLANT NAME SUBMIT START CNSTRN START LOAD DUR DUR DUR DUR PERCENT AAG PSAR CNSTRN PERNIT FOUDTN FUEL 1-2 2-3 3-4 4-5 0F AAR YR MO YR M0 YR MO YR M0 YR M0 MOS MOS MOS MOS NORM
=====AAS :========= ::= === :: == :: ::: == === === === ==== :: ==== :::= =======
1 North Anna 71 9 72 7 74 7 76 1 81 11 10 24 18 70 69.81% 2 North Anna 71 9 72 7 74 7 76 3 82 12 10 24 20 81 80.78% 3 Waterford 70 12 74 11 74 11 75 12 82 10 47 0 13 82 81.78% 4 San sofre 70 5 74 2 73 10 74 11 81 10 45 -4 13 83 82.781 5 Byron 73 2 75 4 75 12 75 12 83 4 26 8 0 80 87.76% 6 Comanche Peak 73 6 74 10 74 12 75 4 82 8 16 2 4 88 87.761 7 C;.tawba 72 7 74 5 75 8 76 4 83 8 22 15 8 88 87.76% 8 South Texas 74 5 75 9 hi 12 76 4 83 9 16 3 4 89 88.76% 9 Ccaanche Peak 73 6 74 10 74 12 75 7 83 6 14 2 7 95 94.74% 10 Sumner 71 6 73 4 73 3 74 3 82 2 22 -1 12 95 94.74% ' 11 San Onofre 70 5 74 2 73 10 74 11 82 10 45 -4 13 95 94.74% 12 Vostle 73 2 76 8 74 6 78 8 86 9 42 -26 50 97 96.741 13 Byron 73 2 75 4 75 12 76 2 84 4 26 8 2 98 97.74% 14 Wattsbar 71 5 72 12 73 1 74 5 82 8 19 1 16 99 98.73% 15 Wattsbar 71 5 72 12 73 1 74 4 82 8 19 1 15 100 99.73% 16 Catawba 72 7 74 5 75 8 76 8 85 2 22 15 12 102 101.73% 17 South inas 74 5 75 9 75 12 77 3 85 9 16 3 15 102 101.73% 18 Pallefonte 73 5 74 9 74 12 75 6 84 6 16 3 4 108 107.71% 19 Beaver Valles 72 5 74 5 74 5 76 11 85 12 24 0 30 l'.4 108.71% 20 Braidwood 73 2 75 8 75 12 76 3 85 5 30 4 3 110 109.70% 21 WNP 74 8 75 8 75 12 76 4 85 8 12 4 4 112 111.70% 22 Vogtle 73 2 76 8 74 6 78 8 88 3 42 -26 50 115 114.69% 23 Bellefonte 73 5 74 9 7412756 85 2 16 3 6 116 115.69% 24 Braidwood 73 2 75 8 75 12 76 3 86 4 30 4 3 121 120.68% 25 McGuire 70 9 71 4 73 2 72 5 83 4 7 22 -9 131 130.65% 26 Hillstone 73 2 74 5 74 8 74 10 85 12 15 3 3 133 132.64% 32EEE322232323=E 3333332===3EES2=3:E2E33333E232 3333E2=====23323:23333333E3=33323=E33333 24 3 12 100 100.00% 0 1
O O O FIGURE K-20 WATERFORD 3 COMPLETION SCENARIOS 150 140< - 130- -
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[ Chapter L
\ ]i PROJECT MONI'IVRING AND REPOR'I1NG The term monitoring, as used in this report, denotes the process of determining project status and reporting it to appropriate levels of management. The purpose of thic chapter is to examine how this process was fir.plemented on the Waterford 3 project, and to assess its adequacy as compared to the utility industry norms.
Chapter L consists of two' sections. The first section provides an overview of project monitoring and control; the second evaluates implementation of these methods on Waterford 3. 1.0 Overview of Monitoring and Reporting Engineering and construction of the Waterford 3 project took place during an unstable time period, characterized by a great number of changes in regulatory, labor, socio-political and economic conditions. As a result, the Waterford 3 scope, schedule and budget became rapidly moving targets and the pursuit of project goals a difficult and challenging task. It should be noted, however, that in any environment or under any conditions, there are good and bad solutions. The quality of-a management decision is commensurate with the quality of the [,_] decision-making information. It is, therefore, mandatory that this information be
'V accurate; that it be presented in a form well suited to the needs of various decision makers; and that decision makers take appropriate actions to correct deficiencies and enhance project results.
Following is an overview of how the utility industry met this challenge. DESCRIPTION During the late 1960s the common approach in the utility industry was t.o assign responsibility for project monitoring and control to the Architect-Engineer and/or Construction Manager, and to retain final decision making authority. On a typical project, the AE/CM would prepare the overall project schedule, cost estimate and various detailed plans. These documents, together with contracters' plans would serve as a franie of reference against which to measure progress and performance. The monitoring process began with collection of cost and progress (ata. Cost data were collected by accounting departments from employees' time sheets and contractors'/ vendors' invoices. Work status was measured cs follows: o Engineering progress was determined by discipline supervisors as (O) percent complete of design and drafting for a given building, system or area. Percentage of completion was estimated based l Page Is-1
on t rofessional judgment and some physical milestones. o Procurement status was determined by discipline supervisors and procurement departments. Discipline supervisors estimated the status of specifications; progress of bidding and contract awards was measured by procurement departments. o Manufacturing status was determined oy expediters based on information provided by material and equipment vendors. Progress data were verified through fudits, site inspection and receipt of contract deliverables. o Construction progress was determined by contractors and verified by construction management personnel. Percentage of completion was generally calculated as a ratio of installed / erected quantities to the total planned quantities. Activities which were not conducive to quantity tracking (e.g., condenser installation) were reported as the ratio of manhours expended to total manhours estimated. As suggested above, cost and progress measurements were highly departmentalized; data were collected and recorded within two separate and diverse structures. The cost data structure was usually a code of accounts designed in accordance with the Federal Power Commission's code of accounts and the client's requirements. Progress data structures were fairly decentralized; each functional group collected work progress information in a manner which addrmsed its individual needs. Project status was reported on a monthly (or quarterly) basis. Typical reporting formats included: o Project Status Report providing a narrative description of major accomplishments and problems realized during the reporting period, and an outline of act ities to be undertaken in the near future. l 0 Schedule Status Report depicting planned and actual progress of project activities. o Cost Status Report depicting planned and actual cost of various cost accounts. o Manpower Report depicting planned and actual workhours expended (or number of personnel on the project). o Contract Status Report defining planned and actual progress of individual contracts. Page le2 l
,6- o ' Commodity Status Reports defining planned and actual quantities of materials and equipment installed / erected by construction
(' '} ' contractors. o Various schedules (drawing, procurement, equipment, pipe spool, etc.) defining planned and actual dates of various project milestones. The above reports were prepared at various levels of detail. Summary level reports were forwarded for the client's review; intermediate and detailed reports were (usually) made available upon the client's request. UtiHty companiet used progress reports for information purposes; for control of project scope changes; and for coordination of its activities with the AE/CM's work. In addition, their personnel attended select meetings convened to review work status, analyze problems and discuss alternate solutions. DISCUSSION The monitoring and control methods outlined above are adequate for management of projects involving stable technology and environments. They were successfully implemented on earlier nuclear power projects, and are practiced even today on many _.h.. complex endeavors. However, these methods are not fully adequate C /- for management of evolving technologies in an unstable environment. The key drawback of the above methodology lies in the fact that monitoring and control functions, as well as project status data, are
' fragmentized rather than integrated. Difficulties resulting from this lack of integration are clear if one considers the example shown in Figure L-1 and described below.
Assume that Chart A represents the planned and actual cost of a given plant system expressed in labor hours. The chart indicates that, as of the data cut-off date, 50,000 workhours should have been spent on that system, whereby actual expenditures amounted to only 40,000 workhours. A manager reviewing this chart could reasonably conclude that the subject system will be completed under the budget. In the event his monitoring system did not provide for cost and schedule hitegration, he would be unable to correct this erroneous conclusion until much later. If cost and schedule data were integrated, the progress report would contain information shown in Chart B. A person reviewing this report would come up with a completely different set of conclusions. Ile would determine that actual progress achieved amounts to only ('] 30,000 workhours, and, therefore, the system is 20,000 workhours .(' #) behind schedule and 10,000 workhours over budget. Page Ie3
The need for integration of cost and schedule data were first recognized in the aerospace and defense fields in the mid-1960s Over the next dozen years, several Department of Defense contractors were forced to revise their management methods and include cost / schedule integration concepts. By late 1970, this new technology began to spread through other industries. For various reasons, its acceptance was less than enthusiastic and, generally, slow. CRITERIA The adequacy of the Waterford 3 monitoring and control methods was evaluated in light of applicable criteria shown in Section H-3. Specifically, DMC attempted to find the answers to the following questions:
- a. Were the monitoring and control techniques used at the outset of the project reasonable in light of common industry practice and adequate in light of project needs?
- b. Was there a reliable and valid process for the compilation of internal and external data?
- c. Were there adequate and sufficient management reports and management meetings?
- d. Did LP&L and Ebasco make adequate use of project status data contained in various reports er discussed at status review meetings?
- e. Did LP&L and Ebasco take actions necessary to improve undesirable situations or to resolve problems indicated in the Waterford 3 reports / meetings?
- f. Did LP&L and Ebasco implement an appropriate systen, for control of design and construction changes?
- g. Was the evolution of Waterford 3 mor..toring and control techniques reasonable as compared with the industry norm?
- 2. Evaluation of Waterford 3 M<rdtoring and Reporting Methods and formats used to monitor Waterford 3 status and report progress to LP&L/Ebasco management underwent several changes over the past 13 years. The evolution of these methods / technique: followad the same general pattern as the evolution of construction nanagement organization. The following pages outline this evolution process, describe the key reporting formats and present related findings and conclusions.
Page IA
7Qa o Commodity Status Reports defining planned and actual quantities of materials and equipment installed / erected by construction contractors. o 'Various schedules (drawing, procurement,-equipment, pipe spcol, etc.) defining planned and actual dates of various project milestones. The above reports were prepared at various levels of detail. Summery level reports were forward;d for the client's review; intermediate and detailed reports were (usually) made available upon the client's reciuest. Utility companies used progress reports for information purposes; for control of project scope changes; and for coordination of its activities with ?.he AE/CM's wori:. In addition, their personnel attended select meetings convened to review work status, analyze problems and discuss alternate solutions. DECUSSION The monitoring and control methods outlined above are ads quate for L management of projects involving stable technology and t environments. They were successfully implemented on earlier nuclear power projects, and are practiced even today on many complex endeavors. However, these methods are not fully adequate
- n/ for management of evolving technologies in an unstable environment.
The key. drawback of the above methodology lies in the fact that monitoring and control functions, as well as project status data, are fragmentized rather than integrated. Difficulties resulting from this lack of integration are clear if one considers the example shown in Figure Ir1 and described below. Assume that Chart A represents the planned and actual cost of a given plant system expressed in labor hours. The chart indicates that, as of the data cut-off date, 50,000 workhours should have been spent on that system, whereby actual expenditures amounted to only 40,000 workhours. A manager reviewing this chart could reasonably conclude that the subject system will be coinpleted under the budget. In the event his monitoring system did not provide for cost and schedule integration, he would be unable to correct this erroneous conclusion until much later. If cost and ' schedule data were integrated, the progress report would ~ contain information shown in Chart B. A person reviewing this report would come up with ~a completely different set cf conclusions.
- He would determine that actual progress achieved amounts to only
- A . "/)s - 30,000 workhours, and, therefore, the systen is 20,000 workhours ,
behind schedule and 10,000 workhours over budget. l l l Page Ir3 i e _ _ m -m_ , - - - . . _ , _...,,...-,m., -_._----,,...,,m---...,,,------,_----m-,---. .-
c - The need for integration of cost and schedule data were first recognized in the aerospace and defense fields in the mid-1930s. Over the next dozen years, several Department of Defense contractors were forced to revise their management methods and include cost / schedule integration concepts. . By late 1970, this new technology began to spread through other industries. For various reasons, its acceptance was less than enthusiastic and, generally, slow. CRITERIA The adequacy of the Waterford 3 monitoring and control methods was evaluated in light of applicable criteria shown in Section H-3. Specifically, DMC attempted to find the answers to the following questions:
- a. Were the monitoring and control techniques used at the outset of the project reasonable in light of common industry practice and adequate in light of project. needs?
- b. Was there a reliable and valid process for the compilation of internal and external data?
- c. Were there adequate and suffielent management reports and management meetinge?
- d. Did LP&L and Ebasco make adequate use of project status data contained in various reports or discussed at status review meetings?
- e. Did LP&L and Ebasco take actions necessary to improve undesirable situations or to resolve problems indicated in the Waterford 3 reports / meetings?
- f. Did LP&L and Ebasco implement an appropriate system for control of design and construction changes?
- g. Was the evolution of Waterford 3 monitoring and control techniques reasonable as compared with th(- industry norm?
- 2. Evaluation of Waterford 3 Monitoring and Reporting Methods and formats used to monitor Waterford 3 status and report progress to LP&L/Ebasco management underwent several changes over the past 13 years. The evolution of these methods / techniques followed the same general pattern as the evolution of construction management organization. The following pages outline this evolution process, describe the key reporting formats and present related findings and conclusions.
Page Ie4
g 3 p \.- . DESCRIPTION Ebasco's project monitoring and reporting philosophy is based upon cb the baseline management concept. In simplest _ terms, this concept requires that: o Technical, schedule and budget baselines are established at the outset of a project; o Technical, schedule, and cost performance is continuously measured against the baselines, and project status reported to appropriate levels of management; o When planned accomplishments and actual results diverge significantly, corrective action is planned and implemented to resolve deficiencies, and; o integrity and validity of baselines is maintained throughout the projact life cycle. Waterford 3 technical baseline is defined in PSAR, FSAR, drawings, specifications, reports and other. technical documentation. Schedule , baselines were established through a Milestone Schedule and other scheduling formats discussed in Chapter K. The budget baseline is represented by project estimates and contract / work psekage budgets. , Methods and formats used in monitoring technical and schedule i baselines are discussed in other parts of this report. This section . will consider the monitoring process evolution and focus on some of i the key reporting formats. PROJECT EVOLU'ITON The evolution of Waterford 3 monitoring and control practices is shown in Figure L-2. The figure identifies project phases and [ depicts the following information for each phase: o Prevalent contract types o . Principal project tools o Emphasis of project organization o Project _ control responsibilities and interfaces o Project control staffing As Waterford 3 proceeded through engineering, civil construction and
- other- project phases, Ebasco introduced several new reporting Page Ir5 m
formats and project review meetings. These new reports and meetings were often established based on LP&L's guidance and implemented if concurred in by LP&L's project management. Reporting formats and meetings used during various Waterford 3 phases, are identified in Figures L-3 through L-7. the following information is provided for each individual format: o Report Title o Report Purpose o Organizations responsible for compilation of input data and report preparation o Personnel responsible for report review o Primary report users Following is a brief description of the key reporting formats used during the various project phases. MONTIILY PROGRESS REPORT The Waterford 3 Monthly Progress Report was first issued in October, 1971. This report represents one of the primary tools for monitoring Waterford 3 status and communicating it to the various project participants. Its format and contents were revised several times during the project life cycle; in each phase, however, the report consisted of a narrative analysis of project status, and various reporting formats identified in Figures L-3 through L-7. The following paragraphs provide a brief outline of the major sections of the Monthly Progress Reports,
- a. Transmittal Letter: A summary of major accomplishments and significant problems and trends requiring management attention,
- b. Overall Project Accomplishments Chart: Graphical depic;. ion of the actual versus planned accomplishments. A formula used for calculating percent complete used the following weight factors:
(1) 50% for engineering, (2) 10% for procuremcat, and (3) 40 % for constructica. Figure L-8 displays the overall progress curve. The report included similar graphs for engineering, construction, and procurement. During the interviews with Ebosco's management personnel, DMC was informed that the overall project percent complete of Page L-6
l M L P? ~ the 'Vaterford 3 Project was based on Ebasco's Project Management
,g ~ Procedure, Number PM-64 dated November 3,1975 entitled " Project
'* ' Percentage Completion". The methodology outlined in this procedure had been used by Ebasco prior to 1975. Its issuance as a formal
. procedure in'1975 established the methodology as the official method
. of calculating percent complete on all Ebasco projects. .
i' The: weights established and documented in the procedures were the I - result of a study Ebasco had conducted on its in-house projects (both- completed and active projects 'as of 1975). The cost of engineering, procurement, and construction services from these : historical projects, as compared to the total. cost of services, was used as a guide in determining the relative distribution.
- c. Construction: A narrative overview of construction activities prepared by the Project superintendent. in addition, .this section included a project Milestone Schedule and photos
~ depicting construction progress. The narrative portion of the report included a discussion of schedule variances. L rf d. Plant Operations: -Review of LP&L readiness for plant F operations defining progress achieved, problems and hardspots, 7 - . staffing levels and status of the Plant Operations Manual. q >1 . e.: Start-Up: Review of the overall start-up effort including l Prerequisite testing, Preoperational testing, -Integrated testing l and procedure production. This information 'was reported both L in narrative form and via time-phased progress charts (see , Figure le9). !. f. Engineering and Licensing: A detailed analysis of design and licensing activities with emphasis on problem resolution. In [ addition, this section-included: charts depicting the status of L drawing' releases,- changes to engineering requirements, and , schedule milestones; logic flows for. critical sample report on the cable and conduit list status.
- g. Proenrement: A narrative prepared by the project senior buyer describing the status of bid issuance, order shipments and
~
b contractual changes. It also included a narrative of critical orders and, at one time during the early mechanical installation [ phase, it statused valve procurement in detail. V . h.. Quality Assurawe: . A. narrative depicting status of project QA activities prepared by the Project Quality Assurance Engineer. , The report also included a list of visits made to the vendars' g, facilities. Page Ic7
)
- i. Project Changes: A listing of all proposed changes which are undergebg review / approval; Figure Ic10 provides a sample list.
In addition, this listing included project exposures. J. Cost: A narrative discussing the total potential project cost. This section also included the Cost Summary Report and the cash flow variance listing providing traceability of project expenditures. These formats are discussed further below. OTIIER MONITORING TOOIE In addition to tb onthly Progress Reports, Ebasco used several other reporting tous. These tools can be grouped into four categories: schedule, cost and production, quantity tracking and master tracking. Following is a brief description of some of the formats used in Waterford 3.
- a. Production and Productivity Curves The production and productivity curves were developed for each contractor's craft manpower and for the significant bulk quantities which the contractor was installing. These charts were included in the Monthly Progress Reports. In late 1981, the major construction contracts were also converted to -
productivity incentive fee arrangements basec on the productivity figures. A san.ple production and productivity chart is 1.hown in Figure L-11. This method of quantity and productivity tracking was developed at Waterford 3 and later adopted on several other Ebasco projects. The top portion of the chart provided productivity information: a productivity factor greater than 1.0 indicates poor productivity and a productivity; factor which was les than 1.0 was considered to be good. The productivity factor for each bulk commodity was a reflection of actual performance against the estimated unit rates for that particular quantity item. Productivity was calculated in accordance with the " earned value" method. Installed quantities were multiplied by the budgeted unit rate to obtain earned value manhours. The earned value manhours for the c,uantity iteins were then added to the actual manhours expended on other non-quantitative items (level of effort) to 4tain the total earned value for the period. The earned value manhours were then divided into the actual manhours expended to obtain the productivity factor. O Page le8
The body of -the chart depicts the planned and actual monthly f] (in bar form) and cumulative (in line form) quantities installed or manhours expended. At the bottom of the chart, the actual and planned cumulative figures are shown through the preceding month and the current m onth'. The difference in these two figures is the actual or planned for the current month.
- b. Project Quantity and Manhour Report (PQMR)
The PQMR (see Figure Ir-12) displays quantity and labor hour data either by cost account, order, subcontractor, or work area. The. display format is the same. During the civil construction phase, the Base PQMR Report was used ;o compare actual manhours spent against budgeted manhours, physical percent complete against manhour percent complete, and actual unit rates against budg-sted unit rates. As work progressed more into the bulk phan, the earned value calculation system became more significant than the unit rate data from the PQMR. Earned value provides a more accurate representation, especially at summary levels, than the more g traditional methods of assessing status, and also permits j j produtivity calculation. Lj Monthly, an anal; sis of progress based on percent complete achieved, quantities installed and earned value manhours versus actual manhours, was prepared by the Cost / Schedule personnel and reviewed with the responsible Construction Superintendents. This data was summarized in the Progress Analysis Report.
- c. Progress Analysis Reports This report represented one of the primary tools used to monitor Waterford 3 construction from mid-1979 to late 1981.
It consisted of several tables and groups presenting earned value data, and/or narrative analysis of schedule impacts. The report is structured by contractor. Figure Ie13 presents a sample fctmat depicting the status of the piping installation contract.
- d. Cost Report Waterford 3 Cost Report consists of several tables and l narratives depicting budgets, expenditures, forecasts, variances,
('] cash flow and other relevant cost data. This information is ! X',) reported at various levels of summary. Figure L-14 depicts a l sample of the Project Cost Summary Report. Page le9
- e. Quantity Tracking Tools The Quantity Tracking tools used at Waterford consist of five individual compu*erized commodity tracking systems, and one manual tracking eystem. Their purpose is to trace the commodity status from engineering inception through to completed installation. The computerized quantity tracking systems include:
o Piping Component System o Equipment Component System o Electrical Management System o Electrical Progress Measurement System o Material Tracking System (Instrumentation) Quantity tracking began with development of quantity takeoffs from the engineering drawings. These takeoffs formed a data base of information for each uniquely identified commodity. In case of piping, equipment and electrical cable, the takeoffs provided the means for cross-referencing each component to a work area, process system and start-up system. With this identification and the schedules discussed previously, specific delivery requirements were identified and used as a basis for expediting. In addition, the quantity takeoffs provided specific quantity data for cost forecasting. Other tracking functions of Quantity Tracking included monitoring of promised and actual delivery dates- QC status of received material; status of issuing material to the contractors; and installation status. Information regarding actual quantities installed was reported by contractors. The Quantity Tracking group verified this input and reported summary information to Cost, Scheduling and Consiruction supervision. In addition, actual quantities were used as report data for the PQMR, Production and Productivity Curves, Earned Value Calculations and Cost Reports,
- f. Master Tracking System The Master Tracking System (MTS) was established at Waterford in early 1980. Its primary purpose was to provide traceability and accountability for completion of open items. These items included punchlist items, Quality Assurance and Quality Control deficiency items, Engineering Information Requests (IR), Fielo Page IMO
-N Change -Requests (FCR), Design Change Notices (DCN) and
( ' ~) Condition Identifi ation Work Authorizations (CIW A). In addition, MTS was used to scheCle completion of the open items and to prioritize closure activities. MTS reports were available in a wide variety of selections and sorts, A sample report is shown in Figure Ie15. DISCUSSION Monitoring and reporting methods and formats used during the course of the Waterford 3 project were similar to the common power industry practice. In general, we believe that these methods and formats contained all basic information necessary to monitor and control the status of engineering, procurement, construction and start-up activities, but that this information was not always developed and presented in a manner best-suited for effective project control. Following is a summary of the strengths and weaknesses of the Waterford 3 monitoring and reporting process:
- a. Status monitoring and reporting was initiated at the outset of the project; the format and frequency of the early reports was 7
adequate for control of design and procurement activities.
- b. Progress and cost was reported against plans which integrated engineering, procurement and construction activities. Contract performance was monitored by means of the earned value method; use of this method as early as 1977 is significantly ahead of the industry norm.
- c. Project cost variances and financial exposure data contained in cost reports provided adequate visibility of project cost status and potential cost increases. This aspect of the Waterford 3 project monitoring methodology was above the industry norm.
- d. As the project proceeded through its various phases, reporting formats and status review meetings evolved to address unique needs of each individual phase. The evolution of the monitoring function followed the evolution of the project management organization. This f act suggests that the monitoring function evolved by dc.ign rather than by accident.
- e. There was a sufficient number of projects status review meetings. All meetings were open to LP&L Company. As discussed in the Contract Administration chapter, this openness
(~' , is unusual, commendable and above the industry norm, i > Page Iell
- f. The Ebasco personnel responsible for the monitoring and reporting function were well qualified and experienced. Their cumulative experience averaged over the project duration amounted to an average of 14 years per man in the power field and over 11 years in the nuclear industry.
Waterford 3 monitoring and reporting also had certain weakneues. These weaknesses are less pronounced than deficiencies we found on other nuclear projects. The most significant weeknesses in Waterford 3 monitoring and reporting included the following: o Project cost and schedule data were not fully integrated at all levels of planning. o The formula used to compute the total project percent complete reported in the Overall Project Accomplishments chart was inaccurate. (We were informed by LP&L that the low value of the overall project formula was recognized and, therefore, did not place much emphasis on it.) Problems which can result from the lack of cost / schedule data integration have already been explained in Section L-1. In a summary, the lack of complete integration decreases visibility of project status, variances from plans and potential problems. This deficiency was reported to LP&L and Ebasco management in an independent management diagnostic report issued in September,1977. LP&L directed Ebasco to review this and other deficiencies and take appropriate corrective action where necessary. Ebasco addressed LP&L's concerns in a formal report issued in November of 1977. With regard to cost / schedule integration, Ebasco stated the following:
"A major project, such as Waterford #3, requires a number of Integrated management information and reporting systems in order to properly control the job in the inter-related areas of cost and schedule. These systems are also needed to make meaningful management decisions. Control systems to be effective must not only fulfill the requirements of the Project Manager,but those of the Owner, Enginect-Constructor Management and Team Leaders to the first line supervisors.
Ebasco had developed and is utilizing four levels of planning, scheduling and reporting for the Waterford Project. These systems are designed to provide not only work scheduling and control but also reporting for the various management levels concerned with the Project. The system is integrated with programs that tabulate material supply requirements and provide manhour and productivity performance data to our reporting / forecasting system. Page L-12
. = -
O 1 / We feel that the Consultant 1 may have been misled in evaluating U Ebasco project control programs first, because of the large amount of time spent with one contractor operating under a firm price contract and second, because of their failure to evaluate programs which Ebasco has utilized on previous projects and which are operational or under development for monitoring the other contractors at Waterford." Later in the report Ebasco described the systems used in management of Waterford 3, and identified the Cost / Schedule System and other earned value, based reports which accomplished the integration of cost and schedule data. DMC believes that the difference of opinion expressed in the two reports is because, while Ebasco had cost / schedule integration capabilities, its system was not fully integrated. We find that, at the time, Ebasco's position was fully justified because: o Ebasco had successfully completed several nuclear and fossil power plant projects using similar, but less developed methods than those used on Waterford 3. []- o Ebasco was aggressive in enhancing its management methodology; (f its ability to integrate schedule and cost as early as 1977 proves that the company was among the most advanced AE/CM firms in the industry. o Experience with the use of fully integrated cost / schedule control systems was low in general, and practically nonexistent in the power industry; there was no firm reason to believe that such a system would yield better results. o The Waterford 3 project was in its eighth year, and core loading wt.s planned three years later; implementation of a completely new system late in the project life cycle is risky and can prove traumatic. Due to the above reasons, DMC, Inc. believes that Ebasco's response was not an attempt to hide deficiencies, but the expression of the company's conviction that its management methods are well suited to Waterford 3 needs. Lacking clear reasons to the opposite, LP&L's decision not to force a major change in planning / monitoring methodology was prudent. y/. 1Consulting firm's name was removed by DMC, Inc. Page Ie13
The other deficiency of the Waterford 3 monitoring and reporting methodology (total project percent complete formula) can best be explained through an example. In the Monthly Progress Report issued in January of 1980, Ebasco reported the following project status: Engineering 97.7% complete Procurement 95.6% complete Constmetion 76.0% complete Based upon the above information and the 50/10/40 formula discussed earlier, Ebasco computed the overall project status as shown below. Engineering 97.7% X 50% weight = 48.85% Procurement 95.6% X 10% weight = 9.56% Construction 76.0% X 40% weight = afL40% Total Ebasco Managed Effort 88.81% The above percent complete is correct only if the relative weight of engineering, procurement and construction are indeed 50%,10% and 40% of the total project cost. DMC considered the above computation in light of data contained in August,1979 project budget, which was in effect in January,1980, and which was based primarily on the Ebasco D-7 estimate. This budget provided the following breakdown of Waterford 3 costs: Materials $296.4 million Contracts $295.3 million Indirects $ 93.9 million Ebasco $154.1 million Contingency $JJ).3 .million Total Cost Managed by Ebasco $860.0 million LP&L's Expenditures $_89.5 million Total Cost (excluding AFUDC) $949.5 million To assure that our evaluation is conservative, we assumed that Contingency is directly proportional to direct cost of engineering, procurement and construction and that all Ebs3co costs are engineering related. Based upon these assumptions we computed the following: COST WEIGHT Procurement (Materials) 303.6 35.3% Constmetion (Contracts & Indirects) 398.6 46.3% l Engineering (Ebasco) 157.& .lB.43i Total Ebasco Managed Effort 860.0 100.0% Page L-14
J ' " -
'-c - = - b
- f. b .
n 4
- If the above weights are input into the total percent complete 3 formula, the overall percent complete is computed as follows:
\
Procurement 95.5% X 35.3% weight = 33.71% Construction 76.0% X 46.3% weight = 35.23% Engineering- 97.7_% X 18.4% weight = E93% > Total-Ebasco Managed Effort 86.87% Ebasco reported value (88.81%) and the percent complete shown above are, clearly, different. This _ difference was far greater in early project phases. For example, in January,1976, Ebasco reported. that its effort was 57.1% complete. Using the weights ;
- shown' above, we compute Ebasco's progress at 42.2%, approximately
- 15% less than that reported. The above analysis indicates that ,
Waterford 3 progress was overstated throughout the engineering phase. As procurement and construction proceeded, the difference grew smaller and, by 1978, it becamt inconsequential. I It should be noted that the effects of this deficiency were mitigated by the fact that Ebasco prepared separate prcgress charts for engineering, procurement and construction work, and LP&L recognized the deficiency and placed low emphasis on the overall project formula. Also, and in fairness to Ebasco, most of the other
.. 'AE/CM's we are familiar with used similar experience-based formulas
[ for computation of.the overall progress, or did not report it at all. !A' , CONCLUSIONS DMC, Inc. evaluated monitoring and reporting techniques used on Waterford. 3. In light of criteria defined in Section L-1. Based upon this analysis we have determined the following:
- a. . Techniques used at the outset of the project and throughout its 1, duration were appropriate in light o# the common industry
. practice.
- b. Methods used to compile internal and external data were ,
reasonable. With_ the exception of deficiencies we discussed I~ earlier, . data reported to LP&L appear to have been valid. l
- c. -In combination, progress reports and status review meetings did provide the management with information necessary to direct project work.
- d. LP&L and Ebasco made adequate use of project status data and,' as demonstrated in other sections' of this report, took -
-corrective actions to resolve problems and enhance performance.
l?n)'
- e. The system used to control design and construction changes was well developed and adequately implemented.
o ! Page L-15
. _ . . .. ~ _-. . _ . _ _ _ . _ _ . _ . _ . _ _ _ . _ _ - - .. . _ _ _ _ _ - .
- f. The evolution of the Waterford 3 monitoring and reporting methodology compares favorably to the industry norm.
Based upon the above considerations, DMC, Inc. concludes that LP&L has acted prudently with regard to the above subject. We recommend, however, that all of the company's future projects be monitored by means of a fully integrated cost / schedule control system. O O Page Ie16
F i I i FIGURES i s l l l l l i Page L-17
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" Project Fagineer Diecipline 5hatneer Construction Desten Supervisor Project Scheduling in New York Maintain forecaste to Project buyer complete droutage Project Cost / Schedule Engtseer Construction Manager Spectitcation And Some As Above Required Issue dates for Beme As Above Procurement Schedule ---------- -------- Same As Above spectiteetions and Same As Abave bid docuneite Required at alte dates to support 3
Construction 1 1 CFM Schedule Licensing Engineering /Destan, Maintain Project Sche & ale Ebasco Project Manager LP&L/haseo Project & Procurement, Construction, Identify areas " Construction Manager Start-Up Senior Management critical to meeting a Project Engineer imod Discipline ochedule " Project Super 1atendent Engtasere Project Scheduling in New LP&L York Project Buyer Cometruction Manager 4 , Project Estimate Ebasco Engineering /Dreign, '! Estabiteh total project hasco Project Manager LP&L/Ibasco Project & Construction cost
- Construction Manager j ................... Senter Management Provide quantity and a Project Engineer Project Cost /Scheeste Ebasco Estimating in aanhour date for " Prp;act Supertagendent
! Engineer
'ow York performance LP&L measurement i
1 ) Monthly Project Cost Ebesco Licensing Engineering / Identify coat impacto 1 Ebasco Project Manager LP&L/hesco Project Analysta Summary Deatga, Construction that were tecngnised a Project Engineer and Senior Report ------------------- se either probable a Project Superintendant Management Protect Cost / Schedule Engineer or potential FIGURE PROVIDED BY LP&L i i e
FIGURE L-4.1 CIVIL CONSTRUCTION PHASE REPORT / RESPONSIBILITY MATRIE SHEET 1 of 2 INPUT / RIPORT5 PREPARATION PURPOSE REVIEW USED Drawing Schedule Base As Entineering N ee same As Eng.neering game as Engineering Same A6 Engineering
.................. N se Phase N se Same As Engineering N se Specification and Same As Engineering h oe Same as Engineering Same As Engineering Same As Engineering Procurement Schedule .--------.---.---- N ae N ee Phase Same As Engineering Phase s
CPM Schedule Same As' Engineering Phase Same As Engineering Same As Engineering Same As Engineering
-- - =----
N ees plus, Controt N eeg plus Ebasco N ees plus, Project Scheduling in N.Y. and direct construction eng Contractor Project Supt. plus construction efforts toward critical Super 31ston constr. Schedultog Scheduling areas Constr. Supts. Project Eatinate Same As Engineering Phase Same As Engineering Basco Project Manager 1.PR/Dasco Project
.................. N oe " Site Manager and Senior %t.
Same As Engineering Nae " Project Engineer Const uction Control
" Conatruetton Controf Crcup Superintendeat
" Project Superintendent 176L Monthly Project Cost Same As Engineering Phase Same As Engineering Same As Engineering Same As Engineering Analysis Sumanry ------------------ N ee N oeg plue N ee taport Same As Engineering Phase Construction Control Superintendent l FIGURE PROVIDED BY LP&L 9 O O
v s s FIGURE L-4.2 CIVIL CONSTRUCTION PHASE REPORT / RESPONSIBILITY M&TRIE INPur/ Sheet 2 ef 2 kPORTS PREPARATION PURPOSE AEVIEW USgD i i Project Quantity / bat Quantity Tracking Cost Control Tool hasco Site Management l Report (PQMR) Time Sheete Cov.atructica Controle. i Status of Actual Contractor & BSI Coat Engineering manhoure
---=- ----
Supervisor and quanttelee Conettuction Controla installed by account tottasted manhours and quantittee by account Percent complete Eattented and f actual unit rates I Cost Report / Cash Flou hasco Licensing, Identify changes in hasco Project Manager IJ6L/I!basco Project 3 Engineering, Construction, Project Coat and " Site Manager & Senior llenagement Procurement and Cash Requiremmate " Project Engineer i Construction Controla, Accounting " Conatr. Control Accounting Superintendent Construction Controla " Project Superintendent 176L Detailed Contractor Parameters by hasco Direct contractor Schedules hasco Canat. Controle Construction Controla, 3 Conalatent utch CPM uork and Constructice Superte-j Contractor & h asco Contractor Superintendente Provide input for tendente 4 --* - Supe. Ebasco monitoring ] Contractor 4 e l Production Curves (pantity Tracking Actual quantity installed Ebasco Site Management, Constructica Controle,
.................. compared to schedule j
Contractor, 4t., LP6L Contractor 6 haeco Conetruction Contrale Supw. T d FIGURE PROVIDED BY LP&L ,t I i
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FIGURE L-5.1 gu1Jt QUANTITY INSTAU.At10N CONSTSUCITON PHASE REPORT /Kr.SronSIBILITY MATE!E Sheet 1 st 2 INMill RTP0kTS PREPAAATION PURPO*E REVIEM t! SED Drawing Schedule; Same As Engineering Phase; Same As Engineering Sams As Enstneering Phase Same As Engineering plus, Critical plus, Construction Supts. Phaseg plus, identify Phase treme List -- =-- most urgent design Same As Engineering phase; requiremente plus, Resident Engineer Spectitcations and Same As Engineering Naeg Same As Engineering Same As Engineering Phase Same as Engineering Procurement $d.eduleg plus Ccmatr. Supts. N eos plus plus, Critical itesa List Same As Engineering N aeg Identify most urgently plus, Constr. Control needed materlata CPM Sshedule Same As Civit maae Same As Civil N oe Some As Civil N ee Same As Ctest Phase Same As Civil Phase Munthly Project Cost Some As Engineering N ee Same As Engineering Some As Civil Phase Same As Engineertag Analyste Summary ------------------ Phase Phase Report Same As Engineering Phase Project quantity / lei Same As Civil Phase Same As Civil N oe Same As Civil N oe Same as Civil N oe Esport (PQMR) ------ ------ Same As Civil N se Coat tsports/ Cash Flow Same As Ctett N ee Same As Civil Phase Same As Civil Phaseg Same As Civil Phase
.................. plus, Contractor Same as Civil Phase Management Detatted Contractor Same As Civil Phase Same As Civil Phase Sans As Civil N ee Same As Civil N ae Schedulse ------------
Same As Civil Phase FIGURE PROVIDED BY LP&L O . O O
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FIGURE L-5.2 J ! BLIK QUAprf!TY INSTAILATION CUNETRifCTION PHASE i REPORT / RESPONSIBILITY h&TRIE Sheet 3 of 3 INPUT / aEPotTS PasPARAT10m PuaPost Review USup Deta18ed Area Construction Controle Coordinate Contractore Baeco and I.mtractor heece and Centracter
.laterface nasco Superwtatom in work area Supervleton Supervistaa m.3ee -
Casatruction Controle Production & Pro- Some As Civil Phase Same As Civil Phase Some As Civil Phase Some As Civil Phase ducttirtty Qirves .-----------..---- I Same As Civil Phase Cost / Schedule Plana Eattmating, quantity Establish both a cost & Site Management Centractore Tracking Schedule baseline Project Management Cemetruction Super. Cost Engineering. Design for performance LP6L Constructice Centrole
- Procurement Constr. measurement Rome. Hamagement l Supervistan. Contractor including earned
] Supervietoa value and productivity information 4 - j Construction Controle f 4 Weekly Performance Ebasco Construction Detailed annitoring and Site Management j Site w usement Review heeting Supervleton and review of performance Construction Supervieton Constr. Supervleton Construction Controle against plana and Resident Engineering heeldent engineering
....-............ ochedujee Construction Control Cemetturtion Centrol Construction Controle Project Enstaeerlag Project Eastneering Procurement /Espeetting Frocurement/hnpoetttag Pt>nthly Progresa Dasco Construction Analyze contractor haeco $1te Management D6L and hasco Analyste Report Superviston and and overall project and Construction Project and setor 1 Contractors monthly progrees Superwtelon P*
Construction Centrole 3 Constructton Cuntrole h asco N.V. Cent / a~ Scheesitas FIGURE PROVIDED BY LP&L I d
FIGURE L-6.1 STAkT-UP CONSTRUCTION PHASE REPORT / RESPONSIBILITY MATRIX Sleet 1 of 3 INPUT / REPORTS PREPARATION PURPOSE REVIEW USED Drawing Schedule 6 Same As Bulk Phase Same As Bulk Phase Same As Engineering Phase Some As Engineering Critical Items List ------------------ Phase; plus, Same As Bulk Phase Start-Up Croups Specification and Same As Bulk Phase Same As Bulk Phase Same As Engineering Phase Same As Ent,ineering Procurement Schedule ------------------ Phase; Plus, cnd Critical Items List Same As Bulk Phase Start-Up Croups CPM Schedule Same As Civil Phase; plus, Monitor criticality of Same As Engineering Phase; Same As Civil Phase; LP&L Start-Up Start-Up Requirements plus, Start-Up Croups plus, Start-Up
.... ............. Groups Same Ls Civil Phase; plus LP&L Start-Up Monthly Project Cost Same As Engineering Phase Same As Engineering Phase Same As Civil Phase Same As Engineering Analysis Sununary ------------------ Phase Report Same As Engineering Phase Project Quantity And Same As Civil Phase Same As Civil Phase Same As Civil Phase Same As Civil Phase Manhour Report --- '--------------
Same As Civil Phase Cost Report / Cash Flow Same As Cf vil ihase Same As Civil Phase Same As Bulk Phue Ssme As Civil Phase Same As Civil Phase FIGURE PROVIDED BY LP&L O O O
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v ( 1 x FIGURE L-6.2 START-UP CDhSTRUCTION FNASE REFURT/RESFonSIBILITY MATRIE Shoot 3 of 3 INPUTl REFORTS PREPARAT1 W PURFOSE REVIEW USED Munthly Centractor Ebasco and Contractot Supwen. Prohce en acceptable Hot Required Some As Clelt Phase Schedulee --~ -------- schedule without metas I Centractore en eatenalve review cycle Produccion and Product- Same As tulk Phase Same As Bulk h oe Same As Sulk N ee Same As Bulk Phase , twity Curves -------- - -- Same As bath Phase Some Ae Eulk h oe Same As tulk Phase Some as halk hee Cost / Schedule Plane Some As Bulk Phara Same As Sulk Phase Some As Bulk Phase Saw de Sulk Phase Same As Sulk Phaos Same as Bulk Phase Same As Bulk Phase Some As bulb Phase Start-Up Completion Engineering, Start-Up Schedule Ramatatng LP R Start-Up LF E Start-Up Schedules Constr. Supervisten Constr. Work Ebaeca Constr. Supvoa. Ebaeco Cons. Supuse. Coatractera. Constr. to support and Contractore and Contractore Control Start-Up Syerem releases ! Constr. Control St-Weekly Bulk Same As bulk Phase; plus Same Aa Bulk Phaseg Same Am Bulk Phase same as Bulk Phase Performance Start-Up System plus, emphestze , Mmetings Comptetton Status system completton q ...- ........ j Same As Bulk Phase i Weekly Start-up MIS Content Revleu specific ites Contractor Constr. $lte semanger l Status Review status of Start-Up Supervisore Project Superintendent Meetings Construction Start-Up Systees Ebasco Constr. Supvre. Ebasco and Contractor ESSE Engineering Cometr. Supers. l IM L Start-up thL Start-4 FIGURE PROVIDED BY LP&L i a 4 i )
FIGURE L-6.3 START-UP CDNSTRUCTIf PHASE REPORT /RESPONSIBILIT's TTRIX Sheet 3 of 3 INPUT / REPORTS PREPARATION PURPOSE REVIEW USED Ev nt Coordination MTS Content; Ebasco and Assure completion date All leads of Ebasco and All leads of Ebasco Meetings Contractor Supervision, of the Milestones LP&L Construction and LP&L Constr. LP&L Start-Up on schedule Management, Constr. Management, Constr. Supervision and Supervisf an and Event Cootdinators Start-Up plus Start-Up Ebasco and LP&L Senior Management Matter Tracking System Ebasco, Contractor and LP&L Provide a co m n All input groups and All input s.nd review R ports Engineering, Construction collection and Ebasco and LP&L groups Start-Up, Quality Assurance status point for all Site Management and Scheduling Croups outstanding documents and work items Master Tracking Department FIGURE PROVIDED BY LP&L O O O
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FIGURE L-7 START-UP SYSTEM / AREA PHASZ REPORT / RESPONSIBILITY MATRIX INPUT / REPORTS PREPARATION PURPOSE REVIEW USED Engineering Task Engineering / Design, and Identify and schedule Tables Project Engineer Construction Controls Procurement all remaining Construction Controls Prnject Management Engineerir.g work Cucetr. Supt. Project Cost /Sched. LP&L Start-Up Engineer Start-Up/ Area Ebasco & Contractor Completion of Construction Not required, users Developers plus Completion Construction work to satisfy both participate in Project Mst. . Schedules Supervision, QA, Start-Up and Operations development Construction Nat. LP&L Start-Up, Engineering requirements, especially LP&L Start-Up in closing areas Construction Controls Task Completion Engineering Procurement, Maintain and report Construction Control Developers plus Schedules Ebasco & Contractor status of specific Engineering Project Mgt. Construction Supervisors identifiable tasks Construct. ion Construction 4t. LP&L Start-Up
' Construction Controls FIGURE PROVIDED BY LP&L
FIGURE L-0 OVERALL P.0 JECT ACCOMPLISHMENTS resmuu ren nenus cesws 19919458 P9fft 8 Utsi CORPART WAfttittI Sf3 59113 constmenes ses 1976 1977 1978 1979 1980 1981 mg = = h
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FIGURE L-10J 4/3C/79 SERVICES COST UPDR*E STATUS PACE 2 of 3 5 000 PREVIOUS CHAN"IS RIVISED COST EFTIn *E TE!! PEPICD COST Ef?!MAM SCHEDC:.ED COST ren ESASCo $128,900 8978 5129,878 SEPVICES EXTENSION OT SCEELVI.E 6,400 6,4CC ( 8 Moh7BS ) PENDING ITEMS AND TUTURE ADCERS: 0.0.5.rEE COMPENSATION $ 35 $ 35 PROJECT DELAY TIE $ 2.889 -0 2,889 CCMPENSAT2CN CONSTPUCTION W.NAGEMENT $ 3,330 3,330 FEE COMPENSATION SYSTEM DESCRIPTIONS 419 419 STARTUP Pr.R. SONNE!. 7,681 (273) 7,409 PROJECT MANAGEMENT CONTINGENCY
= 0- =0-7cTA:, 8149,654 8705 8150,359 EXPLANATION OF CHANGES t
- 1. Isarease in schedule cost for services as identified int a) Lw3-742-79 Basger spring Constar.ts 5 39 b) Lw3-738-71 Increase in Purchas;ec Activities 6 41 c) LW3-758-79 RCB Mod 61 Adjustment $ 15 d) Lw3-790-79 Fuel Bandling Bridge Crane 8 5 a) IJt3-7 9 2-7 9 IEW & Buf f alo Forge Procurem**.t Anivitiess 57 f) Lw3-795-79 Turbine slag Maint Coopy Lighting 8 2 i g) LW3-800-79 FSAR Defense Mandays $446 i b) LW3-845-79 Dravo Piping Coetract 8 80
- 2. Transfer to scheduled cost for services frce pending itana:
I a) Lw3-743-79 Startup Personnel $100 l M ' w3-7 91-7 9 Startup Personnel 5 93 FIGURE PROVIDED BY LP&L 9
FIGURE L-10.2 Paoc et CM1AGEC STATt*5 PAGE 3 cf 3 27tn sEstr.inzen Pzrrten:ts 2796.125-14 Additional Construction Management Services 2796.125-15 Project Delay Pending ont-of-scopeo
.132 Pipe Support /Bestraint Interference LW3-1914-76
.309 Change in Control Aoor. - Eliminate Unit 4 LW3-710-75
.322 Architectural Changes for Aesthetic Purposes LW3-1979-76
.516 Effect cf Won-Safety Class Piping on safety Related Equipment LW3-1112-76
.525 Plu:r.bing Seimic Support Design (RA3 in lieu of S&P) LW3-1976-76 5,
L l l FIGURE PROVIDED BY LP&L l
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- t. ARhtto/C. HALL O O O
PART IV Cm . WATERFORD 3 TECHNICAL FUNCTIONS PAGE l CHAPTER M - INTRODUC'I1ON 'ID TECHNICAL FUNCTIONS .i CHAPTER N - IJCENSING
- 1. Nuclear Power Regulation 1
- 2. Waterford 3 Licensing Organization 5
- 3. Conduct of Waterford 3 Licensing 10 Methods
- Figures 17 CHAPTER P - ENGINEERING l
- 1. Introduction 1
- 2. Evaluation Criteria 1
- 3. Description of Waterford 3 2
- 4. Waterford 3 Engineering Organization 8
- 5. Conduct of Waterford 3 Engineering 12 Process Figures 23 CHAPTER Q - PROCUREMENT
- 1. Overview of Procurement Function 1 and Evaluation Criteria
- 2. LP&L Procurement 5 Figures 12 CHAPTER R - CONTRACT MANAGEMENT
- 1. Overview of Contract Administration 1
- 2. Waterford 3 Contract Administration 4 Figures 9 l
l v
=_
l r PART IV WATERFORD 3 TECHhlCAL FUNCTIONS (Continued) PAGE CHAPTER S - CONSTRUCTION Evaluation Criteria 1 1. Construction Management Team 2 2. Construction Management Process 7 3.
- 4. Construction Support Functions 14
- 5. Significant Construction Methods 18 Figures 19 CHAPTER T - QUALITY ASSURANCE Overview of Quality Assurance 1 1.
l 2. LP&L QA Program 3 l Figures 13 l CHAPTER U - START-UP EFFORT & OPERATIONAL PREPAREDNESS 2
- 1. Evaluation Criteria
- 2. Evolution of Start-up Effort 2 Operational Preparedness 11 3.
Figures 15 l
Chapter M INTRODUCTION 'IU TECHNICAL FUNCTIONS Part IV of the Waterford 3 /. Grand Gulf Study report consists of seven chapters. They examine he methods used in the execution of Waterford 3 work and evaluate the roles of the key performing organizations. Their purpose is:
- a. To describe-- LP&L/Ebasco methods used in licensing, engineering, procurement, contract management, construction, quality assurance, and start-up.
- b. To describe methods LP&L intends to use in operating the Waterford 3 generating station,
- c. To examine the roles and responsibilities of LP&L, Ebasco, and key contractors in activities defined in (a) and (b) above,
- d. To determine whether or not:
o proper procedures have been and are in effect to ensure that the terms of its contracts for construction are being met and that LP&L has not borne costs properly assessable to contractors, j~j o LP&L has the requisite managerial and technical expertise to successfully license the Waterford Unit No. 3, o LP&L has the requisite expertise to successfully operate the unit, and,
- e. To document DMC, Inc. conclusions regarding the above issues.
Chapter M differs from the corresponding chapters in parts II and III in that it does not contain a description of the recommended technical methods and evaluation criteria. The reason for that difference lies in the fact that the methods for
~ licensing, engineering and other functions discussed in Chapters N through U are governed by numerous regulations, codes and standards. These standards, codes and regulations define acceptable technical methods and, therefore, their further discussion is not required.
Since the subjects covered in the following chapters are extremely diverse, it would be inappropriate to base their evaluation on generic criteria. Consequently, the specific' criteria for the evaluation of licensing, engineering and other technical methods and issues are presented in the chapters corresponding to each individual method / issue. Q ,)- Page M-1
4 Chapter N (] LICENSING
%e term " Licensing" refers to the proccss of applying for and obtaining approvals to construct and operate a nuclear power station from the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA), and other bodies of the Federal, State, and local governments.
This chapter reviews the process, methods, and organizations employed by Louisiana Power & Light Company and its contractors for the purpose of licensing Waterford Steam Electric Station Unit No. 3. Its objectives are as follows: o to analyze the adequacy of the methods and procedures and the puformance of the Waterford 3 licensing organization, o to assess the impact of licensing and regulatory changes on engineering, procurement and construction, and o to cramine open licensing items and determine LP&L's capability to resolve them and place the unit in service as scheduled. o To accomplish the above objectives, DMC reviewed over 120 licensing-related (V) documents, held interviews with ten LP&L and Ebasco employees, and verified its findings in discussions with representatives of the Nuclear Regulatory Commission. De following sections present our observations, findings and conclusions. 1.0 Nuclear Power Regulation In order to measure the impact of regulations on nuclear power projects and the resulting cost of electricity, a thorough understanding of the complex licensing process is essential. The following paragraphs provide an overview of this process and discuss its implications on plant engineering, procurement and construction. DESCRIP'I10N The' Atomic Energy Act of 1954 established a two-phased process for licensing of nuclear commercial power plants. An overview of this process is outlined schematically in Figure N-1. As indicated by the figure, the first phase of the process leads to the issuance of a construction permit to (CP). The purpose of the second phase is to review whether the plant was designed and constructed in accordance with applicable standards, and it leads to the issuance of an Operating License (OL). Significant . evolution occurred in the nuclear generating plant licensing process during the course of the
,s.
Waterford 3 project. However, the two phases, themselves, have ' ( remained constant. The first phase of the nuclear licensing is V} shown in Figure N-2 and is outlined below. Page N-1
- - - _ . ~_- - -. . . -- _
[
- a. The licensing process begins with development of Construction Permit application which consists of the Preliminary Safety Analysis Report, Environmental Report and the information required for anti-trust review. These documents are submitted to the Nuclear Regulatory Comtblon (formerly the Atomic Energy Commission). Following a brief review, and provided that the documents are found to be adequate, the NRC 'ssues a docket number and publishm this information in the Federei Register. [The Construction Permit application and pertinent documents are prepared in a pre-agreed format specified by N R C]1 In summary terms, these documenta define the proposed plant dsign, discuss environmental impacts of plant construction and operation on the site and surrounding area, and provide information necessary for the Anti-trust Review.
Upon docketing of the project, the NRC staff initiates safety, environmental, safeguards and anti-trust reviews of the application. The objectives and the process of these four parallel evaluations is outlined in paragraphs 1 through 4 below.
- 1. The safety review of the application is perfornied by the NRC Licensing staff against various laws, regulations and acceptance criteria. [ Standard Review Plans (3RP) have been developed for Light-Water-Cooled Reactors and are updated periodically. The SRPs describe the procedures used to perform safety review, and specify the .icceptance criteria which the applicant must meet with respect to various systems, stmetures and components important to safety and the proposed reactor site.P When the NRC determines that the design is consistent Mth the regulations, the staff prepares a Safety Evaluation Report (SER). In this report, the effects of the proposed plant on the public health and safety are described.
- 2. The environmental review begins with an analysis of the l applicant's Environmental Report (ER) for acceptability.
Upon completion of this analysis, the NRC prepares a Draft Environmental Statement (DES) which describes the impact of nuclear power plant construction and operation at the proposed site on the surrounding environment. The DES is distributed to federal, state, md local agencies, intervenors and members of the general public, hll parties may comment on the DES, and the F;nal i 1Data enclosed by [] parentheses describe the current process which was not in effect during the Waterford 3 Construction Permit proceedings. Page N-2
,m . Environmental Statement (FES) must address all their concerns.
(v {During the same period, the NRC prepares a report on the site suitability. Upon completion of this report, a separate public hearing, with a member of ASLB predding, is conducted on environmental and site suitability aspects. After the hearings the ASLB makes the Initial Decision on whether or not to grant the CP.}2
- 3. The law requires that the Advisory Committee on Reactor Safeguards (ACRS) conduct an independent safety review and meet with the NRC staff and the applicant. If all of the preceding work is found to be satisfactory, the ACRS preparer a letter to the Chairman of the NRC recommending the issuance of a Construction Permit. The NRC staff revises the SER to incorporate any changes adopted as a result of ACRS recommendations.
- 4. The anti-trust review is accomplished under memoranda of agreement between the NRC ar.d the Justice Department.
The applicant's practices are reviewed against general criteria originated in the Sherman Anti-Trust Act. Upon satisfactory determinations, the anti-trust matters are (']i V - resolved with the applicant and findings are issued by the NRC licensing staff.
- b. Ccpies of the CP Applicetion are posted in the vicinity of the proposed site and at NRC offices in Washington, D.C.; A notice of public hearing is published in the Federal Register and local newspapers. [ Members of the public have 30 days to petition to participate in _the proceedings.]l The Atomic j Safety und Licensing Board consisting of 3 members, reviews l petitions of various parties for lesve to intervene in the public hearing process, and makes determinations as to the disposition
! of such petitions. Petitioners have the right to appeal to the Atomic Safety and Licasing Appeal Board (ASLAB). The public hearing is mandatory at the Construction Permit stage. The Atomic Safety and Licensing sBoard (ASLB), a i three-member committee, makes the initial decision to grant or l withhold the CP. The pubife hearing is generally held near the proposed site. l 2 Data enclosed by {} parentheses define requirements which were not !p l (,/ ' applicable to the Waterford 3 Constmetion Permit. i l Page N-3
~
After the ASLB makes tha Initial Decision, concerned parties may appeal to the ASLB and, ultimately, to the NRC commissioners. The law also provides for appeals beyond the Commission (in federal courts). In the event that the ASLB makes a favorable decision, and the appeals to the ASLAB, NRC, and federal courts are exhausted, a Construction Permit is issued. Phase Il of the licensing process begins after the issuance of the Construction Permit. During the first few years this process entails the following activities: o Detailed Engineering and Design Phase o Monitoring of changes in regulatory requirements, codes, standards, technology developments and other industry-wide events. c (Preparation of PS AR amendments addressing the above changes, and their review by the Nuclear Regulatory Commission staff.}2 o ~ Negotiation of new issues between the Commission staff and the Applicant. o Assembly of engineered information into the Standard Format in preparation for development of the Final Safety Analysis Report. Approximately three years before the plant fuel loading, and application for an Operating License (OL) including the Final Safety Analysis Report, is submitted to the Nuclear Regulatory Commission for review. Review of the application for an l Operating License is conducted in accordance with procedures which involve basically the same steps as the review of the Construction Permit application. Although a public hearing is not mandatory at the Operating Lice'ising stage, such a hearing may be demanded by any interested party and is usually held. Assuming that the NRC, ACRS, and ASLB determine that the plant can be operated safely, an Operating License is issued and fuel loading may begin. Following the issuance of the Operating License, the NRC continues to inspect the plant and monitor its operations throughout plant life and until the plant is decommissioned. DISCUSSION The N.'C is charged with the responsibility of regulating the nuclear industry such that the safety of the public is protected. In carrying out this responsibility, it has developed regulations which provide for addition, modification, or elimination of various systems, structures and components whenever it determines that such modifications are necessary for safe plant operation. l Page N-4
[] V During the past decade, the cost and schedule of nuclear power plant construction increased significantly. Today, the construction time for a typical 1100 MW plant is about 12 to 14 years; installed costs of $3,000 per kilowatt or higher are becoming more and more common. A large percentage of this cost growth could be traced to events in the regulatory process. Regulatory changes usually evolve through technological advances or industry experience. New knowledge and technology are translated into additional requirements, codes, standards and regulations. In many cases, these new requirements, codes, standards and regulations are made retroactively applicable to projects in various phases of construction, and to many operating plants. CRITERIA The adequacy of methods, procedures and organizations used in licensing of the Waterford 3 project were evaluated in light of common industry practice from 1970 to date. Our evaluatica addressed the following questions:
- a. Did LP&L and its contractors have an organization capable of undertaking licensing of the Waterford 3 nuclear power plant?
p b. Did LP&L have adequate capabilities to manage and direct the
. Q licensing effort of its contractors?
- c. Did the Waterford 3 licensing process evolve reasonably as compared to the industry norm?
- d. Does LP&L currently have a strong licensing and technical support organization capable of l o Closing out all open licensing items?
l o Transferring from the construction to operation phase and assuming full licensing responsibilities after the assignments j of Ebasco, the NSSS vendor and other organizations are completed? f o Receiving the Operating License for Waterford 3 on schedule ! and operating the plant successfully? l 'Ihe following sections present the results of DMC's evaluation of the above issues. 2.0 Waterford 3 Ideensing Organimation Nuclear power regulations require the applicant to retain the overall responsibility ! V) for plant engineering, construction and operation. Regulations allcw the utility l l Page N-5 1
company to delegate the responsibility for execution of engineering, licensing, construction and other activities while retaining the ultimate responsibil!ty for the project. The following paragraphs describe the Widerford 3 licensing organization and examine how LP&L assigned responsibilities for execution of the licensing process and controlled its overall direction. DESCRIPTION LP&L's involvement in the Waterford 3 licensing during the Construction Permit phase was relatively limited. During these early days, the company relied heavily on Ebasco and Combustion Engineering for the conduct of most of the licensing activities. During that time period, LP&L did not have a formal licensing organization. However, throughout the Construction Permit phase LP&L retainet ultimate responsibility for the licensing process and authority to make the final decisions. This responsibility and authority was vested in one of LP&L's executives. LP&L personnel represented the company in all meetings with the Atomic Energy Commission and, la%c, the Nuclear Regulatory Commission, and directed the activities of Ebasco and Combustion Engineering. Licensing activities nre organized under LP&L management as shown in Figure N-3 and as described below. As indicated on the Figure N-3, licensing activities were directed by LP&L executive management. Legal services were provided by the Washington, D.C. firm of Shaw, Pittman, Potts and Trowbridge. The licensing activities were coordinated by LP&L personnel which arranged and led all meetings with the NRC at Bethesda, Maryland and at the Waterford 3 site. The required work connected with SAR preparation was carried out by the licensing organizat.ons of LP&L, Combustion Engineering, and Ebasco. The organization concept remained the same from early days of PSAR preparation until today. The only difference is that the majority of the work load has now shifted from Ebasco to LP&L. From 1970 to 1979, a majority of licensing effort was carried by Ebar. The Ebasco licensing organization is shown on Figure P-4. As indicated in the figure, this organization included three groups: Environmental, Project Licensing and Licensing Management. The Environmental group consisted of the team leader and environmental specialist; its work was directed by the Environmental Manager. The Licensing Management group was responsible for technical publications, radiation assessment and probabilistic risk assessment. The Project Licensing Group included licensing engineers responsible for project safety review. Work on the SARs was coordinated by the Project Licensing Engineer and directed by Ebasco's licensing management. Licensing activities of Combustion Engineering, the Waterford 3 NSSS supplier, was coordinated by the Ebasco Project Licensing Page N-6
t Engineer. From 1970 to 1979, Ebasco's average Waterford 3
- ] licensingleam consisted of approximately 8.5 equivalent people.
Since then, their role has decreased while LP&L's organization has increased in responsibility. Ebasco expended about 269,880 manhours on Waterford 3 licensing activities over the course of the project. Today, LP&L's licensing organization consists of three groups, reporting to the Licensing Manager; their responsibilities and staffing are shown on Figure N-5 and described below:
- a. The Safety / Environmental unit has a staff of four; its responsibilities are as fol;ows:
o Maintenance of State and Federal Environmental Licenses o Environmental i.fonitoring Programs o Owners Group Participation o Coordination of Responses to Bulletins, Notices, Circulars, & Generic Letters o Maintenance of FSAE & ER
-\ o Licensing Document Changes (e.g., Security Plan, Emergency Plan, Technical Specifications, etc.)
o Review of Design Change Safety Analysis
- b. The Regulatory Compliance unit has a staff of three, and their responsibilities are as follows:
o Commitment Tracking o Review of 10 CFR changes for applicability & impact o Review of generic study issues o Maintenance of the licensing library
- c. The On-site Licensing unit has a staff of two, and their responsibilities are as follows:
- . o Coordination of on-site licensing activities
( o Preparation / coordination of routine /non-routine reports , i l- o Update & tracking of licensing commitments 4 Page N-7
r-All engineers working in the licensing group have at least a B.S. degree in Nuclear Engineering or related fields; two team members have a M.S. degree. Their average nuclear experience is about 8 years. A summary of LP&L's experience of licensing staff is shown in table on Figure N-6. In recent years, the primnry responsibility of both LP&L and Ebasco's Licensing organizations, has been the SAR change process which must be performed to the satisfaction of NRC and without interference with the project completion schedule. LP&L has devised methods and procedures whereby all project interaction with regulatory agencies are accomplished by, or under the direct control, of the LP&L Licensing organization. NRC inquiries are distributed by LP&L Licensing to the respective project organizations, including Ebasco, for response. Interdiscipline and l interorganizational reviews of draft responses are performed prior to final Licensing review and transmittal to the NRC. The process is depleted schematically in Figure N-7. i Following the Three Mile Island accident, the NRC review process slowed considerably and began jeopardizing the then-scheduled fuel load date. To accelerate the review, LP&L established licensing presence in Bethesda and encouraged more meetinge between NRC
- reviewers and the project technical staffs. DMC was informed by LP&L that this process greatly accelerated the issuance of the Safety Evaluation Report (SER) and established closer working relationship between LP&L and the NRC. Because of these actions, during the accelerated FSAR review period LP&L was able to publish (approximately) one FSAR amendment per month, and the NRC was able to publish the Safety Evaluation Report in approximately seven months.
DISCUSSION During the early 1970s, a large percentage of utility companies relied heavily on their architect-engineers for performance of most of the licensing activities. This situation was particularly true for the companies engaged in licensing of their first nuclear units. One of the reasons for the prevalence of this approach is that the rapid growth of the nuclear industry in the 1970s produced a critical need for qualified licensing and nuclear engineering personnel. At the time, many of the industry professionals felt that their career growth would be better enhanced by joining a large architectural-engineering fi m engaged in several nuclear projects than by joining a utility company constructing a single nuclear unit. Second, the relationship between utility companies and their architect-engineers was usually long-standing and exceptionally good. There was no reason to believe that an architectural-engineering Page N-8
7m.i firm which protected its clients interests on many fossil projects (N could not do the same on a major nuclear project. The idea of hiring a large licensing staff who would watch over the shoulders of the architect-engineer's licensing staff was regarded as impioper and wasteful. Review of the Waterford 3 licensing organization history indicates that LP&L subscribed to the above philosophy. We find, however, that while LP&L's carly participation in the Waterford 3 licensing organization was minor, the overall licensing organization supplemented by Ebasco and Combustion Engineering personnel was adequately staffed throughout the project and capable of undertaking licensing of the Waterford 3 nuclear power plant. As Waterford 3 approached completion, a shift in licensing responsibilities had to be made from the contractor's to the owner's personnel. 'Ihis process w s slow, as LP&L had difficulties staffing its organization with experienced professionals. The Advisory Comraittee on Reactor Safety (ACRS), stated in its letter of August 11, 1981 to the NRC chairman, that the staffing at Waterford 3 was less well established than at other nuclear power plants at a similar time during their construction and start-up schedule.
. /^' DMC reviewed the documentation and the circumstances which led to the above ACRS conclusions and interviewed LP&L management personnel. During the interviews, LP&L agreed that the Waterford 3 project organization lacked commercial operating nuclear experience at the time of the first ACRS review. Since that time, considerable efforts were made to address ACRS concerns regarding organization and management. These efforts resulted in favorable ACRS findings (documented in letter dated March 9,1982). The Committee expressed its belief that LP&L effectively responded to ACRS concerns, and that with continued support of LP&L management, there is reasonable assurance that the satisfactory completion of staffing can be accomplished prior to the plant operation.
i Recently, the NRC concluded (see " Conduct of Operations", Chapter 13, of the Waterford Supplement to Safety Evaluation report No. 5) that LP&L's management and technical support organization meets the acceptance criteria of Standard Review Plan (SRP) and are, therefore, acceptable. LP&L's tardiness in staffing objected to by ACRS had both negative and positive consequences. The negatives are that LP&L had to ! f m accelerate the staffing effort in order to be ready for operations. ( ) However, due to construction schedule delays, the Operation License date had been pushed back. The positive points are that LP&L did Page N-9
not have to pay salaries of a large staff before its services were actually needed. CONCLUSIONS Decision Management Company, Inc evaluated practices and organizations used in licensing of the Waterford 3 project in light of criteria shown in section N-1. Based upon that analysis, we have determined the following:
- a. The Waterford 3 licensing organization (including LP&L, Ebasco and Combustion Engineering personnel), was adequately staffed throughout the duration of the project.
- b. Ebasco's licensing personnel acted professionally, efficiently, and in the best interest of LP&L throughout the project duration.
- c. Combustion Engineering, to a minor extent, may have used the nuclear licensing process to obtain certain contractual gains.
Ilowever, project contract administration practices adequately protected LP&L interests.
- d. The evolution of LP&L's licensing organization was rather slow and below the industry norm. Because of the strength of the overall Waterford 3 licensing team, we do not believe that LP&L's tardiness was the cause of any schedule delays or cost overnins.
- e. DMC, Inc. agrees with the ACRS recommendation and the NRC conclusion that the present staff and organization are able to successfully license and safely operate the Waterford 3 Steam Electric Station.
3.0 Conduct of Waterford 3 Licensing Methods This section presents the results of DMC's evaluation of the Waterford 3 licensing process. The evaluation was focused upon various phases of the process, including l the Construction Permit phase, the period between the issuance of the Construction Permit and the application for the Operating License and the Operating License phase. I 3.1 Construction Permit Phase This section examines one of the most critical periods in the Waterford 3 history, the period beginning December 31, 1970, and ending on November 14, 1974. This time span of almost 4 years was consumed on review, decisions and appeals which eventually led to the issuance of the Waterford 3 Construction Permit. O Page N-10
3 DESCRIPTION The Louisiana Power & Light Company announced the Waterford 3 7^ project in September of 1970, and filed the Construction Permit
- , application on December 31 of the same year. The Construction Permit application was developed jointly by LP&L, Ebasco and Combustion Engineering. The company expected completion of the review and issuance of the Construction Permit 14 months later, on March 1,1972. As history will have it, the Construction Permit was issued over 21/2 years later than expected, on November 14, 1974. The following paragraphs describe the key events which occurred during the intervening time period, and which delayed the issuance of the Waterford 3 Construction Permit by almost three years.
o During the early months of 1971, the Waterford 3 Construction Permit application was docketed and the review was under way. In May of 1971, LP&L and Ebasco met with the NRC staff to discuss quality assurance and IIVAC related issues. o On July 23, 1971, one of the most momentous events in the history of nuclear power occurred. On that date, the United States Court of Appeals, District of Columbia Circuit, issued its decision in the case of Calvert Cliffs Coordinating Commission l versus United States Atomic Energy Commission. The Court i decided that the AEC did not properly implement the J_' 3 requirements of the National Environmental Policy Act (NEPA). The Court directed AEC to make all of its future decisions regarding the issuance of Construction Permits based upon NEPA requirements. The Calvert Cliffs decision was applicable to the Waterford 3 project. o During the second half of 1971, LP&L developed a new Environment Report in accordance with the requirements of NEPA. The report wt , filed with the NRC in February of 1972. o In March of 1972, LP&L began site preparation work. During this time frame site work was allowed prior to any authorizations from regulatory agencies. During the first half of 1972, regulations were revised to preclude site work prior to CP issuance, but the regulations allowed a formal process for gaining a waiver (Limited Work Authorization, LW A) of this new requirement. In May,1972, while corWting site preparation under a "gra'idfather" provision, LP&L % tm application for an LWA. The LWA was granted in &% 1'
. but LP&L terminated the site work in July because i t s_ n+ies related to the e'. ' Waterford 3 Constructior. Permit .ssusnet; date in general and, in particular, the effects of the Calvert Cliffs decision and Anti-trust matters.
Page N-11
o The Waterford 3 licensing staff spent the remainder of 1972 in meetings with the AEC, ACRS and other groups, and on preparation of PSAR amendments. In December of that year, the company received the AEC's questions on pipe rupture protection. (Over the ensuing several years, pipe rupture protection became one of the most costly events in the history of the commercial nuclear energy industry.) o By February of 1973, the Waterford 3 Preliminary Safety Analysis Report was amended 30 times. By December of that year, when Atomic Safety and Licensing Board hearings started, the SAR was amended approximately 40 times. o A favorable decision by the Atomic Safety and Licensing Board was rendered in April of 1974. By May of 1974, all safety and environmental issues had been resolved, o The anti-trust reviews continued through the summer and fall of 1974. After nearly 4 years of review, all of the outstanding issues had finally been resolved, and on November 14,1974, LP&L was issued a license to construct Waterford 3. DISCUSSION The history of Waterford 3 Construction Permits was representative of M1 nuclear projects that were undergoing licensing review at the time. The only discernable difference between LP&L's experience and that of other utilities is in that the Waterford 3 licensing had two critical paths: one leading through the safety review and the other through to the anti-trust review. The safety review path is usually more critical and time censuming throughout the industry. In the opinion of LP&L's Waterford 3 project management, CP proceedings delayed the project schedule by 31/2 years. LP&L and Ebasco are convinced that this delay moved the project into the perled of unprecedented inflation and regulatory changes. If the project had proceeded on its originally planned schedule, it would have been completed under dif f erent, and much less costly, regulatory rules and general economic conditions. CONCLUSIONS Decision Management Company, Inc. evaluated the conduct of licensing activities during the Construction Permit phase of the Waterford 3 project. Based upon this analysis, we have determined the following:
- a. The time it took to obtain Waterford 3 Construction Permit of 46-1/2 months is slightly over the industry's average of 43 months. We believe that this variance is insignificant.
Page N-12
i
./ - b. The fact that the Waterford 3 licensing critical path went through the anti-trrat review is unusual. Should the critical path have gone through the safety review, Waterford 3 would j have been licensed approximately 3 to 4 months earlier. !
l 1
- c. Louisiana' Power & Light's defense of its corporate interests during the anti-trust hearings, must be regarded as reasonable.
3
. Based upon the above considerations, DMC concl'Hes that LP&L's conduct of licensing activities during the Construction Permit phase of haterford 3, was reasonable and prudent. ;
3.2 Operating License Phase
- Review. of the licensing process and events which took place during the Operating .
' License phase of Waterford 3, covers the period from November 14, 1974 to date.
DESCRIPTION ' Issuance of the Construction Permit presumes that the spplicant will 4 ' construct the plant defined in the Preliminary Safety Analysis Report. - The Permit also implies that tha design presented by the company is acceptable to the NRC from the standpoint of safety and cnviron:ncnt. In neccrdance with the above, it would be logical to assume that the Operating License phase would begin with the development of the Final Safety Analysis Report. With regard to Waterford 3, the Operating License phase -began shortly after the issuance of the Construction Permit. . Following is a brief description'of licensing events which affected the project, ' and activities of Waterford 3 licensing team from 1974 to date. o In March'of 1975, the fire at the Browns Ferry Nuclear Power plant damaged control cables and caused changes in the criteria F governing ~the design 'of electrical and ventilation systems for
- nuclear plants. As a result, Waterford 3 cable spreading room l underwent total r'edesign. Fire protection requirements increased dramatically after the Browns Ferry incident and continued to increase until the issuance of Appendix R to 10CFR50 in 1980.
'lhis regulatory change resulted in a major increase in the amount of sophisticated aut_omatic detection and suppression systems, and a costly backfitting of fire area barriers.
.o In- November 1975, Standard Review Plans (SRPs).and Regulatory Guide 1.70 were issued. Ae a result, while the Waterford PSAR
- consisted 'of about 4 volumes printed on one side of each page, the Waterford 3 FSAR consists of 18 volumes printed on both sides of each page.
Page N-13
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F In the same year (1975) ALAR A ("as low as reasonably achievable") requirements were published in Appendix I to 10 C FR 50. As a result, radiation levels and radioactive effluents had to be significantly reduced. Large new filtration systems had to be added along with associated ducts and air conditioning equipment. These new requirements affected the process of design, evaluation and Cesting of installed radiation shielding and significantly upgraded the program of monitoring and control of radiation exposure and effluents, in the plant and its environment, throughout the plant life. o In 1977, alone, the NRC issued 238 regulatory guides and revisions. A significant amount of effort went into the review of those guides. o In March of 1979 the combination of events at TMI substantially damaged the reactor core. In the months following this event, the Waterford 3 licensing program was disrupted by a defacto moratorium on licensing, and the requirements for improvements in s t a f fing, training, operations and Emergency Planning. Construction of new facilities, such as the Technical Support Center and the Emergency Operating Facility, was required. New regulatory standards were outlined in "the TMI lessons learned" and in a number of " action plans" outlined in NUREG 0737. o In August 1980 Emergency Planning requirements were firmed up and LP&L prepared documentation to resolve this outstanding issue. Emergency planning was a contention of the Joint Intervenors and w9s formally litigated before the ASLB. The Board in its decision set four conditions which had to be fulfilled. LP&L has fulfilled all of those conditions, o During 1983, activities are concentrated on construction completion, start-up and pre-operational testing and Licensing is, at the moment, off the " critical path". In order to determine whether any of the Licensing issues could adversely impact the granting of Operating License, DMC reviewed the summary of Open Items listed in Licensing progress reports, the list of NRC Unresolved Safety Issues listed in Appendix C to SER, the issue of Decommissioning described in Section 5.10 of Environmental Statement, NUREG-0787 and a list of items negotiated with NRC for implementation beyond the fuel load date. Our findings are as follows: o Open Items: None of the open or confirmatory items should Page N-14
'~ '3 ~
adversely impact the granting of an operating license assuming timely NRC review. o Unresolved Safety Issues: The NRC staff has reviewed the unresolved safety issues listed in Appendix C to the SER. Discussion of each of those issues is provided in Section C.S. There is reasonable assurance that the Waterford, Unit 3 can be operated prior to the ultimate resolution of these generic inues without encongering the health and safety of the public. o Decommissioning: Decommissioning is not an imminent health and safety problem. However it is stated here to bring attention to this issue, because decommissioning can have an impact on health and safety as well as the cost. o Licensing Retrofits: In order to recover schedule, it is custenary practice in the industry to negotiate with the NRC completi 2 of certain items after the fuel load date. The list of those items as well as the list of items which are pending NRC review were examined by DMC during the interviews. The joint consensus reached were that those items would not be difficult to implement and they do not present a major cost burden if p completed after the fuel load.
\
( '
- DECUSSION The Operating License application followed the same basic steps as ti.e CP application review. LP&L was required to respond to over 1100 FS AR queMions. The impact of those question varied from simple requests for information to extensive design changes.
However, Waterford 3 performance in licensing period after CP was better than the performance of average nuclear power plants. Figures K-18 and K-19 shown in Chapter K, Scheduling, place Waterford as number 5 and 3 respectively. This performance was achieved through an aggressive licensing program which included control of changes, minimizrtion of contentions, familiarity with the other similar projects and aggressive efforts to recover schedule. Problems that overall industry had experienced after the TMI, were minimized on Waterford 3 by better than average planning of control room and plant monitoring computer programs; however, staffing and training programs experienced some difficulties. The combination of stricter requirements specified in Appendix I and the proximity of industrial and chemical plants to the Waterford 3 site, resulted in required upgrading of the gaseous effluent
, j treatment system. In addition Regulatory Guides 1.95 and 1.78 required incorporation of chlorine, ammonia and organic detectors at Those detectors were required to the air intake of the control.
Page N-15 o j
automatically and quickly isolate the con'.rol room. In addition, a large sed-contained air supply for control room occupants was installed, as defense in-depth, in the event of a toxic chemical release. In closing out licensing activities after constructbn completion and in preparation for fuel load and operation Waterford 3 appears to be more complete than most power plants are at the time of Operating license. The NRC reviews and rates nuclear power plants in their Systematic Assessments of License Performance (SALP) reports. Those reports rate the Licensee, based on the NRC attention level which the agency must maintain, so that acceptable levels of operational safety or construction is being achieved. DMC reviewed those reports and found that with the respect to licensing activities Waterford 3 is rated at Category 2 meaning that NRC attention should be maintained at normal level. CONCLUSIONS Decision Management Company, Inc, evnluated the conduct of licensing activities during the Operating License Phase of the Waterford 3 project. Based upon this analysis we have determined the following:
- a. The schedule from C1' to OL ranks Waterford 3 better than average, compared to same period for other similar nuclear power plants.
- b. S ALP reports rate Waterford 3 licensing performance as adequate and at the industry norm.
- c. Assuming timely review by the NRC and Lae absence of industry-wide accidents concerning safety, there is a reasonable assurance that the LP&L organization is capable of:
o Closing out all open licensing items, o Receiving the Operating License on schedule, and o operating the plant successfully. O Page N-16
P I: i t [ i l l RGURES l l i ( i I j i ( l l l l i n Page N-17 I 4 i f
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FIGURE N-3 O LICENSING ORGANIZATION OVERVIEW LP&L MANAGEMENT , , 3 LEGAL ADVISORS LP&L LICENSING NRC AND MANAGER ( ; EREG i AGENCIES t i ?
~
( LP&L EBASCO/ LICENSING ENVIROSPHERE ORGANIZATION LICENSING ORGANIZATION (See Table 2) (See Table 3) FIGURE PROVIDED BY LP&L k l L
FIGURE N-4 EBASCO LICENSING ORGANIZATION EB SCO ENVIROSPilERE LICENSING ORGANIZATION ENVIRONMENTAL ENVIRONMENTAL LICENSING PROJ. LIC. CE MANAGER TEAM MANAGEMENT ENGINEER - - - - - - APM LEADER LICENSING LICENSING ENGINEERS SPECIALISTS (Safety Reveiw) PROBALISTIC TECNNICAL RAD RISK JUBLICATIONS ASSESSMEtG ASSESSFENT FIGURE PROVIDED BY LP&L Primary Responsibility 1970 - 1980 AVERAGE 8.5 EQUIVALENT PEOPLE 1970 - 1979 Secondary Responsibility 1981 - Present O O O
3 -FILs N-5 LP&L LICENSING ORGANIZATION 1 LICENSING 1 SUPERVISOR i i (1) ' i l e SAFETY / REGULATORY ONSITE
- ENVIRONMENTAL COMPLIANCE LICENSING j (4)_ (3) (2) l
-t . l 9 Maintain State & Federal 9 Conunitment Tracking 9 ",oordinate Onsite j- Environmental Licenses 9 Review 10 CFR Changes
"*""E '"' '**
, . 9 Environmental M nitoring for Applicability & 9 Routine /Non-Routine { Programs Impact Reports . 9 Owners Group Partici- 9 Review of Generic 9 Update & Track Licensing l pation Study. Issues Consnitments l
- 9 Coordinate Responses to e Maintain Licensing f
! Bulletins, Notices, Library ;
- Circulars, & Generic j l Letters FIGURE PROVID6D BY LP&L 9 Maintain FSAR & ER
- 9 Security Plan Changes
! 9 Review Design Change Safety an ResWnsMW M - hesent l Analysis '( ) NUMBER OF PERSONNEL ; i-l a j
c FIGURE N-6 NUCLEAR LICENSING STAFF - EXPERIENCE
SUMMARY
FIGURE PROVIDED BY LP&L NUCLEAR EXPERIENCE NAME EDUCATION TRAINING NUCLEAR OTHER PRESENT POSITION
- 1. K. W. Cook BS Mech. Eng. Yes 20 -
Nuclear Support & Licensing Manager (Nuclear Opt.) MS Mech. Eng.
- 2. R. M. Nelson BS Mech. Eng. Yes 19 -
Nuclear Licensing Manager (Nuclear Opt.)
- 3. R. W. Prados BS Industrial Yes 16 ? Technical Assistunt to Nuclear Technology Support & Licensing Manager
- 4. M. J. Meisner BS Nuclear Eng. Yes 2 2 Associate Engineer-Nuclear
- 5. C. D. Groome BS Zoology Yes 2 3 Associate Engineer-Nuclear MS Environmental Eng.
- 6. K. N. Curley BS Naval Yes 7 2 Associate Engineer-Nuclear Architecture
- 7. R. A. Savole BS Industrial Eng. Yes 1+ 2+ Associate Engineer-Nuclear MBA Post Grad to PHD
- 8. T. J. Gaudet BS Ind. Management Yes. 2.5 2+ Engineering Technician
- 9. E. M. Townsend Yes 1 Engineering Technician
*10. W. A. Cross BS Nuclear Eng. Yes 9 -
Nuclear Licensing-Special Projects SRO License (Consultant)
*11. R. M. Foley BS Nuclear Eng. Yes 3.5 6 Nuclear Licensing-Special Projects (Consultant) *12. D. W. Herrin BS Nuclear Eng. Yes 6 -
Nuclear Licensing-Special Projects
- Nuclear Licensing Staff Consultants O O O
FIGURE N-7 O t i LOLPSiana POWER S Lies? CO. WETEfr0E ES W NCL 3 E8ASCO SAR CHANGE PROCESS ir _
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- wtru ca. c Ts acr7 ancie=EnT FIGURE PROVIDED BY LP&L lO i
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l.. p Chapter P J - ENGINEERING 1.0 Introduction The term engineering refers to an orderly set of activities, required to produce construction documentation. These activities include the preparation of procedures, analyses, studies, calculations, topical reports, specifications and. drawings. Engineering also includes the resolution of technical problems and questions which arise during manufacturing, construction and testing operations; the preparation of technical documents required to license the plant; and the burden of responding to technical questions from regulatory agencies. Thorough understanding of regulatory requirements, industry standards and codes is essential for timely completion of 4 design and integration with' licensing, purchasing, construction testing and operation disciplines. The following sections will define our evaluation criteria, describe the Waterford 3 nuclear power plant, and address specific Waterford 3 engineering issues, i 2.0 Evaluation Criteria There are several conditions which should exist in order to assure successful O: engineering of a nuclear power plant facility. Organizations engaged in plant
- design should have experience with nuclear power projects. Their staff must include technical experts who are actively involved in the development of industry l
, codes and- standards; capable and concerned corporate management; and project ' leadership able to coordinate work between different engineering disciplines, ' l regulatory agencies and construction organizations. The company must develop and implement procedures, ' follow and apply the latest state of the art in design engin'eering and' acquire and train a number of engineers needed for preparation of l project documents. The adequacy of methods, procedures and organizations utilized for Engineering of l lthe Waterford 3 prc'ect,'were evaluated in light of common industry practice from 1970 to date. Our. v.siluation addressed the 'following questions:
- a. Did LP&L and its contractors have an adequate organization capable of undertaking. engineering of the Waterford 3 nuclear power plant?
l[ b. . Did LP&L adequately manage its contractors in the engineering effort? l
- c. Did 'LP&L and its contractors have adequate technical procedures and
.have they utilized those procedures during the engineering process?
. d.- Were 'the engineering activities coordinated with procurement and i V construction in a reasonable.and effective manner?
i Page P-1
- e. Did engineering completion adequately lead construction and procurement?
- f. Did LP&L have at its disposal adequate methods capable of controlling design engineering changes to receive a timely Operating License?
The following subsections present the results of our evaluation and related descriptions, discussicns and conclusions. 3.0 Description of Waterford 3 This subsection describes site characteristics and key Waterford 3 components as they are presented in the WSES-FSAR. Its purpose is to provide an overview of the plant, and it should not be regerded as a detailed descripti" of Waterford 3. 3.1 Overall Power Plant Description The Waterford SES Unit No. 3 is located on the West bank of the Missi. _.ppi River, approximately 25 miles northwest of the city of New Orleans. Kenner, the nearest population center, is located 13 miles east of the site. The area adjacent to the site is moderately industrialized. Both banks of the Mississippi River near the site are lined with industrial facilities, primarily chemical plants. The Beker Industries Corp. is adjacent to and downstream of the Waterford 3 site. Next to Beker Industries is the Hooker Plant and farther downstream is the Union Carbide Company. Two Shell Oil Company plants, a chemical plant and a refinery, are located on the opposite bank from Waterford 3, approximately 1.5 miles downstream. The Mississippi River is used extensively for commercial traffic and municipal, and industrial water use. The site is located on the right descending bank of the river and its consists of over 3,000 acres of flat land. The plant area is raised to a final grade of +17.5 ft. MSL around the Nuclear Plant Island Structure and +14.5 ft. MSL around the Turbine Building. Flood protection in the vicinity of the site includes levees, bypass channels, and channel stabilization that can effectively confin'c flood flows except for very severe floods. Strrctures housing safety related equipment are flood protected to elevation +30 ft. MSL. The site plan is shown on Figure P-1. Thunderstorms, hurricanes and tornadoes have been postulated and engineered protection designed and built into the plant. The structures are conservatively designed and built with respect to geological and seismic considerations. The established ground accelerations for the Safe Shutdown Earthquake (SSE) and Operating Basis Earthquake (OBE) are 0.10g and 0.05g, respectively. A pressurized water reactor system was utilized for the generation of an initial thermal output of 3410 Mwt which results in the equivalent gross electric energy of Page P-2
-. ,~
~
i-approximately 1150 Mwe. The reactor core is fueled with uranium dioxide pellets. v The core consists of 217 fuel assemblies with U-235 enrichments in a three batch mixed central zone arrangement. The Reactor Control System and the Chemical and Volume Control System are used for start-up and shutdown of the reactor and for adjustment of the reactor power in response _ to - turbine load demand. The Nuclear Steam Supply System (NSSS) is capable of following a ramp change from 15 percent to 100 percent power at a rate of up to five percent per minute and at greater rates over smaller load change increments up to a step change of 10 percent. The Control Element Assemblies (CEAs) consist of Ni-Cr-Fe alloy clad beron carbide absorber rods, guided by tubes in the fuel assembly. CEA movement provides changes in reactivity for shutdown or power changes. The CEAs are actuated by control element drive mechanisms mounted on the reactor vessel head. The control
- element drive mechanisms are designed to permit rapid insertion of the CEAs into t- the reactor core by gravity. CEA motion can be initiated manually or automatically.
t- The plant design incorporates redundant engineered safety features (ESF). These systems, along with the containment, ensure that the of fsite radiological consequences following any postulated loss-of-coolant accident (LOCA) up to and
. including a double-ended break of the largest reactor coolant pipe will not exceed 1
p) ( the guidelines of 10CFR100.
%/
The R' ator Coolant System (*1CS) shown in Figure P-2, is arranged as two closed loops con;.ected in parallel to the reactor vessel. Each loop consists of one 42 in.
! .lD outlet (hot) pipe, one steam generator, two 30 in.'ID inlet (cold) pipes and two pumps. An electrically heated pressurizer is connected to one of the loops and a safety injection line is connected to each of the four inlet legs. The RCS operates at ~n nominal pressure of 2,250 psia. The NSSS supplier is Combustion Engineering
;inc.
'The Steam and Power Conversion System removes heat energy from the reactor coolant through two U-tube steam generators, and converts the steam into electrical energy by means of a turbinegenerator. The enusable heat in the steam cycle is tranferred to the main condenser for rejection to the Circulating Water System.
The resulting condensate is then descrated, heated through feedwater heaters and returned to the steam generators as feedwater. The main turbine is a Westinghouse
. Electric Corporation 1800 rpm, tandem-compound six flow exhaust unit with 40 in.
last stage blades. Other components of the Steam and Power Conversion System are the main steam supply piping, Steam Ilypass System, three motor driven condensate pumps, three
. strings' of ' five . stage low-pressure feedwater heaters, two turbine driven feedwater
[\ pumps, three' strings of two stage high pressure feedwater heaters, the Steam Generator Illowdown System and Emergency Feedwater System. t Page P-3
For safe storage of new and spent fuel, Waterford 3 is provided with special f acilities. New fuel is stored dry in vertical racks. Space is provided for one-third of a core, with fuel assembly spacing and vault construction sufficient to preclude criticality. The stainless steel lined, reinforced concrete spent fuel pool provides storage for up to 1088 assemblies. Spent fuel assemblies are stored in vertical racks. Adequate spacing in the spent fuel storage pool is provided to preclude criticality, taking no credit for the boron in the pool water. Cooling and purification equipment is provided for the spent fuel pool cooling water. The Fuel Handling System provides for the safe bandling of fuel assemblies and control element assemblies (CEAs) and for the required assembly, disassembly and storage of reactor internals. This system includes a refueling machine located inside the containment above the refueling pool, the fuel handling crane, fuel handling tools, the fuel transfer carriage, the upending machine, CEA change mechanism, new fuel elevator, fuel inspection stand, the fuel transfer tube, a fuel handling machine in the spent fuel storage room, and various devices used for handling and storing the reactor vessel head and internals. The Boron Management System (BMS) and Radioactive Waste Management System provide the means for cot. trolled handling, storage and disposal of liquid, gaseous and solid wastes. In addition, the BMS provides the mechanism for reconcentrating and recovering dissolved boron from the liquid effluent for reuse in the plant. Liquid effluent from the RCS first passes through the purification filter in the Chemical Volume Control System (CVCS). It is then processed in the BMS by successively passing through the flash tank, filters, ion exchangers and a boric acid concentrator. These operations remove the radioactive material and concentrate the boric acid for reuse or solidification for disposal. All other radioactive liquid l wastes are processed in the Waste Management System (WMS) for release to the l environment or solidification and drumming. All liquid wastes are sampled prior to release. The waste release rates are as low as reasonably achievable (ALARA) and within the guidelines and limits for waste release established by 10CFR20 and 10CFR50, Appendix I. All solid wastes are stored in suitable containers for ultimate offsite disposal in accordance with applicable regulations. Waste gases are either collected in the gas surge header or filtered and released to the atmosphere via the plant stack, depending on expected activity level. High activity gases are collected in the gas surge header and compressed into gas decay tanks. The waste gas held in the gas decay tanks is released to the plant vent af ter sampling. The tank contents are releascu at rates well within the limits established by 10CFR20 and 10CFR50, Appendix I. Page P-4
The above description covers the basic functional components of Waterford 3. Most (') (/ of these components are quite similar to other typical Pressurized Water Reactor (PWR) 1100 Mwe nuclear power plants. However, the Waterford 3 site's surrounding environment and LP&L's operating experience led to specific requirements in some areas of the plant design. In those areas, the innovations were very beneficial and desirable. An analysis of selected Engineered Systems specific to Waterford follows. 3.2 Innovative Design for Waterford 3 3.2.1 Plant Monitoring Computer and Control Room LP&L designed and implemented a computt-r system which will have a comprehensive amount of information concerning plant status available to the operators. Such an advanced computer system of controls and displays will significantly reduce human error as an initiating or contributing cause of undesired plant trcnsients. The following programs were included in the computer system. o The Core Operating Limit Supervisory System is the program which monitors ~ the limiting conditions for operation and which will initiate alarms when a limiting condition is exceeded. This would prompt the operctor to take appropriate action as required by the License Technical Specifications, o The Sequence-of-events program w!!1 permit plant personnel to accurately p determine the cause of any trip in the plant, thus contributing to the safe restart after all clauses have been eliminated. o The computerized emergency planning and data acquisition system will provide immediate off site rediological anessment in any case of an accidental radioactive release. o The Safety Parameter Display System will monitor safety-related plant parameters and will display them in a coordinated manner to prompt the operator into action if transients lead to unsafe operation. o Direct Digital Control program which will automatically control various non-safety temperatures and chemical control loops within the plant. 3.2.2 Nuclear Plant Island Structure The Reactor Containment Euilding (RCB), Reactor Auxiliary Building (RAB) and Fuel Handling Building (FilB) are founded on a common foundation mat. These buildings house safety related equipment, the contiol room, computers and instrumentation, as well as new and spent fuel, and they require extensive seismic analysis and qualification of equipment and components located within. The common foundation concept offers advantages when subgrade soll is soft and subject to changing moisture content. Seismically, this is a more stable structure C/ due to a lower center of gravity, and long term differential settlements are minimized when compared to the foundation of buildings on separate footings. Page P-5
3.2.3 Rollaway Missile Shield The rollaway missile shield / refueling maintenance structure will reduce down-time for refueling, eliminate the potential for heavy load drop of the missile shield end reduce the need for laydown area. 3.2.4 Hot Machine Shop The decontamination facility and hot machine shop located on the the Nuclear Plant Island represent the state of art in the decontamination field. It will reduce downtime in making hot repairs and will improve plant avail bility. 3.2.5 Liquid Radwaste Management System This design was ahead of its time when it was conceptually designed around 19"1-1972. The addition of a third evaporator and the doubling of evaporator capacities tripled the overall processing capacity of radwastes from 20 to 60 gpm. Doubling the size of the hold up tanks will reduce plant effluents and will increase load following capability. 3.2.6 Law Residual Element Steel By limiting the amount of residual elements like copper, phosphorus and sulphur in the Reactor Vessel material, the changes in physical properties are minimal. Those O
- changes could be caused by irradiation over the life of the plant.
The advantages of low residual element steel are: I
- a. Improved plant operation toward end of plant life i.e., greater flexibility in operating pressure temperature window during start-up and shutdown,
- b. Additional assurance that the potential requirement to anneal the Reactor Vasel in plece is very remote.
- c. Makes periodic hydrostatic tests more safe.
3.2.7 Ultimate Heat Sink, Combination of Wet and Dry Cooling Towers This unique system resulted from a study of available options after the use of the Mississippi River as a reliable heat sink (under seismic conditions) was rejected. The combination wet / dry cooling tower system was selected, with all system components located on the nuclear plant island. 'Ihis system would be capable of cooling down the reactor and maintaining it in a safe condition following an accident without reliance on the Micsissippi River or any other source of water external to the plant. Page P-6
O 3.3 Discussion \ l The Waterford 3 power plant represents one of the largest nuclear electric generation facilities. Due to its size, site-specific characteris!ics, and socio-economics, Waterford 3 was faced with many difficult questions and problems. The engineering challenge was to minimize those problems in the changing regulatory environment, design a facility which is safe eind easy to operate, and to accomplish this effort at a reasonable cost. During the audit of Waterford 3, DMC, Inc. reviewed documentation of the facility, walked through the constmetion site and all buildings, participated in a General Employee Training (G.E.T.) seminar (orientation session), and conducted interviews with key LP&L and Ebasco personn 1. A better than average impression was made on DMC, Inc during the tour of buildings. Plant layout provided for easy accessability and communication between buildings. Even in the reactor building, walkways were clear. In many nuclear power plants, this is not the case because much of the available space is taken by hangers, cables and pipe supports added to the plant design. Desides the accessibility and layout, good engineering is reflected in easier
,,- operation and safer working conditions. LP&L management interfac.ed with Ebasco's engineering, requiring improvements and new ideas to be applied towards those (v. j goals.
3.4 Conclusions DMC, Inc, reviewed the overall Waterford 3 nuclear power plant engineered to generate 1150 MWe of electric power. Based on the review of documentation and inspection of the facility, we have concluded the following:
- 1. The site layout provides for convenient and easy accessibility, and is above the industry standard.
- 2. The plant layout is very spacious; the size of Waterford 3 buildings provided for easier constmetion and will facilitate plant operations and maintenance. We believe that if Waterford 3 was designed more tightly, its cost would have been much greater.
- 3. Engineered systems and components were designed within industry standards.
- 4. Design innovations implemented by LP&L and Ebasco will enhance plant operability and safety.
v) Page P-7
4.0 Waterford 3 Engineering Organization LP&L's participation in design and engineering of Waterford 3 nuclear power plant was limited. LP&L participated in the design activities associated with start-up and plant operation, authorized studies. approved alternative solutions, approved design modifications, and revie'ved specifications and other procurement documentation. For detailed engineer'ng work, LP&L selected Ebasco Services Incorporated and delegated work to them. The evaluation of Zbasco's selection as Waterford 3 A-E , is presented in Chapter Q, Procurement. For the purpose of this engineering l review, only organizational and technical aspects of this contract were considered. I l DESCRIPTION Review of the Waterford 3 engineering team is presented unde;- three headings: Ebasco's Organization, LP&L's Organization and Configuration Control Board. EBASCO'S ORGANIZATION The Ebasco Engineering Department is organized under the Vice President of Engineering as shown on Figure P-3. The Manager of Standards and Procedures and the discipline Chief Engineers report directly to the Vice President of Engineering. Under the Ebasco discipline Chief Engineers, engineers are assigned to specific projects, including Waterford 3, in a matrix arrangement, and report in the project chain of command for project-specific matters (e.g., engineering specific to the project, project schedules, authorizations, etc.). Exchange of engineering information between projects and maintenance of Ebasco engineering policy, stanJards, and practices occurs through the discipline chain of command. This matrix arrangement recognizes project urgency and continuity while providing for maintenance of standards and practices consistent with the state of the art in nuclear generating plant design. The Ebasco Waterford 3 Project Engineering organization consists of two engin::ering teams, Ebasco Home Office Engineering and Ebasco Site Support Engineering (ESSE), as shown on Figure P-4. Each team has a designated Project Engineer, lead discipline engineers and lead designers. Basically, tne Home Office team maintains top level drawings [ general arrangements (GA's), piping and instrument diagrams (P&ID's) and Electrical one-line drawings], supports the licensing efforts and functions as the engineering interface with suppliers. Large engineering and design changes are also accomplished in the Ebasco Home Office. ESSE is an on-site extension of Ebasco Home Office Engineering, and was placed on-site for the following purposes: o To provide rapid engineering responsa to construction and start-up forces. Page P-8
f q I
\j o To establish ultimate responsibility for engineering and configuration control on-site.
Relatively early in the Waterford 3 project history, LP&L and Ebasco decided to transfer Ebasco drawing control to the site. All Ebasco drawings, with the exception of top level drawings, have been transferred under the direct control of ESSE. In addition to the rapid engineering response and engineering control resulting from this decision, it appears that LP&L will gain additional benefits in a smoother transfer of plant design control to the utility. Ebasco Services Inc. has the necessary experience to engineer Waterford 3. This experience was gained on nuclear projects such as Robinson, St. Lucie, Millstone and Vermont Yankee. The average project leader working on Waterford 3 had over 14 years of nuclear and -17 years of power plant experience. Ebasco developed a company-wide procedures manual. In addition, the project specific engineering procedurer were included in the "Waterford SES Unit No. 3 Project Procedure Manual". These procedures describe methods for detailed preparation of design calculations, drawings, design and field changes, LP&L and vendor interfaces and other engineering p) activities. -( U LP&L monitored Ebasco's work both through its own staff and with the help of outside consultants. With respect to this section, DMC reviewed two such studies. In 1977 LP&L hired a management consulting firm to perform an audit of LP&L and Ebasco. Following this audit, Ebasco moved the office of the project manager to the site in order to facilitate closer coordination between the New York project organization and the Waterford 3 site team. In addition, the size of the ESSE group was increased and their reponsibilities expanded to include field engineering and contract coordination in the environmental, mechanical, electrical and civil / structural areas. Ebasco's engineering groups are currently working toward finishing construction and supporting the priority needs of LP&L start-up and operation. Design and field initiated changes are processed for final installation or for deferral as retrofit work after the issuance of the Operating License. In 1982, LP&L contracted Torrey Pines Technologies to perform an independent design review of the Emergency Feedwater System () including the review of integrated related engineering disciplines. The purpose of this review was to enhanee LP&L's confidence in the Page P-9
l Waterford 3 design process and to provide additional assurance to NRC that Waterford 3 was designed and constructed in accordance with the applicable requirements. LP&L'S ORGANIZATION In the early phases of Waterford 3, LP&L's role in engineering was limited to review and approval of the key conceptual designs. During that period the LP&L engineering staff was very small and organized under the Power Production group. As the project evolved, the need for LP&L's involvement in engineering increased, and the company eventually reorganized to place the engineering, construction, commercial, project control, and records staffs within the Project Management Group and the technical support activities within the Nuclear Services Group. The Project Management Group is currently responsible to: o manage, perform and direct the design change process, o prepare limited design documents and design specifications, as applicable, o prepare equipment and service requisitions and technical assessment of alternatives, o provide interface with the corporate contracts section. o monitor project cost and schedule o monitor and coordinate the construction activities at the construction site, I o provide interface with the start-up test group and the A/E and to resolve construction related problems, l o evaluate, plan and manage future construction related activities, and o provide support to the plant staff during emergency conditions. The Nuclear Services Group is responsible to: o provide licensing interface with Federal, State and Local rgencies, l o provide technical support in the areas of radiological control, Chemistry / Radiochemistry, and Nuclear Fuels management, Page P-10
o manage special projects,
\ /
o provide liaison with Middle South Services, and o - manage and direct Emergency Planning. CONFIGURATION CONTROL BOARD The Configuration Control Board (CCH) consists of LP&L and Ebasco Project Leaders. This board was formed to control the configuration of the Waterford 3 nuclear power plant, at the time of receiving an Operating License. Its intent is to ensure timely receipt of the Operating License while controlling plant design changes. The only design changes (other than changes required to accommodate construction) approved by the CCB for completion prior to the Operating License are those: o needed to meet safety requirements o needed to meet NRC commitments o needed to generate power (kilowatts) The meetings of the CCB are scheduled on a regular basis. LP & L's (VA) Project Manager, Plant Manager and Nuclear Services Manager, independently or collectively (depending on the cost and schedule impact and whether or not a change is mandatory), must authorize the implementation of all CCB recommendations. DISCUSSION The engineering organization used on Waterford 3 is typical and representative of organizations utilized throughout the industry. LP&L's involvement was limited to the monitoring and control of l Ebasco's activities and participation in areas involving plant start-up, operation and maintenance. Ebasco performed all of the detail engineering including the design, drawings and specification preparation. LP&L approved design documentation, vendor bidders l lists and contract awards. l Two aspects of the Waterford 31:ngineering Organization differ from organizations used on many other nuclcor power plant projects. One important difference is the early formation of Ebasco's Site Support Engineering (FSSE) organization, which enhanced the coordination of design and construction efforts. The second difference is in the formation of the Configuration Control Board and the implementation of a formal control method. ' O(,I i The tremendous impact of design changes on the cost of nuclear generated electricity was recognized in the President's private Page P-11
sector survey on cost control. The task force report issued April 15, 1983, identified design changes as the major cause of cost escalation. Key reforms recommended in this working draft were to stabilize regulation and to require irrplementation of design changes only when they are required for safety. LP&L's management realized the need for formal design change control earlier than many utilities involved in nuclear power plant construction. The formation of the Configuration Control Board was a prudent decision; LP&L's performance on this subject was above the industry's norm. CONCLUSIONS Decision Management Company, Inc, evaluated practices and organizations used in engineering of the Waterford 3 project in light of criteria shown in Section P-3. Based upon that analysis, we have determined the following:
- a. The Waterford 3 Engineering organization, consisting of LP&L and Ebasco personnel, was adequctely staffed throughout the duration of the project.
- b. Ebasco and LP&L had adequate technical procedures throughout the project duration. The same conclusion was also reached by Torrey Pines Technologies (TPI) during their independent review.
- c. LP&L's management was actively involved in managing the Ebasco Engineering Organization,
- d. LP&L management has developed and implemented an effective method of controlling changes and completing engineering activities required to obtain the Operating License.
Based upon the above considerations we conclude that LP&L acted prudently with regard to the above subjects. 5.0 Conduct of Waterford 3 Engineering Process Detailed design engineering of Waterford 3 was performed by Ebasco Services Incorporated. Ebasco's responsibilities included the development of drawings, specifications, calculations and many other classes of engineering documents. In order to assure plant licenseability, these documents had to meet the following requirements: O Page P-12
.. . - --. - . ~ . . __. ._ _. - - .-
- a. Industry Standards.
+(
l
- b. Federal, state and local regulations, codes and ordinances.
- c. Contractual agreements defining scope, schedule and cost of deliverable products and services.
- d. Constructability, operability, maintenability and availability.
- e. Commonly accepted principles of good engineering practice.
- f. ' Quality Assurance program requirements.
To ~ assure that Waterford 3 deign meets the above requirements, the key project . parameters were defined in the project specification._ Input used for this specification consisted of project criteria and Ebasco reference documentation. i' The project criteria included the overall' project cost and schedule, NSSS and
- turbine generator vendor information, site data and licensing requirements. The Ebasco reference documents are Reference Plant System Design descriptions, j
standard equipment specifications, daign guides, the QA manual and the company procedures manual. Using the-input described above, the project specification was developed. In Ov ' add; tion, LP&L/Ebasco completed conceptual design and prepared the Safety Analysis Report (PSAR) and Environmental Report (ER). The engineering effort proceeded with detailed deign and procurement. After detailed engineering had advanced sufficiently, Waterford 3 site preparation was initiated. In an ideal L situation, the remaining engineering work would have proceeded smoothly so that the schedule would not be interrupted until project completion. However, this ideal situation did not materialize on Waterford 3. Initial licensing
. delays prolonged the issuance of the Construction Permit beyond the originally estimated date for more than two years. Ebasco reported in April 1975, that at about 1% construction completion, engineering was 78.3% and procurement 47.9%
complete. . The effect of such high completion of engineering at construcMon start
~ is usually very beneficial. However, the progress of engineering and procurement at Waterford 3 was held back by the impact of regulations, change in design and the inability of some vendors to complete their own engineering on time and deliver products on schedule._ The impact of regulatory and design changes is discussed further later .in this section. The following are a few examples of vendor related ,
difficulties: j o Ebasco progress report No. 36, October 1974, states: u NY-403455 P.O. for 480 Volt Power Centers Class IE
" General Electric advises that the above dates are the best they can L (' offer due to their tremendous engineering backlog,"
l L ! Page F-13
~ - . . . - - - - .- - . - - .-., _ --..
NY-403430 P.O. for Purchase of the Auxiliary Transformer ..." Due to the heavy backlog of work at the vendor's engineering department, Ebasco electrical engineering has authorized submittal of final drawings 30 weeks prior to the shipment date of 12-31-76." o Ebasco progress report No. 42 of April 1975, states: Order #NY-403417 for 4 Circulating Water Pumps
... "This order remains 'on hold' due to design changes in the intake structure to be approved by the Corps of Engineers..."
Order #NY-403481 for the purchase of Butterfly Valves "This vendor expects to requote prices on this order by May 30, 1975 because of revised design specifications submitted by Ebasco March 21, 1975. No schedule is presently available." DMC believes that, while these difficulties were severe, their effect on Waterford 3 construction was less than on other contemporary projects. The reasons for this better than average performance are in that Waterford 3 engineering was more advanced at construction start; plant layout wcs spacious; and LP&L/Ebasco were more aggressive with vendors. LP&L prepared in the fall of 1983, a study entitled " Root Cause Variance Analysis". In that study, six areas of the Waterford 3 project were identified as having been severely impacted by regulations. Those areas are:
- 1. Piping and pipe supports
- 2. Iow as reasonable achievable (ALARA)
- 3. Fire protection
- 4. Three Mile Island
- 5. Quality Assurance
- 6. Licensirig The total cost of regulatory changes in these six areas alone was estimated by LP&L as over 500 million dollars.
In order to escertain whether the problems reported by LP&L were indeed caused by regulatory changes, DMC decided to review a sartple of key engincering issues in detail. Subjects selected for this review included General Arrangement (GA) Drawings and the Main Steam Piping System. Review of GA drawings concentrated on identifying changes which were clearly attributable to the addition and revision of regulatory requirements; Review of Main Steam piping focused on the design process and layout changes caused by pipe rupture criteria. O Page P-14
5.1 General Arrangcment Drawings [ Specific requirements imposed upon plant design arise from several sources. The NRC requires implementation of documents such as the Code of Federal Regulations, Regulatory Guides, Branch Technical Positions, Generic Letters and others. In addition to the NRC, regulations issued by the Environmental Protection Agency (EP A) and the Occupational Safety and IIeelth Administration (OSIIA) also had a significant effect on Waterford 3 design. In addition to the above, in order to make power plants safer, and to comply with Federal regulations, the industry itself issued numerous codes and standards which had a significant impact on the schedule and cost. The timing of issuance of the new regulations was unfortunate for Waterford 3. The plant was conceived in a relatively stable period of the late sixties and docketed in early 1971. The changes in regulations and standards occurred after the initial layout and design were finalized and docketed in the PSAR. As a result, the new developments had to be engineered as revisions, adding systems and components and altering plant layout. The net result of all these changes is that the plant described in FSAR has only slight resemblance to the version described in the docketed PSAR. To determine the effect of regulations on Waterford 3, DMC reviewed General Arrangement (GA) drawings. Since GA drawings <'9 fine the plant layout and arrangement of equipment and systems, the analy:Is of revisions made thereto is
. representative of the impact of regulations on Waterford 3. The key premise of our analysis is that if a certain percentage of GA drawing revisions is attributable to regulatory requirements, than st least the same ratio is true for the entire engineering effort. When revisions are analyzed and sorted, they will provide a meaningful comparison between revisions caused by regulation and those due to others causes.
DESCRIPTION For the review of General Arrangement Drawings, DMC, Inc. requested that LP&L provide GA drawings, a list of all revisions made on each drawing, and the date of the initial drawing issue. During the subsequent interviews, each drawing was reviewed and each revision discussed. The revisions mede as a result of regulatory requirements, were further evaluated. The explanation of and the reasons for each change were given. The location of change and revision numbers were then marked on GA drawings and the revisions listings. The interview notes and submitted material were further reviewed and summarized for each drawing. Details of our analyses are shown in the Appendix. Our analysis classified GA drawing revisions into four groups: revisions made durin; the design development phase, minor revisions, revisions required by regulations (RRR) and revisions made for G reasons other than regulations (ROR). Page P-15
Revisions made during the design development phase are considered to be part of the original work scope. The accepted industry practice is that initial drawings are reviewed by several engineering disciplines, QA, and in case of GA drawings, also by the client. Comments made on the first couple of revisions normally finalize the concept and assure product quality. Since we believe that design l development revisions are part of the normal engineering process, their weighted effects were neglected. Minor revisions are classified separately to describe small, inconsequential changes made to GA drawings (such as revisions to notes, title blocks, cross references and other). The effects of those changes on the overall engineering are minor and their weighted effects were neglected. Regulatory required revisions are changes in design and drawings caused by mandatory compliance with the Code of Federal Regulation, Regulatory Guides, SRP's and other regulatory documents and industry standards. Since many of these requirements were issued af ter part of engineering was completed, the drawings and other contract documents had to be changed. In this study, revisions related to regulatory action compliance are recorded and their effect calculated as a percentage of all revistord. Revisions made for reasons other than regulations may have been caused by client requests, improvements and innovations in design, interfacing with vendors, correction of errors and omissions or any other reason. The total number of those revisions was also recorded and their effect computed in the same manner as for RRRs. Figure P-5 entitled " Evaluation of Changes to Waterford 3 General Arrangements Drawings", presents the summary of our analysis. The figure contains the following information: o GA drawing number o Total number of changes made to each drawing and all gas o Number and percent of revisions attributable to RRR o Number and percent of revisions attributable to ROR One drawing out of those eleven was added in its entirety due to compliance with regulations. Number of RRR changes for this drawing only, was estimated as the average number of changes calculated for ten remaining drawings. The percent of each category was calculated by dividing the number of revisions for each category with the total number of revisions. The above analysis indicates that about 54 percent of all GA Page P-16 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ J
revisions were made to comply with regulations. It is reasonable to assume that the same ratio (at least) is true for all other engineering documents. DBCUSSION The method used to calculate the percentage of RRR is approximate but reasonable. This method is used extensively throughout the engineering / construction industry for preparation of " order of magnitude" estimates. It is based on the premise that engineering
.. drawings of the same type require similar manhour budgets.
Derefore, when an " order of magnitude" estimate is required, the quantity of engineering work is determined by counting the number of drawings required to engineer the structure, component or facility, and multiplying that number by unit manhours. We also believe that while making this evaluation DMC, Inc. was censervative when regulatory requested changes are calculated. We included in the RRR column only those changes which were directly attributable to new regulatory requirements, and we did not consider their " ripple effect" For example, if equipment was added due to regulatory requirements (such as Emergency Diesel Generator Oil Storage Tank), revisions of components like structural floors, pumps and piping accessories are not shown on GA's and, therefore, were not included in our analysis. If these " ripple effects" were taken into account, we believe that regulatory requirements would have O accounted for a much higher percent of revisions. The description and brief explanation of the underlying causes of each regulatory required revision is presented in Appendix X. Following our analysis, we grouped the causes of those revisions into 5. major categories. Dese categories are as follows:
- 1. Three Mlle Island post accident modifications
- 2. - Radiation and toxic chemicals monitoring and HVAC modifications (also known as ALARA)
- 3. . Fire protection and criteria for electric cable separation
- 4. Piping and pipe support rerouting and modifications
- 5. Ultimate heat sink (combination of wet and dry cooling towers)
As indicated earlier, Louisiana Power & Light Company completed a study entitled " Root Cause. Variance Analysis" this fall. In this p study, LP&L identified six major areas which have been impacted by 1 i regulations and which contributed to much of the Waterford 3 cost escalation. For each area, LP&L computed associated costs for Page P-17
I Materials, Installation, Indirects, Architect Engineering and l Constmetion Management, but did not evaluate the impacts on costs controlled directly by LP&L (i.e., not by Ebasco as agent for LP&L). DMC's review of Waterford 3 General Arrangement Drawings identified four areas where compliance with regulations caused ) extensive revisions. Those areas include items one through fourl, as shown in the above table. The similarity of conclusions of these two independent studies, lends credibility to LP&L's " Root Cause Variance Analysis". Having established the credibility of the " Root Cause Variance Analysis", DMC decided to review reasonableness of the cost of changes reported therein. We began this task with a research of literature containing industry-wide cost data. The criterion used in this research was that comparative data must be completely unbiased. The one document which offered such unbiased , information is the U S DOE publication entitled " Nuclear Power Regulation". This document contains estimates of TMI related costs prepared by the NRC staff and the Atomic Industrial Forum (AIF). While the two groups disagree on a number of issues, their estimates ' of TMI related costs are fairly close and, with respect to Waterford 3, unblased. The NRC estimated TMI costs at about $25 million per nuclear plant; AIF estimated $28 million. Since these estimates were made in 1979, they should be escalated to reflect inflation over the intervening thae period. The " Root Cause Variance Analysis" estimates Waterford 3 TMI related costs at $28.2 million. The LP&L'. estimate is below the escalated NRC/AIF estimates; this close comparison leads us to believe that data presented in the LP&L report are reasonable. CONCLUSIONS Decision Management Company, Inc. analy::ed the General Arrangement Drawings and the regulatory impact on the Waterford 3 nuclear power plant. Based upon that analysis we have determined the following:
- a. Regulatory Required Revisions have caused the engineering cost of Waterford 3 to escalate significantly.
- b. Regulatory requirements were the cause of at least 54 percent of design and engineering changes; a detailed analysis would most likely support a much higher percentage.
1 The effects of the other two areas identified in LP&L's report, Licensing and Quality Assurance, are not reflected in GA Drawings. Page P-18
s c. The results reported in LP&L'r Root Cause Variance Analysis v) 5.2 appear reasonable. Review of Main Steam Line Pipe Design The purpose of piping systems is to carry steam, water or gases to from one piece of equipment to another. As related pieces of equipment are located in several different areas or buildings, nuclear plant piping is miles long and extremely complex. The piping systems are classified in accordance with the function they perform within the system and in accordance with the safety criteria which must be satisfied. Besides pipes, piping systems include valves and instrumentation, anchors, supports, snubbers and pipe rupture restraints. The escalation of costs of piping systems on Waterford 3 was the biggest of all , systems considered. In.this section, DMC, Inc. will evaluate reasons for those cost increases, and determine whether the p.oblems were caused by events within LP&L's control. Since the initiation of the Waterford 3 project, rcculatory requirernents affecting piping systems have changed significantly. These regulations include: 33 new Regulatory Guides, some of which were revised several times; 32 Safety Review
/N Plans (SitP); 4 branch Technical Positions (BTP); 61 I&E Circulars; 8 NUREG's; changes in Codes of Federal Regulations; and several Generic Letters. Due to the large amount and complexity of piping, even a small regulatory change can have a large impact on project cast and schedule.
In order to review the engineering process, verify understanding and compliance with regulations, and the existence and application of engineering procedures, DMC, Inc. selected piping for more detail review. Since review of all piping would be l very time consuming, only one system, the Main Steam system, was selected. DESCRIPTION Two main steam lines, 40" in diameter, connect Waterford 3 steam generators to the turbine. Main Steam piping design drawings and specifications were initiated in the summer of 1972. Design was accomplished in accordance with the flow diagram shown in Figure P-6. From flow diagrams, piping drawings were developed and the l first stress analysis was performed in accordance with ASME B&PV l Code Section III, Winter 1972 addenda. LP&L reviewed and approved specifications in September of 1972. The bid evaluation package for fabrication was prepared, and Drave was selected to l supply fabricated pipe. A Purchase Order was issued in April of l 1975. The order for material was placed with Cameron Iron Works; L the Cameron order was based on the Ebasco specification entiticd p " Heavy Wall Seamless Pipe". A list of Main Steam Specifications l( and Drawings is shown in Figure P-6. s ! Page P-19
The original Main Steam pipe rcating was shown on drawings LOU-1564-176 sheets 1-6 Revision 0, dated August 31, 1972. This layout predates the AEC's imposition of rules requiring evaluation of pipe rupture for high energy lines, in December,1972, the AEC issued a letter outlining pipe rupture analysis requirements, including how pipe and rupture locations are to be determined, and how to protect against such effects. This directive was followed by another AEC letter in July i 1973, defining additional pipe rupture requirements. To comply with the AEC requirements outlined in those documents, a pipe rupture analysis was initiated. As a result of this analysis, it was determined that the loads imposed on the RAB South Wall due to pipe break in the Turbine Building would not meet the new criteria. To solve this problem, the Main Steam Line was rerouteJ. across the Reactor Auxiliary Building (RAB) roof. The rerouting impacted not only piping, but structural design as well. As a result, walls ar,d columns had to be strengthened to sustain the additional heavier loads. After the rerouting of piping, new stress analyses were performed, i and vendor drawings reviewed in accordance with Ebasco Manufacturers Documents Records and Control (EMDRAC) procedure. Pipe supports were contract (.d to Bergen Paterson who also performed support design. Ebasco reviewed the space availability on the scale model of the Reactor Building. The fabrication of piping and supports followed, and then component shipment and MS line installation followed. Figure P-7 presents a summary Irvel overview of the drawing preparation process and interfacing among Ebasco, LP&L and Vendors. Drawing preparation was governed by procedures E-7
" Processing Drawings for Review and Approval" and E-69 " Design Change Notice / Field Change Request". Figure P-8 presents a summary level overview of the Mein Steam line specification development and purchase orders issue. The figure also identifies the key procurement dates and lists goverring Ebasco procedures.
Af ter completion of design and installation the as built piping review is made to assure that the actual installation is consistent with the design doeurnents. Final acceptance of the Main Steam Line System follows the successful start-up and testing when system and components are turned over to the LP&L plant staff for operation. Page P-20 I
DBCUSSION Prior to 1970 and for most power plants completed prior to 1976, piping daign and stress analyses were performed in accordance with ANSI B31.1 (Power Ploing). In July of_1971 ASME Section IH replaced the requirements of ANSI B31.1. The new loads resulting from hypothetical plant accidents were introduced in addition to normal plant operating loads. Section HI has had monumental impact on engineering, procurement and construction. With respect to engineering, Section IH increased design loads, changed analytical techniques and increased documentation requirements. With respect to procurement of piping components, ASME Section IH increased material traceability, inspection and documentation requirements. For example, with respect to documentation ASME Code Section III required: Manufacturer's Data Reports, Certificates of Compliance, Hydrostatic Test Records, Wall thickness and weld record documentation, Certified Material Test reports, Certificates of Material compliance and Nondestructive test records. This increased documentation significantly increased both the cost and lead ti;ne necessary for procurement. ! With regard to construction, Section III increased personnel
- qualification requirements, inspection, testing and document control.
i These requirements combined to increase labor unit rates, decrease manpower availability, prolong construction duration and delay project schedule. The NRC Pipe break analysis requirements further complicated design, procurement and construction.- As discussed earlier, the major problem associated with pipe break is In the size of resulting dynamic forces. The magnitude of those l forces is far greater than normal operating loads, end may even be greater than earthquake loads. Besides ASME and pipe rupture, other new NRC requirements had to be incorporated into the Waterford 3 de,ign. For example:
- a. Piping systems had to be qualified for seismic forces in order to assure system functionality during an earthquake.
- b. Piping systems had to be protected from missiles generated by p tornadoes, explosions, turbine generator overspeed and other missile-generating phenomena.
Page P-21
l 1
- c. Safety related structures, ystems and equipment had to be protected from jet impingement, pipe whip and other forces resulting from a postulated pipe break.
LP&L estimated in its " Root Cause Variance Analysis" that $222.3 million are attributable to piping cost increases. We did not attempt to verify thise costs because such an analysis would require a much greater level of detail than was scoped for this study. However, based on our review of Waterford 3 and experience with other similar projects, we believe that LP&L's assessment reported in " Root Cause Variance Analysis" is reasonable, if not conservative. CONCLUSIONS Decision Management Company, Inc. evaluated the Main Steam piping design in order to review the conduct of engineering as applicable to piping. Based upon our analysis and in light of criteria shown in Section P-2, we have arrived at the following conclusions.
- a. The engineering of the Main Steam line v'as performed in accordance with criteria specified in FS AR and N RC requirements.
- b. Throughout the project, Ebasco had detailed procedures which served as a basis for preparation of technical documentation.
- c. The Main Steam Line system as well as a large majority of other piping systems were severely af fected by regulatory changes,
- d. Rerouting, changes and rework have caused the cost of piping on Waterford 3 to escalate. LP&L's estimate of piping cost
. Variance appears to be reasonable. l l l O Page P-22
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l . t t i FIGURE PROVIDED BY LP&L l l. I L ! V. L i
FIGURE P-2 ISOMETRIC VIEW OF Tile FEACTOR COOLANT SYSTEM
%J %J STEAM 37ag GENERATOR GENERATOR I No.1 No.2 W Jg PUMP PUMP
/ No.18 y No.2A N M
@W l he PUMP '"l pyyp No.1A No.2B
(
$ ll - b lj o
n , e' y er .;ei o
\ '
DRAINS REACTCR . [\ TED pg PRESSURIZgg FIGURE PROVIDED BY LP&L O
i FIGURE P-3 Ebasco Services incorporated
)
ENGINEERING DEPARTMENT ORGANIZATION VICE PRESIDENT OF ENGINEERING MANAGER CHIEF STANDARDS & ENGINEERS PROCEDURES O ASSISTM DIVislON CNi:, ----- ENGINEERS PROJECT CNGINEERS ASSISTANT
---== DIVISION EUPERVISING CHIEFS LEGEND:
ENGINEERS LINE OF AUTHORITY.
... EXCHANGE OF DESIGN INFORMATION.
i GROUP SUPERVISORS FIGURE PROVIDED BY LP&L LEAD OlSCIPLINE ----- SUPERVISING ENGINEERS DESIGN ENGINEERS l ENGINEERS DESIGN ENGINEERS ( ASSOCIATE ENGINEERS DESIGNERS AS$1STANT ENGINEERS DRAFTSMEN
FIGURE P-4 LOUISIANA POWER & LIGHT CO. - WATERFORD UNIT NO. 3 ENGINEERING PROJECT TEAM NYO- ESSE ENGINEERING VP CHIEF ENGlNEERS
& DIRECTORS CORPORATE d
Y PROJECT TEAM PROJECT ESSE ENGINEER . . . . . . . ?E e 8 ES$E LEAD DISCIPLINE LEAD DISCIPLINE ENGINEER = = = = = = ENGINEERS e e a e E 8 LEAD DESIGNERS LEAD GNERS FUNCTIONAL RESPONSIBILITY
==== PROJECT RESPONSIBLITY FIGURE PROVIDED BY LP&L O
, ~ x. FIGURE P-5
!, ,I EVALUATION OF CHANGES TO
\~/ WATERFORD 3 GENERAL ARRANGEMENT DRAWINGS GENERAL TOTAL NUMBER PERCENT NUMBER PERCENT ARRANGEMENT NUMBER 0F 0F 0F 0F DRAWING 0F RRR RRR OTHER OTHER NUMBER CHANGES CHANGES CHANGES CHANGES CHANGES
=======2========= ======== ======== =======u ======== ========
LOU-1564-G-127 20 8 40.00% 12 60.00% LOU-1564-G-134 25 14 56.00% 11 44.00% LOU-1564-G-135 16 9 56.25% 7 43.75% LOU-1564-G-136 7 2 28,57% 5 71.43% LOU-1564- G-137 7 5 71.43% 2 28.57% LOU-1564-G-141 11 4 36.36% 7 63.64% LOU-1564-G-143 15 7 46.67% 8 53.33% LOU-1564-G-144 16 9 56.25% 7 43.75% l ') LOU-1564-G-145 15 8 53.33% 7 46.67% xs; ---------------- -------- -------- ---..---- -------- -------- t00-1564-G-149 8 3 37.50% 5 62.50% LOU-1564-G-210 14 14 100.00% 0 0.00%
================= ======= ======== ======== ======== ========
l TOTAL FOR ALL gas 154 83 53.90% 71 46.10% i l 7% t / wJ L:
FIGURE P-6 Primary Main Steam Louisiana Power & Light Company Waterford Unit No. 3 LOU 1564.079 " Turbine Generatu. and Accessories, C I ERIA DESIGN APPROACH LOU 1564.088 " Containment Piping Penetrations" LOU 1564.100 " Station Piping, Hangers
- COST and Supports"
- SCHEDULE DETAILED LOU 1564.100A " Heavy Wall Seamless
- AVAILABdLITY VENDOR pipe a
- MAINTAIN A8a LITY ENGINEERING ,,
- NS$$/TG SE LECTION PROJECT j ( LOU 1564.108 " Main Steam Isolation
- SITE DATA DEFINITION Valves"
- LICENSING G-151 " Main and Extraction Steam Flow Diag"
- PROJECT DETAILED G-176 " Main Steam 6 Feedwater Pipi;4g"
~
SPECIFICATION SERVICES
. SDOs
; . BASE LINE U SCHEDULE e DETAILED
. BUDGET ENG & DESIGN ESTIMATE
- PROCUREMENT EBASCO
- PSAR/ER REFERENCE Main Steam Base
- QA MANUAL Design Documents DOCUMENTS . PROC;JURES MANUAL o CE BOP Criteria o Additional Design Criteria OPDDe & SODS o Westinghouse Design Manual
- STAND D o Westinghouse Instruction Book p
- DESIGN GUIDES o Westinghouse Thermal Performance
- QA MANUAL
- COMPANY PROCEDURES FIGURE PROVIDED BY LP&L e O O
O O FIGURE P-7 O Louisiana Power & Light Company Waterford Unit No. 3 DRAWING LOGIC Example: G-151 " Main and Extraction Steam Systems CERTIFIED VENDOR DESIGN DATA Governing Ebasco Engr Procedures o E-7 " Processing Drawings for Review and Approval" j E-69 " Design Change Notice / t PRELIMINARY o Con 4PLETE VENDOR DESIGN DATA PRE LIMINARy Field Change Request" DESIGN l lNCORP COW 4ENTS REEUTION PHELIMINARY INTERDis CO8APLETE INTERDIS N INPUT n DESIGN g Y n REVIEW n CHECK nVERIFY,1g FINALIZE, g DESIGN n REVIEW g00hedENTS v v v v v v v j LPL INTERFACES WITH REVIEW OF gas, CWDs
& FLOW DIAGRASAS 1
FIGURE PROVIDED BY LP&L RELEASE FOR VERIF Y n SIGNOUT CONSTRUCTION v v
FIGURE P-8 Example: LOU 1564.100 " Station Piping,,11 angers and Supports" Louisiana Power & Light Company Waterford Unit No. 3 coverning Esasco enar Proceeurc, @ERGEM WGC o E-21 Rep of Proj Equip Specifications o E-20 Guidelines for Specification Review PREPARE o E-1 Review of Vendor Drawings PURCH o E-6 Emdrac Fystem (LPL-1228) 9-19-72 RID -lNTERDISCIPLINE SPEC EVAL LPL PRFPARE SIGN. LPL & PURCH ,i FOR AUTH V SPEC AREVWMVERIFn OUT nAPPROVAh INO MECOM Y VE RIFIMM e v v v v v v v v v v v (LW3-80-73] L (LPL-2037) ( 2-12-73 : ( 4-3-73 ) Revinion 2 of Spec g VENDOR 5-18-73 oA = INPUT 3 OUAL REVIEW VENDOR (Ebasco STD INTERDISCIPLINE DWG8 Piping Spec) REVIEW (NY-403433) & _ _ VENDOR REL FAB & LSSUE l FOR U SP & StGNOUT FAB P.O. TL a FIGURE PROVIDED BY LP&L VENDOR SUOMIT DWGS PROCEDURES O O O
Chapter Q $vl PROCUREMENT Re term procurement refers to the process of obtaining the goods and services required to design and construct an operating power plant unit. Its objective is to obtain necessary goods and services within the project's regulatory, engineering, financial and schedule requirements. The objective of this chapter is to examine the procurement process used on'the Waterford 3 project and determine the adequacy of LP&L's efforts as compared to utility industry norms. This objective was accomplished through evaluation of the Waterford 3 procurement procedures in light of other industry procurement procedures; examination of the procurement of the AE/CM services, NSSS, TG, and representative construction contracts; review of the overall procurement process in relation to the economic, labor and other conditions and environment; and documentation of DMC's conclusions regarding the effectiveness of LP&L's Waterford 3 procurement practices and decisions. 1.0 Overview of Procurement Function and Evaluation Criteria 1.1 Function The procurement process involves a number of activities. As the first step, goods
] and services necessary to complete a project are identified. Upon the identificction v/ of that need, the procurement organization prepares a list of acceptable bidders.
This activity looks beyond the simple identification of firms offering such goods or services because it is necessary and prudent to examine the adequacy of potential suppliers in terms of financial strength, present work load, organizational staffing, level of experience and general business practices. From this examination of potential bidders will come a list - usually limited to four to six bidders of comparable qualifications. The purpose of this bidders list is to identify organizations qualified to accomplish project work, who will be solicited to provide quotations for particular goods or services. When the specification for the goods / services is fully defined, a request for quotation is formally issued by the procurement organization. The specification usually consists of three parts: Quotation or proposal information, commercial requirements, and technical requirements. The teennical requirements section is normally prepared by the design engineering organization; other sections are develop ed by procurement specialists. Preparation of this document requires a substantial effort; its quality is directly proportional to the quality of the proposals; the quality of the purchase contract; and owner's ability to control the supplier during contract performance. The evaluation of proposals is the responsibility of the procurement organization. m De evaluation encompasses four activities: Review and comparison of the technical ( j offerings; review and comparison of the proposed commercial terms; resolution of
" exceptions to both technical and commercial requirements; and price normalization Page Q-1
of the proposals. Price normalization refers to a process through which the procurement organization and the engineering organization determine the cost impact of differences between the bidders' offerings. The reason for this effort is to identify the vendor offering the best product and/or service at the most reasonable price. The job is not simple and straightfcrward because some offers may require more operating power, greater physical space, more ancillary equipment and many other cost penalties. 'Ihe cost impact of these differences must be determined and brought into the comparison. The conclusion of this evaluation process results in a formal purchase l recommendation from the procurement organization to the purchase authorizing l organization. If the authorizing organization accepts the recommendation, then the purchasing organization proceeds to resolve outstanding contractual issues with the successful bidder. As the final result of this effort, a formal purchase order (or contract) is issued to document all obligations of the buyer and seller. The final purchasing organization activity is contract administration. This activity is so important to a successful project completion that it is covered in a separate section of this document. 1.2 Organization The procurement function is carried out in several ways within the utility industry. Most utilities delegate the function to their AE and/or CM. A minority of utility companies do their own procurement. In some isolated cases, the utility hires a prime contractor who is responsible for all project procurement. Any of the above organizational approaches can be effective and ultimately successful. The owner's involvement in procurement as the ultimate decision maker is highly advisable, provided that the utility retLined its rights to control the process. The level of owners control is directly related to the active participation of executive management. 1.3 Types of Contracts On a nuclear project such as Waterford 3, three basic types of goods and services are purchased. The most demanding and time consuming task is procurement of systems and equipment requiring extensive engineering effort to specify, evaluate and administer contractually. These items are usually referred to as " engineered equipment". The second category, bulk materials such as structural steel, pipe or power cable, constitute a less engineering-intensive nype of purchased goods. The third category includes construction services, the prccurement of the skilled building trades necessary to erect the equipment and materials into a completed unit. Activities such as excavation, steel erection, scaffolding, pipe fabrication and erection, electrical construction, etc. are included within this category. These contracts are frequently issued from field or site offices; they are always administered from the site. Page Q-2
1.4 Context of Procurement i \ j Procurement takes place in the context of the world, U.S. and local economies. Procurement for Waterford 3 was carried out throughout the 1970s; during that time period there were many significant events in the context economies which impacted Waterford 3. These events were: i) the nuclear power " bandwagon"
- 11) wage and price controls (1971-1972) lii) the oil embargo (1973) iv) uncharacteristic inflation (mid to late 1970s) v) the energy industry boom (1974-1977)
The nuclear power bandwagon was actually a part of an unprecedented expansion of central power station capacity across the country - utility industry's response to rapidly advancing load growth. At the time when Waterford 3 was on the drawing boards, the total number of planned units exceeded 250; approximately 160 of these units were nuclear. The utility industry was experiencing load growth rates ranging from 7 to 1, per annum. This tremendous expansion in capacity had saturated (')/ equipment vendors and created a" sellers" market. This in turn made the purchasing
-(
function focus closely on who could actually deliver, and rush to reserve scarce shop space. Wage and price control were in effect in the U.S, during the early engineered equipment purchasing phase of the project. Waterfcrd 3 equipment vendors were facing a difficult dilemma: Because of wage / price controls, some of them contracted with LP&L during a period under wage / price controls; they had to buy materials and supply labor after the controls had expired. While this situation was advantageous to LP&L initially, it created difficultics in contract administration. The oil embargo accelerated the need for Waterford 3, but also produced a period of supply problems for pipe, valves, steel, etc., as refineries expanded and oil exploration and development increased in order to reduce U.S. dependency on OPEC. The economy suffered from inflation caused by the Vietnam War, wage and price controls, and OPEC pricing. This took place at the time Waterford 3 construction was peaking; its impact on labor rates and construction materials cost was significant. The overall energy boom that continued throughout the decade gave rise to numerous synthetic fuel projects and refinery changeovers to process lower grade crude oils. Competition for shop space increased and the cost of goods and o) ~ services rose sharply. Suppliers became reluctant to service the nuclear industry in general because of the stringent quality assurance requirements which demanded Page Q-3
higher quality personnel and more management attention. In short, vendors felt that their resources were better allocated to the less demanding requirements of the other industries. There is little question that the 1970s were the least stable procurement period in the history of the utility industry. There was no time worse for capital and labor intensive projects to be carried out. Figure Q-1 shows the rate of escalation of labor costs. From 1972 to 1974, the rate of increase was approximately 5.8%; from 1974 to 1980, the rate of increase was 10.7%; and from 1980 to 1983, the rate was 13.2%. Figure Q-2 depicts the impact of wage and price controls and inflation. From 1974 to 1975, after the wage / price restrictions were lifted, a large jump occurred in the rate of price increases. The high inflation was also evident in 1979, with rates increased up to approximately 17%. a 1.5 Evaluation Criteria In evaluating the efficacy of a utility's procurement practices, it is necessary to answer the following questions:
- a. Were all pertinent types of goods / services considered?
- b. Were all qualified suppliers of goods / services considered?
- c. Was an adequate RFP (or specification) developed?
- d. Were reasonable selection criteria developed?
- e. Was evaluation of bids quantified?
- f. Were bidc evaluated by qualified personnel?
- g. Was the selection process unbiased?
- h. Was the selection process documented?
DMC's analysis of LP&L procurement practices was focused on the adequacy of LP&L's control over the procurement process, LP&L's active protection of its commercial rights, and its flexibility with respect to changes in the marketplace for the goods and services necessary for completion of Waterford 3. O Page Q-4 _ _ - - - - - - - - - - - - - - - - - J
2.0 ' LP&L Procurement Q Most of LP&L's procurement was accomplished in accordance with Ebasco's standard procurement procedures. This procedure was' placed in effect af ter LP&L's
-selection of AE/CM and purchase of the NSSS, and the TG. The last two items are frequently termed the prime movers and it was a widespread custom in the utility industry for the utility to procure these items without an A-E, and sometimes even before the A-E was selected. This section will first discuss these three unique contracts, and then evaluate the " standard" procurement process, r 2.1 LP&L Selection of an AE and CM .
LP&L 'did not procure AE and CM services on a competitive basis. The company negotiated a contract for these services with their historical AE and CM- Ebasco
- Services, Inc.
This approach is discouraged at the present time, because of recognition by both utility companies and regulatory commissions that AE/CM services represent u major i cost item which should be procured on a competitive basis. At the time the initial agreement between LP&L and Ebasco for Waterford 3 engineering services was made, LP&L's approach' was the most prevalent in the utility industry. This approach itself is based on the premise that competitive bidding for professional services is unethical and unreasonable. A 'LP&L's initial agreement with Ebasco to provide engineering services was reached (, j July 21,1970, and the final contract was signed April 27, 1972. The time lag U between agreement and formal contract is not unusual for large scale, engineered projects. The period without a contract spans the preliminary design phase which is I not as cost intensive as r,ther phases of the project. Many utilities used this time lag as'a leverage in contract negotiations with the AE/CM. 1 The contract between LP&L and Ebasco provides a clear and thorough definition of services to be provided, reeponsibilities of the contractor and determination of costs. The contract is basically cost-reimbursable type with a fixed fee. This type of contract for AE and CM services was and is fairly common in the utility industry. The fixed fee is usually computed as percentage of the direct labor, materials and installed equipment costs. On Waterford 3, the AE/CM's fee was determined as a fixed dollar amount. The reimbursable costs consist of professional - service charges, out-of-pocket expenses (such as travel costs, outside consultants, telephone, etc.), and special equipment charges (such as computer time, metallurgical testing lab, etc.). The most significant cost item is clearly the profesional service
. charg es. These costs are keyed to the base salary of the professionals assigned to the job. This base salary is multiplied by a factor which provides for benefits, clerical and administration expense, professional development, facilities expense, and
, . general baines expenses. The multiplication factors throughout the industry vary between .the high average factor of approximately 3.0 and the low average factor is .
, 1.9. On .Waterford 3, this factor is 1.7. Additionally, out-of-pocket expenses arc
; frequently marked up at a rate from 10 to 15%; on Waterford 3, there was no n/ mark-up; these expenses were passed through at cost. Another common clause in Page Q-5
.. . . - . _____. _ _ _ , . , , . _ _ _ . . . _ - - _ . --- _ _ .~ _
AE/CM contracts is that AE's are responsible to correct errors in design documInts at emt. The LP&L/Ebasco contract allows no cost recovery for Ebasco. Ebasco is required to bear the full cost of its errors or oversights. Examination of the supplements to the base contract indicates a careful delineation of what the supplement covers. the delineation provides sufficient detail to permit tracking of costs to single issues. For each supplement there is a charge in the fixed fee, but the amount of the fee is still fixed. In conclusion, while the methods used to select Ebasce are not in conformance with current practices, LP&L did nothing out of the ordinary at the time it procured these services. Ebasco was then and is now one of the larger and most experienced AE and CM organizations in the U.S. In spite of this fact, LP&L was able to negotiate an extremely favorable contract which has been modified only for scope of work changes which took place over the thirteen year life of the document. We conclude that this procurement was appropriate both at the time it was made, and over the life of the project. 2.2 LP&L Procurement of the NSSS and TG LP&L is a wholly owned subsidiary of Middle South Utilities, Inc. (MSU). MSU also has a service organization, Middle South Services, Inc. (MSS), that provides consulting engineering services to and serves as an agent for the Middle South System companies. In the late sixties and early seventies, when nuclear power appeared as a new economic central power station alternative, MSS picked up options on the Nuclear Steam Supply System (NSSS) and turbine generators (TG). The option for the TG was exercised in the third quarter 1969 and the option for the NSSS in the second quarter 1970. These options were taken at favorable prices, terms and conditions during NSSS/TG contract negotiation of LPAL's nuclear unit. MSS assigned the contract for these options to LP&L for Waterford 3, LP&L negotiated the centract and assigned contract administration to Ebasco. 2.2.1 NSSS Contract The NSSS contract was awarded to Combustion Engineering. This contract includes the initial fuel loading and two subsequent fuel loedings. The delivery schedule was established to support commercial operation in 1977. The contractor warranted licensibility and permitted review of subcontractor selection and the right of LP&L to audit at cost. The contract recognized pending ASME code changes and accounted for them. The price modification clauses for LP&L-caused delays, split the cost into 45% for material (indexed to Wholesale Price Index) and 55% for labor (indexed to the average total employment costs as compiled and released by the American Iron and Steel Institute). The fuel cost was also split into 50% for material and 50% for labor and tied to the same indices as described above. At the time the NSSS contract was written, the prices, terms and conditions, and warranty clauses were among the best obtained in the industry. LP&L's interest was well protected by this contract. Page Q-6
2.2.2 TG Contract The TG contract was awarded to Westinghouse. The contract has a favorable /^\ guarantee clause. the price adjustment clause is also favorable and is tied to the V Westinghouse price book in effect 60 months prior to shipment. Other favorable clauses were added to the standard Westinghouse terms and conditions, including assignment, nuclear indemnity and insurance, delays and patents. The price, terms and conditions and guarantees negotiated by LP&L are fairly standard f or the industry at that time. LP&L did set more leverage on Westinghouse contract performance by negotiating the modification of Westinghouse's standard terms and conditions. 2.3 Balance of Waterford 3 Procurernent 2.3.1 LP&L/Ebasco Procurement Procedure The process used in procurement of most of Waterford 3 commodities, equipment and services is shown in Figure Q-3. The process included the following stepst
- a. The procurement process was initiated with preparation of procurement specification. This document was developed by Ebasco's lead Discipline Engineer, reviewed by several in-house organizations and approved by the d!scipline supervisor.
,,ms b. The specification was sent to LP&L and reviewed by affected engineering disciplines, and recommendations forwarded to LP&L's Project Manager and Site (v) Director for approval,
- c. Ebasco would finalize the specification, prepare inquiry memorandum and forward inquiry to vendors shown on the approved bidders list, with a copy to LP&L.
- d. Vendors' proposals were evaluated for technical adequacy, exceptions, deviations and compliance with commercial terms and conditions. Bids were tabulated and compared, and a recommendation for award sent to LP&L for review and approval.
- e. Ebasco's recommendations were reviewed by LP&L's engineering personnel.
LP&L's comments and conditions were documented in a letter and sent to Project Support Manager and their Site Director for approval. All procurements were reviewed and authorized by a Vice President or the Waterford 3 Project Manager.
- f. The procurement package was assembled and transmitted to Ebasco Purchasing for issuance of the purchase order.
The above procedure is a typical representation of the standard industry practice. /, ) We find that it provided an adequate mechanism for procurement of goods and (/ services at terms advantageous to LP&L. The following section contains an evaluation of the manner in which the procedure was implemented on Waterford 3. Page Q-7
2.3.2 Procurement Procedure Applic2 tion The application of the LP&L procurement procedure was evaluated through examination and analysis of four typical LP&L contract files. The files reviewed included: o Electrical Construction o Main Feed Pumps o Piping Fabrication o Station Piping The results of these examinations are presented in the sequence of their chronology. 2.3.2.1 Main Feed Pumps The purpose of the main feed pumps is to return the condensed steam to the steam generator at cycle pressure plus the additional pressure necessary to overcome friction losses end elevation differences. These pumps are among the principal equipment in the power plant. The main feed pumps procurement process Degen in early 1971. This first interface document was sent for LP&L review, comment said authorization on November 5, 1971. This document included the bid specification and the bidders list. The document was sent to an LP&L Senior Vice President. An LP&L letter from the samt Senior Vice President authorized the specification for release to the bidders Ebasco identified. The letter had some very minor comments on the document; it was sent to Fbasco on February 25, 1972. Ebasco sent the eyeluation of bids with a purchase recommendation to the same Senior Vice Prcsident on October 9.1972; he authorized the purchase in a letter dated March 5,1973. While the five month delay between Ebasco evaluation and recommendation appears lengthy, this delay 6fd not impact schedule as LP&L was awaiting regulatory decisions necessary to proceed with the project. It is of some interest that the contract contains the favorable guarantee requiring the manufacturer to replace failed parts for one year from the date of start-up, without regard as to when the start-up may occur. In conclusion, procurement of the Main Feed Pumps was accomplished in accordance with applicable procedures, and a senior executive of LP&L was directly involved. O Page Q-8
. - _ . - - - . . -. . = _ __ - - . -
1 . 2J.2.2 Power Piping
- 'In Section' Q-1.4 of this. report, it was pointed out that pipe and valve manufacturers were saturated with work. Ebasco advised LP&L of this situation i and Indicated that it succeeded in' including Waterford 3 with other Ebasco nuclear units in the Cameron Iron Works shop with an escalation not to exceed 6% for work ordered after June .30,1978. This offer was very advantageous to LP&L and the compeny accepted Ebasco's . recommendation. A _ senior vice president of LP&L was involved in_ the decision and wrote the authorizing letter.
2JJ.3 Piping Fabrication
-Pipe purchased for. power plants comes from steel mills where it is manufactured in straight runs. In the actual plant however, piping is not straight, but includes both straight and curved runs, fittings and other specialty items. Fabrication of these pipeline sections is easier done in a shop than at the actual plant as it is being built.' Therefore, the bulk pipe is sent to a pipe fabricator where it is fabricated and assembled into shippable " spools". Pipc fabrication is one of the most critical
. contracts.. If the pipe fabricator does poor quality work or if he is late in r delivering 'the spools, the plant erection schedule and project cost can -be severe?y
' impaired.
!. The bid specification and bidders list on this contract was sent by Ebasco on j' August 9,1972.- 'Ihis letter was sent to a Senio4 Vice President of LP&L. On September 19, 1972, the same Senior Vice President authorized release of the , l
.q specification for bid to an amended bidders list contingent upon rainor corrections to the specification. ,On February 12, 1973, Ebasco sent the bid evaluatioa and ,
L recommendation to the same LP&L executive for purchase authorization. On April 3,1973, th_e LP&L executive authorized purchase in accordance with the Ebasco recommendation, but with.two significant comments. 2 [ The contract for the piping fabrication consisted of two parts; one part was lump l_ sum,' the other was at firm unit prices. On the lump sum portion, deliveries of the spools .w'ere staggered in accordance_ with the construction schedule._ Ebasco had suggested that spools be identified by dollar value, and completion date on a plant system' basis. LP&L regested a more tightly defined method for tracking the work
. progress,(i.e., by piece number and plan drawing number). The contract also l: included a bonus / penalty arrangement. Ebasco recommended that this provision be
? 1 dropped because of uncertainties with the Waterford 3 schedule. LP&L requested
.that.the bonus / penalty provision be re-established on the new dollar / schedule basis.
In this_ contract procurement, LP&L followed project procedure and actively intervencd to protect its interest. Through this active involvement, the company gained. adequate visibility of _ work status and control of contractor's performance. l.
,p.
L l Page Q-9
2.3.2 A Electrical Construction Work The electrical construction contract covers the installation of electrical cabinets, cable trays, cable and other commodities /cquipment for he Waterford 3 main plant buildings and systems. It constitutes one of the major construction contracts and its successful completion is extremely important to the overall project schedule and budget. Ebasco's proposed bidders list was forwarded on February 23, 1976 to LP&L's Vice President. lie questioned the list on February 26, 1976, and on April 20, 1976. Ebasco responded on April 14, 1976, and clarified the issue on April 21,1976, in a letter to the executive. Ebasco sent the bid documents to LP&L for review and approval on July 17, 1976. On July 25, 1976, Ebasco was given oral authorization to obtain bids subject to comments which were documented December 1,1976. On October 27, 1976, Ebasco sent the bid analysis and recommendation to LP&L's executive. The Ebasco recommendation to reject the bids was approved by LP&L's executive on November 4,1976. In this letter, LP&L requested review of a cost reimbursable target incentive basis for the bids. This new approach was found acceptable and approved. The revised bid document was released for bids December 21, 1976; Ebasco submitted the new bid analysis and recommendation on February 14, 1977. LP&L's executive authorized Ebasco to arrange meetings with two of the bidders to resolve issues of concern to LP&L. On March 18, 1977, Ebasco reported back with the results of the meetings and a re-analysis of the two quotes. On March 30,1977, the LP&L executive authorized Ebasco to award the fixed fne/ target manhour contract to the successful bidder. The contract was executed April 5,1977. This particular contract was given close scrutiny during this analysis because of its overall importance, and because it was significantly affected by changing regulatory guidelines. The origin 11 estimate of this contract, prepared prior to bidding by Ebasco, was $18,000,000; during contract negotiations this estimate was reevaluated to $36,000,000. To date, LP&L expended a total of $92,000,000, and the contract is not expected to close much higher. The contract cost to date includes
$ 5 6,000,00 0 in changes, much of it attributable to design changes required by regulations issued after the Brown's Ferry Fire (March 1975), and the Three Mile Island incident (March 1979).
The target manhours (approximately 1,200,000) for the contractor were determined as a sum of manhours necessary to install thirty-eight (38) individual construction items such as cable tray, seismic supports, conduit, power cable, etc. The contractor's fee was set at $1.00 per manhour. If tbc actual manhours exceeded the target manhours by 50,000, then for each additional manhour, the contractor had $1.50 deducted from the fee - up to a maximum loss of 15% per manhour without limit. If the contractor's work was defective, then the hours to fix it were paid and accumulated against the target account. The fee covered all profit, office expenses and general corporate expenses. LP&L paid all net costs. Net costs were those after deduction for resales, rebates and pre-payment discounts. There was an allowance of 7-1/2% on the fee to cover incidental expenses such as field office supplies, small tools, mobile equipment, etc. There was also a mobilizaticn and demobilization lump sum payment to cover temporary buildings, and guaranteed 40-hour pay to certain general foremen. By contract, LP&L had the right to place its own accountants, bookkeepers and timekeepers on the contractor's Page Q-10
staff. Supplemental work orders were handled identically to the contract. m
' ~
The general structure of this contract is similar to other industry attempts to control cost -reimbursable work. Clearly, LP&L was very actively involved in the formulation of this contract and its standard procurement procedure was followed. 2.4 Summary and Conclusion Procurement of the Waterford 3, NSSS and TG was accomplished by LP&L exercising options initially negotiated by Middle South Services. LP&L's input to the initial procurement of these options was relatively minor. Both the NSSS and TG were obtained at favorable prices; contracts with CE and Westinghouse had well defined scopes of work and terms and conditions favorable to LP&L. These contracts viere compa'able with or better than the industry standard. LP&L's procurement of an AE/CM was done on the basis of its past experience with Ebasco and competitive bids were not taken. W AE/CM contract is quite thorough and has survived the trials of a lenghty and difficult project. In the area of compensation, LP&L negotiated much better terms than the industry norm. LP&L also negotiated better terms for errors and omissions than is common in the industry. In a summary, LP&L's approach to procurement of the AE/CM services was not unusual for the industry at that tim e. Its contract with Ebasco was substantially better than the industry norm. (m) LP&L followed a fixed procurement procedure for the balance of the project. This V essentially consisted of Ebasco's preparation of bidders lists, bid documents, bid analyses and recommendations, and the final contract. LP&L reviewed the bidders '
-list and bid documents and authorized, with changes where necessary, the bid documents for use. It also reviewed the bid analyses and recommendations and approved the contract award. All authorizations were by an LP&L Vice President or the Waterford 3 Project Manager. Indeed, LP&L was actively involved in procurement at the executive level. LP&L showed flexibility when it was called for and_ at all times exercised care in insuring its control over contractors.
It may be argued that because LP&L's project staff was unusually small, comoany's involvement in the procurement process could not cmount to more than a " rubber stamp". On the contrary, our analysis of sample contracts suggests that LP&L
- achieved a reasonable degree of control over the procurement process. Based upon the above considerations, DMC, Inc. concludes that Waterford 3 procurement was above the industry norm, and that LP&L management actions were reasonable and prudent.
c p l', v Page Q-11 l-
O A FIGURES . O r O . Page Q-12 i 4
FIGURE Q-1
~ AVERAGE HOURLY EARNINGS INCREASE SINCE 1972 O SOURCE: US BUREAU OF LABOR STATISTICS INDEX -
150 -
--- FABRICATED METAL PRODUCTS (CODE 34) lE ~
- . - MACHINERY (EXCEPT ELECTRICAL) (CODE 35)
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o ' ' ' ' ' ' ' ' ' ' ' 72 73 74 75 78 77 78 79 30 31 82 83 YEAR i O FIGURE PROVIDED BY LP&L
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== = STEEL MILL PRODUCTS (CODE 1017) /y
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Chapter R CONTRACT ADMINISTRATION The term Contract Administration refers to the process of monitoring the performance of suppliers and contractors and assuring that they are in compliance with contract requirements. The purpose of this chapter is to examine this process was implemented on the Waterford 3 project, and to determine adequacy of LP&L's efforts as compared to the utility industry norms. Chapter S is subdivided into two sections. The first section presents contract administration activities as they are typically carried out in the utility industry; the second dis tusses LP&L's practices as contrasted with general utility industry practices. 1.0 Overview of Contract Administration Any contract, whether for equipment, supplies, or services has many diverse requirements. 'Ihese requirements address accounting practices, insurance, technical performance, schedule performance, quality assurance, transportation and many other areas. In order to assure adequate contract performance, the purchasing organization must ascertain that the contractor complies with each and every one of the above requirements. It is clear from the above thst the contract administration effort requires the expertise of several disciplines. In the utility industry, the most common approach v/ is to provide requisite expertise by assigning contruet manegement responsibility to an architeet-engineer or construction manager. DMC believes that this approach is reasonable because AE and CM firms have requisite expertise in all of the above areas. However, in the final analysis, the ultimate responsibility for administration rests with the owner, because it is his money that is being spent, and it is his remonsibility to assure that the contracts are fulfilled. DBCRIF110N The following paragraphs provide an outline of methods used in the utility industry in management of ' equipment, material, services and other contracts. f Equionent Contacts: Equipment contracts are among the most
- , complex from the standpoint of contract management. The first l' requirement after contract award is that the contractor submit certified technical information for the owner's approval. This information may come in the form of drawings, data schedules, reports, calculations and many other formats. The contractor must submit this information in accordance with the contract schedule.
This submittal should be complete and it must meet quality assurance requirements on all nuclear safety related items. p) t V Information submitted by the contractor is reviewed by the owner and/or architect-engineer. Following approval of certified technical information, the owner releases the contractor to begin the Page R-1
f abrication process. Throughout the fabrication process, the contract administration group must monitor a number of factors and requirements. These requirements include material traceability, subvendor quality control, material availability, welder qualifications, weld procedures, inspection hol@oints, test procedures, test witnessing, shipment scheduling, and many other factov. Once the fabrication is complete, the contract administration group must assure that delivered equipment meets requirements defined in certified technical information and in the procurement contract. In the event discrepancies exist, the contractor is requested to correct the errors, or he is backcharged for the cost of repairs. Material Contracts: Material contracts are the least demanding from the contract administration standpcint. It is very important, however, that the contract edministration group assures the contractor's compliance witn three critical requirements: materials traceability, quality assurance, and adherence to the delivery schedule. Material traceability and quality assurance requirements are applicable only to those materials which are used in nuclear safety related construction. Contractor compliance with these requirements is assured through reviews of his quality assurance i program and through scheduled and unnheduled quality assurance l audits. The contractor's compliance with delivery schedules is l assured through site visits by expediters, monitoring of the } contractor's work progress and, sometimes, other actions designed to incentivize the contractor's interest to perform in accordance with contract schedule. Services Contracts: S ervic es contracts include architectural-cngineering services, construction management services, and all construction contracts. As on other types of contracts, the contract administration group must assure compliance with contractual terms and conditions through review of contractor's reports, inspections and various technical, quality and financial audits. Depending on the type of the contract, the contract administration group should devote special attention to certain issues. On the lump sum contracts, contractors usually tend to obtain extras for every minor deviation from the conditions defined in the contract. It is therefore mandatory to control the contractor's scope of work; to assure that he has requisite materials and equipment; and to take any other reasonable action designed to remove excuses which may lead to future contractor claims. On the cost-reimburseable contracts, the single most import 6nt issue is control of the contractor's productivity. This objective is accomplisheo through review of the contractor's plans and progress reports; meetings with its management; and labor utilization studies. Page R-2
DECUSSION During the Waterford 3 life cycle several events occurred which complicated the process of contract administration in a significant way. The first event was the imposition and subsequent removal of the wage / price controls. This event created a situation where i equipment vendors and material suppliers signed their contracts d during the freeze period, and had to supply products after the controls were lifted. Faced with loss of profit (and sometimes outright losses), many contractors tried desperately to get relief from their price restricted contracts. Some vendors threatened utilities with a work stoppage; some delayed material and equipment deliveries; some decided to let wage / price controls linger in their shops after they were officially lifted. The second event which effected contract administration severely was the imposition of quality assurance program requircments in vendors shops. Many of the ver. dors did not have the adequately trained and experienced personnel necessary to implement quality assurance programs of the type required by the NRC. Consequently, in many cases, architect-engineers or owners had to develop the vendors' quality assurance programs. In virtually all cases, quality assurance required significant attention on both the architect-engineer's part and the owner's part. Other problems which made contract administration during the 1970s more difficult than usual included regulatory changes and a shortage of skilled personnel caused by the rapid growth of the nuclear and / oil industries. The effect of these problems have already been (]/ identified in Chapter Q, Procurement. CRITERIA As indicated earlier, during the 1970s most utility companies delegated contract administration responsibilities to one of their prime contractors. This was particularly true for the companies who were entering the nuclear power field and constructing their first nuclear unit. Our basic criteria as to how well the utility managed the contract administration function are as follows:
- a. Did the utility company maintain adequate control over the effort of its architect-engineer and/or construction manager?
- b. Did the utility company monitor the contract administration activities of its prime contractor carefully?
- c. Did the company have adequate visibility of procurement progress? Did it insist on being advised of any near-def ault situation?
- d. Ilow did the company react to actual default?
Waterford 3 contract administration was evaluated in light of the above criteria. The following pages' describe DMC's findings and conclusions regarding the adequacy g )
%/ of LP&L's and Ebasco's efforts.
Page R-3
- _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ _ _ _ _s
E 2.0 Waterford 3 Contract Administration Waterford 3 contract administration took place at two levels: LP&L Company aaministered Ebasco's contract and oversaw Ebasco's contract administration activities, and Ebasco administered all other equipment, material and services contracts related to the construction effort. Waterford 3 contrads were administered in accordance with the following LP&L principles: o Define contractual positions clearly. o Present a united front of LP&L and Ebasco to all contractors. o Pay only what is owed; never fall to blackmail. o Do not stay on defensive; attack with counterclaims whenever pocsible. The following paragraphs describe the manner in which the above principles were implemented on Waterford 3, and present DMC's findings and conclusions. DESCRIPTION The following description of LP&L's and Ebasco's contract administration practices addresses three subjects. L P & L's administration of Ebasco's contract, Ebasco's administration of equipment and material contracts, and Ebasco's administration of construction contracts. LP&L's Administration of Ebasco Contract: Louisiana Power & Light Company maintained control over Ebasco's effort on Waterford 3 through review of progress reports, meetings with Ebasco personnel, frequent audits and communications among the top level executives of the two companies. The types of reports LP&L received from Ebasco were identified and described earlier in this report. It is of interest to note at this time that LP&L discussed reporting formats with Ebasco frequently and directed the company to change reporting formats and enhance LP&L's visibility of project status. LP&L was invited and regularly attended weekly, monthly, and daily meetings held to deal with the ongoing engineering, licensing and construction issues. In addition, LP&L conducted frequent management, quality assurance and financial audits of Ebasco. Most of these audits were conducted by LP&L's in-house personnel; on occasion. the company hired outside consultants to audit Ebasco's operations. Based on the results of these audits and LP&L's overall perception of Ebasco's performance, the company insisted that Ebasco increase staffing levels and/or make personnel changes at several pobts during the project life cycle. O Page R-4
Ebasco's' original contract was revised several times over the past
,O thirteen years. At present, there are fourteen supplements to the (j original contract. All contract supplements are very specific with regard to scope definition and causes of scope changes.
Administration of Equipment and Material Contracts: Administration of Waterford 3 equipment and material contracts was executed by Ebasc o. Louisiana Power & Light Company monitored the status of contract activities and became actively involved in specific ' contracts when it appeared that late deliveries would threaten the project. schedule; when default seemed possible; and when a default in fact occurred. At the beginning of the project, contract administration of meterial and equipment contracts was performed by Ebasco's purchasing department. The purchasing department was organized along the functional lines and worked on many projects simultaneously. In mid-1975 Ebasco's purchasing department was reorganized and a contract administration staff was assigned directly to the project. Figure R-1 presents the Waterford 3 Contract Management Organization and defines the responsibilities of various positions. Contract administration activities were conducted in accordance with Ebasco's office procedures (See Figure R-2). As a matter of course, p) -(" Ebasco prepared expediting reports throughout the information phases of contract performance. In addition, Ebasco prepared vendor quality assurance reports and fabrication cycle status reports from queries and visits to suppliers' facilities. In the late 1970s the project procurement staff developed a critical item list to focus project attention on potential problem areas. As mentioned earlier, all of these reports were sent to Louisiana Power & Light Company on a regular basis. Throughout the project Ebasco represented LP&L as an agent in all contractual matters. In cases where vendors were in dispute with Ebasco, they were allowed direct access to Louisiana Power & Light. LPSL and Ebasco endeavored to maintain a unified image and defeat occasional " divide and conquer" tactics. The dispute management approach was to address disagreements aside of the production effort, rather than as a condition for continuation of that effort. Ebasco and LP&L stated that due to this approach, construction delays resulting fron. late deliveries were minimized. The better than average Waterford 3 schedule performance (see Chapter K) suggests that this conclusion is reasonable. While equitable settlements of disputes was one of the key principles of contract management, LP&L was ready to take more drastic actions, including contract termination, if a settlement consistent V) Page R-5
with contract terms and conditions could not be reached. DMC is aware of one default situation which resulted in a termination of the contract for cause. This termination was contested by the contractor, but resulted in no loss to LP&L other than the internal legal costs for termination. As part of the settlement agreement, the termination for cause was withdrawn by LP&L, and the contract was terminated for convenience. Administration of Construction Contracts: Construction contracts were administered in the same manner and in accordance with the same principles as equipment and material contracts; contract administration activities were carried by Ebasce: LP&L would become involved when specific contractual problems occurred. It is worthwhile to note that the relationship between Ebasco and LP&L with regard to construction contract administration was on a day-to-day basis and far more immediate than the relationship between Ebasco and LP&L home offices. Ebasco's on-site contract administration group was supported by home office personnel on an as-needed basis. The need for such support most commonly occurred with regard to contracts issued by the home office. One of the principle ercas of interest with regard to administration of construction contracts is the manner in which LP&L and Ebasco managed backcharges and construction contract claims. Backcharges Ebasco referred to backcharges as field job orders (FJO). Once the need for a backcharge was identified, the FJO coordinator issued the field job order to the delinquent contractor. Work to be accomplished was defined in a site work order. After the work was completed, the field accounting office issued t.n invoice to the resporsible supplier or contractor. The following table and Figure R-3 provide a summary of field job order activities as of (approximately) the end of July,1983. o Total FJOs 807 o Settled and Paid 487 o Settled for less than full amount 99 o Cancelled 90 o Active 131 The total amount of backcharges is $7,610,734. Out of that, $ 4,291,85 3 was collected or settled, and $3,309,881 remain active. Louisiana Power & Light Company receives monthly reports on the status of field job orders. O Page R-6
Claims Construction contractors claims are submitted to Ebasce, reviewed
; / and forwarded together with Ebasco's recommendations to LP&L and LP&L's attorneys. This information is reviewed and a settlement offer is presented to the contractor. The proposed settlement may take the form of a payment to the contractor, a counteroffer, or rejection. LP&L's counterof ters are negotiated with the contractor and an equitable settlement of the claim made. In the event that an agreement on the claim cannot be reached, and in the case of rejected claims, the rights of the parties are determined through litigation. Further discussion and examples of methods LP&L and Ebasco used in contract management are discussed in Chapter S, Constmetion.
DECUSSION In general, Waterford 3 contract administration was conducted in a manner and by means of methods similar to those used in the utility industry as a whole. We believe, however, that the results achieved by LP&L and Ebasco exceed the industry norm. First of all, Louisiana Power & Light controlled Ebasco's activities to a very high degree, as compared to the industry norm. Our experience with other projects indicate that many architect-engineers and construction managers would have refused, or s been very resistant, to the idea of allowing the utility company's involvement in the project at the level comparable with LP&L's
\ involvement in Waterford 3. We find it rather surprising that the LP&L/Ebasco relationship survived internal and external pressures caused by the proliferation of regulatory requirements. the resulting revisions / rework, and out-of-scope adjustment claims. The differences between the two companies are being resolved in the spirit of negotiation while the project work is continuing.
Ebasco's contract administration procedures for materials and equipment are similar to those used by other A/Es in this industry during the same time period. The evolution of Ebasco's contract administration organization, including the shift to project-based contract administration, was reasonable and adequate. Methods and practices employed by Ebasco in administration of construction contracts were similar to methods employed by other architect-engineers and construction managers. What is different from the industry norm, is the level of cooperation between LP&L and Ebasco in enforcing these contracts. This cooperation allowed LP&L to deal with claims, threats of litigation, and actual litigation from a position of strength. 'Ihis environment, together with tough and aggressive protection of LP&L's rights provided by the law firm Q of Monroe and Lemann allowed LP&L to prevail over some nationally Q recognized claim opponents. Page R-7
CONCLUSIONS Decision Management Company, Inc. reviewed Waterford 3 contract l administration in light of criteria defined in Section S-1. Based I upon this analysis we have determined the following:
- a. LP&L's management of Ebasco's activities was above the ,
industry norm. '
- b. Ebasco's contract management methods and organization were similar to those used by the industry as a whole. LP & L's involvement in the contract management process was above the industry's norm.
- c. LP&L's and Ebasco's management of defaults, backcharges and claims was reasonable and effective,
- d. LP&L maintained control over its interests in all contracts throughout the duration of the project.
Based upon the above considerations, Decision Management Company concludes that LP&L has had sufficient managerial expertise to properly monitor Waterford 3 contracts. We find that LP&L has exercised extreme care and control over contract administration. We believe that through these efforts LP&L has limited schedule delays and construction cost overruns. This aggressive attitude of LP&L should be commended and could actually be used as a model by other utilities in their contract administration efforts. O Page R-8
O - FIGURES . O O Page R-9
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COMPANY PROCEDURES COMPANY PROCEDURES ADMINISTRAT!VE SITE COMPANY PROCEDURES COMPANY PROCEDURES MANUAL - CONSTRUCTION MANUAL - CONST RUCTION PROCEDURES M ANUAL - CONSTRUCTION C4 MANUAL - CONSTRUCTION I C-16 ASP-IV 13 C-5 C 10 PREPARATION OF PRE Blu CONFERENCE CONTRACT DETERMINATION OF ESTIMATES PREPARATION OF l . WITH CONTRACTORS ADMINISTRATION PERCENT COMPLETE PROGRESS REPORTS I I I I I I ASP-l'84 RCHGM ASPIll.5 ASP-IV 12 ASP IV-33 ASP-IV42 ASP IV 57 SUPPLIER FIELC CONTRACTOR MONITORING CONTPACT CONTRACTED , SURVEILLAfiCE JOB ORDERS PAYMENTS SUPPLEMENTAL WORK CLOSECUT SERVICES AUTHORIZATIONS PROCEDURE FIGURE PROVIDED BY LP&L
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r 7 Chepter S , O CONSTRUCTION
'the term construction, as used in this report, refers to the process of . assembling ,
; materials and equipment into systems and structures which make up an operating.
. nuclear power plant. In order to achieve project objectives the construction effort must be accomplished in accordance with applicable drawings and specifications and be completed' within a limited schedule and budget. The term construction management, refers to .the process of organizing, planning, monitoring and '
~ controlling 'the construction process, work and resources, and participating organizations. . The objective of this section is to examine construction management processes on the Waterford 3 project and determine adequacy of LP&L's efforts as 1 compared to the utility industry norms.
- 1. Evaksation Criteria Several-conditions must exist in' order to create an environment within which successful construction management is possible: the. construction manager must be properly organized and staffed with experienced personnel; he must have available well developed and documented planning and control techniques; he must be able to coordinate the work of subcontractors and provide them with realistic direction; and he must assure that the materials and equipment are procured and delivered in accordance with the construction schedule. The premise of this evaluation is that the above conditions must exist, if the project is to be regarded as prudently
( managed. Therefore, our review was focused toward finding the answers to the
- following questions:
- a. Was the Waterford 3 construction manager well organized and staffed with personnel experienced in power plant construction?
- b. Was the construction management organization well suited to the project needs in all phases of construction?
! c. Were construction management procedures reasonably well developed and documented?
' d. Did the construction manager coordinate and direct contractors efforts in a reasonable and effective manner?
c L e. . Did the construction manager assure that materials and equipment are
' deliver'ed in accordance with the construction schedule?
- f. Did LP&L monitor the construction manager's work and take actions to l
resolve problems and enhance his performance if and as required? D ~ The following sections present the results of our evaluation and related conclusions and recommendations. l-L Page S-1 <:, . . .:-.._._ ... . . - . . ~ - - _ - - . - - - - _ - . . , . -- _ . - , - . .
l l l l
- 2. Construction Management Team One of the key concepts of LP&L's construction management philosophy is to minimize internal staffing. This philosophy is based on the fact that LP&L is not engaged in power plant construction on a continual basis. Consequently, a decision to hire the internal construction staff would have resulted in either unstable employment, or in under-utilization of in-house staff. The company was unwilling to accept this undesirable situation and resorted to hiring consulting firms to engineer its projects and act as LP&L's construction manager and agent. Pursuant to this philosophy, Louisiana Power & Light Company retained Ebasco Services, Inc., to serve as Waterford 3 crchitect-engineer, construction manager, and LP&L's agent.
As agent and construction manager, Ebaseo has the prime responsibility for directing the construction effort at Waterford 3. LP&L's role in Waterford 3 construction management included monitoring work progress and direction of corrective actions and conflict resolution. The following paragraphs describe the evolution of Ebasco's construction management organization and present related findings and conclusions. DESCRIPTION Ebasco's construction management organization changed several times during the period from construction start until today. The reasons for an objective scope evolution included the following: o to structure the organization in a manner which adequately supports individual project phases, o to maintain clear contract management responsibility, o to strengthen the project team with expertise related to individual construction phases, and o to provide requisite continuity. The evolution of Ebasco's construction management is shown in Figure S-1. The figure indicates that from 1975 to date, the organization structure has assumed six different forms. Following project completion, the construction management team will probably be reorganized again, and take the form similar to that at the beginning of construction (i.e., discipline organization). The following paragraphs provide a brief description of the six forms of Waterford 3 construction management organization. BASIC DECIPLINE ORGANIZATION 1975 to 1977 The basic discipline organization is shown in Figure S-2. This organizational structure was used during the civil construction phase, from 1975 to late 1977. The construction management team was Page S-2
fJ - organized along discipline lines. As indicated in the figure, the responsibility for contract supervision and management was assigned to three Assistant Censtruction Superintendents-civil, electrical and mechanical.. The effort of three construction disciplines was
~ coordinated and directed by the Construction Superintendent.
The construction engineering support was. provided by two groups under the direction of the Senior Resident Engineer. The Office Engineering group was responsible for contracts, documentation
. control and facilities management. The Field Engineering group was discipline oriented; its responsibilities included field engineering and
, contract coordination in .the environmental, mechanical, electrical and civil areas.
Construction support services were provided by Planning and Scheduling groups and the Administrative Office Manager's staff. The latter veas responsible for materials administration (warehousing, buying, and expediting); data processing; and site accounting.
- The entire construction management team was headed by a Project
. Superintendent. As the top . level Ebasco representative at the Waterford site, he was responsible for the overall direction of the construction effort; coordination and control of contractors; and supervision of Ebasco's' site personnel. He was- assisted in his efforts by cost, safety, labor relations and security staffs.
Q The above construction management team was supported by three independent groups: Ebasco Site Support Engineering (ESSE), Quality Assurance (QA), and Quality Control (QC). These . organizations reported to Ebasco's home office and, consequently, were independent from the construction management team. AREA / BULK INSTALLA'I1ON PHASE 1978 to MID-1980
, As Waterford 3 proceeded from civil construction to bulk materials installation, Ebasco revised its construction management organization to better address the' needs of the new project phase. This new organization (see Figure S-3) strengthened Ebasco's construction -
management- team by creating a position of Site Manager; by elevating planning and scheduling groups to the superintendent's level; and by creating area- management groups.
'Ihe Site Manager assumed the overall responsibility for Waterford 3 construction from the Project Superintendent. The Construction Control Superintendent was assigned integrated responsibility for cost control, scheduling, and quantity tracking. The discipline organizations reporting to the construction superintendent were
- strengthened by the addition of a centralized contract administration group.
Page S-3
The most profound organizational change which took place at this time was the creation of positions of three Area Superintendents. The first Area Superintendent was responsible for work done in the Reactor Building; the second was responsible for the Auxiliary Building work; and the third managed the Turbine Building and yard work. Each Area Superintendent was supported by an Area Engineer and an Area Planner. They were responsible for providing , technical and scheduling support to contractors and discipline organizations within their respective areas, and for contractor coordination and phasing within the confined space of individual buildings. In addition to the above, during the same time period the home office support organization was strengthened by the creation of a position of the Site Manager of the Quality Assurance Program. BULK / SYSTEM PHASE MID-1980 to MID-1981 In mid 1980, Ebasco's construction management team was reorganized again in preparation for the Waterford 3 start-up. The focus of the new organization (see Figure S-4) shifted from coordination and phasing of contractors within confined areas of plant buildings to completion of mechanical and primary systems. Each Start-up Superintendent was supported by a team of craft supervisors, system planners, and field engineers necessary to plan, direct and control completion of various systems. Ebasco's effort was coordinated with LP&L activities by the Start-up Coordination Superintendent.
'IDTAL SYSTEM PHASE MID-1981 to MID-1982 In mid 1981, as installation of the bulk quantities drew to completion, ne Ebasco construction management group was reorganized . gain to focus totally upon completion of various plant systems. This Total System Phase organizdion is shown in Figure S-5. The overall responsibility for the completion of the plant systems was assigned to the Construction Completion Superintendent.
He was supported in this effort by material coordinators, construction systems coordinators, and system planners. All of the above personnel were assigned the responsibilities by plant systems. As individual plant systems were compleped, they were turned over to the construction start-up group for testing, release and turn over to LP&L, and subsequent support of LP&L testing. SYSTEM / EVENT PHASE MID-1982 'lV MID-1983 In mid 1982, Waterford 3 entered into the " punch list" phase. The construction management team was reorganized (see Figure S-6) to accommodate control of punch list items and milestones, and to Page S-4
i prepare for project completion. This system / event phase T'S organization included two new positions: the Construction
,/ Superintendent for Construction Management was put in charge of contract management; the Construction Superintendent, Force Account work was assigned to manage electrical, mechanien1 and civil force accounts. This organization was in effect until mid 1983.
- SYSTEM / AREA PHASE MID-1983 to COMPLETION In mid 1983, the construction management organization was revised again to accommodate turnover of completed areas to the Louisiana Power & Light Company. This organization is expected to remain in effect until project completion. As indicated in Figure S-7, this organization included an area management group (same as the group in effect from 1978 to mid-1980).
OPERATIONS PHASE Following project completion in 1984, the construction management organization will be revised again to assume the form it had in 1975, during the civil construction phase. This reorganization will be made to accommodate the Waterford 3 modification and
,f S maintenance program.
I i'
\I DISCUSSION LP&L's approach to managing construction projects through an agent, construction manager, is rather common in the utility industry. We cannot find any fault with LP&L's selection of Ebasco Services Inc.
as Waterford 3 construction manager because the company had very satisfactory experience with Ebasco's performance on Little Gypsy, Nine Mile Point, Sterlington, and Waterford units 1 and 2. Furthermore, LP&L was experienced with Ebasco's engineering, procurement, and construction philosophies and methods. Ebasco, on the other hand, was knowledgeable of LP&L's preferences and plant operating philosophy. At the time of its seleotton as Waterford 3 construction manager, Ebasco had prior experience on four domestic nuclear power plants: Robinson, St. Lucie, Milestone, and Vermont Yankee. In addition, Ebrsco's experience included severcl overseas nuclear projects as well as several major test facility projects for the AEC (now NRC) at the national reactor testing station in Idaho. The more notable of these were the Advanced Test Reactor Project and the Power Burst facility. The evolution of the Waterford 3 construction management team was, we believe, above the industry norm. Specifically: h
\j o The basic discipline oriented construction management organization used between 1975 and 1977, is virtually identical to the common industry practice.
Page S-5 j
o The discipline / area matrix organization used during the Waterford 3 bulk instellation phase is not common to all nuclear construction projects. This organizational concept retains the functional expertise available under the discipline oriented organization. In addition, it offers an excellent means of coordinating and controlling the effort of various contractors within confined areas of the Reactor, Auxiliary and Turbine buildings. As minimization of interference among construction crews and competition for space usually rasults in increased productivity, we believe that implementation of discipline / area organization had a substantial positive influence on the overall project results. An additional highlight of this particular organization is in the formation of an integrated cost / schedule / quantity tracking group. Integration of planning and control of cost and schedule is an advanced management concept which is not commonly found on everage const uction projects. o The evolution of the construction management organization between mid 1981 and today was equally adequate. The organizational forms employed during that period were adequately suited to the needs of project phases they were designed to manage. While in our opinion the evolution of the Waterford 3 construction management organization was above the industry's norm, we believe that organizational changes made between mid 1981 and today took place perhaps a bit too frequently. The reason for such frequent changes is usually found in the industry's nervous reaction to cost increases and schedule delays experienced on nuclear power plant projects. The above statement should not be construed to mean that if organizational changes were less frequent, Waterford 3 would have been completed earlier and at a lesser cost. As discussed in Chapter H, the frequency of organizational changes is commensurate with the frequency of outside influences and indicative of the project's ability to respond to a changing environment. Ebasco's site staffing levels ranging from approximately 200 site personnel in 1976 to approximately 1100 personnel today is within the industry's norm. The current construction management staff has over fourteen years of nuclear experience (average per person) and approximately 17 years of total power industry experience. CONCLUSION 3 Decision Management Company, Inc. reviewed the Waterford 3 construction management organization in light of criteria defined in Section S-1. Based upon this ant. lysis, we have determined the following: Page S-6
[} V
- c. LP&L's decision to manage Waterford 3 construction through an agent is consistent with the standard utility industry practice,
- b. The Waterford 3 construction management organization was reasonably well developed throughout project duration.
- c. The evolution of the construction management organization was above the construction industry norm.
- d. The construction management team was staffed with an adequate number of experienced management personnel.
Based upon the above considerations, Decision Management Company concludes that Ebasco and LP&L have paid adequate care to staffing and organizing the Waterford 3 construction management team and, therefore, have acted prudently. 3.0 Construction Management Process The Waterford 3 construction management took place at three distinct levels: LP&L managed Ebasco, Ebasco managed the construction contractors, and the contractors managed craft labor. The following section provides DMC's evaluation of how this (N process was implemented, and presents related conclusions and recommendations. DESCRIP'110N The following description of Waterford 3 construction management practices addresses the follov.ing subjects: labor relations; labor supervision and construction contract management; and materials management. LABOR RELATIONS Recognizing the size and duration of the Waterford 3 project, Ebasco and LP&L decided to negotiate a project wid e labor-management relations agreement with the international and local unions. The agreement was negotiated between Ebasco Services Inc. and the following labor unions: international and local unions affiliated with the Building and Construction Trades Department of AFL-CIO; the Inkrnational Brotherhood of Teamsters; and the teamsters local unfon having jurisdiction over the New Orleans area. The Waterford 3 project agreement was one of the first of its kind in the country. The agrecment regulated and stabilized such items i as: n o werk hours , (V) Page S-7
o shift work o holidays o the duties of union stewards. In addition, the agreement included a grievance procedure and a no-strike clause. Because of these clements of the agreement, Waterford 3 lost less than 400 labor hours to labor work actions. This is probably a record for all nuclear power plants. LABOR AVAILABILITY During the mid to late 70s, qualified craft labor in the nuclear power industry was very scarce throughout the United States. The situation in the New Orleans area was prchably even more difficult because many other major projects, such as Good Hope Refineries, B.F. Goodrich Chemical Plant, River Bend Nuclear Station, and Grand Gulf Nuclear Station, were being constructed at the same tim e. To overcome this difficult labor situation, LP&L and Ebasco had to resort to several actions to assure that qualified labor was available at Waterford 3. These actions included select use of overtime; recruiting from other parts of the United States and Canada; providing comprehensive training programs; and arranging f ar transportation of personnel from the New Orleans area to the Waterford 3 site. Figure S-8 depicts the distribution of the labor force recruited outside the local area during peak construction. LABOR SUPERVEION AND CONTRACTOR CONTROL Labor supervision at Waterford 3 must be evaluated within the context of contract management. The key principles and methods used by LP&L and Ebasco in contract management have already been discussed in Chapter R. In this section, we will describe the methods LP&L and Ebasco used to control craft productivity, and discuss representative examples of how productivity problems were addressed on various contracts. Craft productivity controls on Waterford 3 were based upon the concept that in order to control productivity, the construction manager must provide adequate engineering support, make construction materials available, and assure that contractors and consiruction crews do not interfere with each other's work. Pursuant to that philosophy, Ebasco and LP&L took the following steps: o Ebasco provided sufficient on-site support by creating its ESSE ' office at the earliest phases of Waterford 3 construction. Pags S-8
o To assure a clear understanding of complex systems and structures in the Reactor Containment Building, Ebasco developed a scale model of the building and transferred it to site early in the Waterford 3 construction. De scale model was used by personnel of both Ebasco and the contractors to plan work within the confined areas of the Reactor Containment Building. In addition, the model was used by the plant staff for procedure development and maintainability evaluations. o To assure meterials and equipment are available at the time they are needed for construction, Ebasco developed a position of an Area Expeditor. o A formal craft foreman training program was developed; shift supervision was overlapped to assure continuity of control. o Ebasco hired a single scaffolding contractor to provide centralized scufolding services to all Waterford 3 contractors. o Tool rooms were laid out to assure their easy accessability from all work areas. Q o Overtime was used only on a selected and pre-approved basis. o Work sampling studies were conducted on selected contracts; contracts studied included heating, ventilating and air conditioning contract and piping installation contract. Selective use of overtime made the Waterford 3 project competitive with other projects in the New Orleans area. This in turn reduced craft turnover and relieved labor shortages. De results of overtime were monitored closely and reported to LP&L.. These reports included data regarding contractor's production, productivity, craf t buildup, area craft availability, and craft turnover rate. For example, in a letter dated December 22, 1980, Ebasco reported the results shown in the table below. O U Page S-9
l August / October / September November 1980 1980 % Gate Count (Av/Mo) 193 262 +35 10/1: 213 (Act.) 12/17: 301 (Act.) F&M Effective Manpower 189 299 +58 (Av/Mo) Total Exposed Conduit (If) 25,312 39,674 +56 Total Cable (If) 157,825 292,141 +85 Total Terminations (ea) 8,134 8,900 +9 Overall Performance Factor 0.9 0.9 0 Craft Turnover (%) (Av/Mo) 18.0 9.6 -47 Cum. Manpower Deficit 9/30/80 11/30/80 from Plan (Man Months) -120 -53 +56 One of the most important facets of the Waterford 3 labor management philosophy was LP&L's and Ebasco's idea to manage labor by managing contractors who employ that labor. As indicated in Chapter R, the Waterford 3 contract management philosophy was based upon the idea to be fair but tough with all contractors. The manner in which this philosophy was put in effect was discussed earlier in this report. The following paragraphs provide three examples of methods used by LP&L and Ebasco to enhance labor productivity of under-performing contractors,
- a. The contract described in this example had several significant problems. Productivity was lacking and labor controls were weak. Production schedules were not being met and scheduling was ineffective. The installed work was often found to be defective. Ebasco evaluated the above situation and, with LP&L, considered the following factors:
o exposure to continuing cost overruns, o impact to other contractors' work and the overall schedule impact, Page S-10
. . . - . . . . - - - . - . ~ . __ . .
l l o relatively early stage of construction, o recovery and schedule impact if contractor was terminated, and o feasibility of termination in light of code jurisdictional issues. The first corrective action taken on this contract was that Ebasco assumed greater schedula involvement and increased its day to day control of the contract work. As these actions did , not produce sustained desirable results, Ebasco demanded active
- involvement - of the contractor's executives and changed contractor's on-site management. This corrective action was not fully effective either. Further negotiations with the contractor were unsuccessful and the contract was promptly terminated. LP&L then negotiated a contract with Ebasco to complete the work. Figure S-9 indicates that productivity rates achieved by Ebasco were significantly higher than those achieved by the terminated contractor.
- b. The second contract DMC examined had difficulties with craft staffing. In addition, labor productivity was not satisfactory O and production fell behind schedule. The contractor's field engineering was inadequate and the rejection rates on installed components were high. Ebasco reviewed the above problems
- -and concluded that they were largely due to ineffectiveness of the contractor's site management. Alternate courses of corrective actions were considered in light of the following factors:
o Contractors' executive management was responsive and attempted to resolve problems identified by Ebasco. o The contractor was an ASME "N" stamp holder, o Contract termination would have impacted the Waterford 3 schedule. o The contractor was willing to allow Ebasco to integrate its construction management personnel into the contractor's organization. o Reprocurement of the contract'was not regarded as feasible. ( The corrective action included several steps: contractor's executive management was involved in the site work; the Page S-11
contract was renegotiated to include fee based upon contractor's productivity; contractor's site management and supervision was changed; Ebasco's personnel were integrated in supervisory and engineering positions within the contractor's organization; Ebasco obtained the "N" stamp for Waterford 3 as a precaution that the contractor's performance might not improve,
- c. The third contract considered by DMC, Inc. had the following problems: "as- built" drawings were not representative of field conditions; scheduling was inadequate; contractor's field engineering did not support the construction effort adequately; contractor's performance held back certain system releases, turnovers and start-up; contractor's construction, engineering, and QA/QC groups were not managed effectively and cohesively.
Corrective action was considered in light of the following factors: o The contractor was an ASME "N" stamp holder. o Separation of "N" stamp scope of work was extremely difficult to implement. o The termination of this contract would impact the Waterford 3 ochedule. o The contractor was a small ecmpany, but its parent was a large corporation. The corrective action was implemented as follows: work was stopped and the contractor's personnel were retrained; contractor's and its parent's executive management and quality assurance were involved in the project; walk-downs of completed systems were accomplished jointly by Ebasco, LP&L, and the contractor; Ebasco integrated a sigraficant number of its management, supervisory, engineering, and scheduling personnel into the contractor's organization; Ebasco obtained an "N" stamp for Waterford 3; and, finally, the contractor's scope of work was reduced. MATERIAIS MANAGEMENT AND FIELD PURCHASING Waterford 3 materia * , management functions include receiving by warehouse, receiving inspection and resolution of discrepancies, quality assurance and quality control, warehoucing, and issuance of materials to the Waterford 3 contractors. These functions were Page S-12
_ . . .. r , pe rformed under the direction of the Materials Administrator who a rcported to the Site Manager. Materials and equipment were stored in five warehouses and t'aree storage yards with a total of 890,000 square fee of storage space. DISCUSSION in general, Waterford 3 construction management was conducted in a manner and by means of methods similar to those used by the utility industry as a whole. We believe however, that the following points were slightly different than the common industry practice gnd consequently deserve additional ottention: o As indicated by the fact that only tour hundred workhours were lost to laber actions throughout the project duration, Waterford 3 labor relations were exceptionally good. The reason f or this enviable result can be found in the labor agreement. Based on the fact that interest carrying charges on a project of t"e magnitude of Waterford 3 are extremely high, the labor agreemeru was indeed of great value to the Louisiana Power b Light Company and its customers. We believe that the Waterford 3 labor agreement was a significant management accomplishment, and that project labor relations were above the industry's norm. o The early establishment of a design engineering group (FSSE) at the Waterford 3 site enhanced the coordination of engineering / design / construction efforts. This approach minimized jobsite problems and, when problems developed, expedited their resolution. o The decision to locate Ebasco and contractor's supervisory personnel in one central area was well conceived. It provided for .. close coordination and interaction between Ebasco and the contractors. o Ebasco's craf t f oreman training programs of f ered an extensive overview of nuclear coratruction techniques and methodology. Most other craft training programs are directed toward site indoctrinatien and craf t-specific work methods and requirements. This program was initiated based on LP&L's direction and the company's staff participated in its conduct. o Two work sampling studies were performed on Waterford 3. Their results were dramatic: one contract was terminated, and other renegotiated, o The establishment of tool rooms and warehousing adjacent to major . . work areas provided easy craft access and minimal travel time. In addition, the assignment of expediters directly to the major work ( areas minimized material and equipment delivery problems. Page S-13
o Security force inspections are common industry practices used to deter theft, llowever, at Waterford 3, the guard force was much more visible to the craftsmen and not relegated to specific access gate areas. The guard force staff, although not excessive, was adequate enough to cover gate access as well as work areas. CONCLUSIONS Decision Management Company, Inc. reviewed the Waterford 3 construction process in light of criteria defined in Section S-1. Based upon this analysis, we have determined the following:
- a. The Waterford 3 labor agreement was extremely beneficial to the overall project results,
- b. Labor supervision and contractor's control methods were reasonably well developed in light of industry practice and adequate in light of project needs,
- c. Ebasco and LP&L assured that materials and equipment were delivered in accordance with the construction schedule.
Based upon the above considerations, Decision Management Company concludes that the Waterford 3 construction management process was implemented properly and adequately. 4.0 Construction Support Functions While the management of labor, contractors and materials constitutes the primary responsibilities of the construction manager, certain additional functions must be performed satisfactorily in order to provide for a successful project completion. These functions are often referred to as construction support functions. This section provides our analysis of Waterford 3 construction support functions and an overview of construction procedures. DESCRIPTION The construction support functions addressed in the section include site aceounting, document control, and legal support. SITE ACCOUNTING Waterford 3 site accounting included the following functions: field payroll, contractor's payment, Ebasco home office billings, cash requirement estimating, job orders, and contract close out. A sample field accounting procedure depicting the contractor labor payments process is shown in Figure S-10. As indicated by the figure, the process began with preparation of time sheets. These time sheets were approved by contractors and Ebasco supervisors. Page S-14
, Approved time sheets, together with attendance control logs formed
/ ,\ the basis for payroll preparation. Ebasco's field auditing office b reviewed invoices su'bmitted by contractors in light of applicable labor and services contracts. Following this review, labor invoices were approved or disapproved by the contract administrator and the appropriate payments were made. Field payroll activities were also audited by Ebasco's home office and Louisiana Power & Light Company. Another sample procedure depicting the field payroll process is shown in Figure S-11. As indicated by the figure, the process began with development of employee requisitions for manual and non-manual labor. Once the position was approved and the employee hired, he began project work and recorded activities on time sheets. Manual personnel recorded their activities daily; non-manual employees recorded their activities on a semi-monthly basis. Following supervisory approval of employee's time sheets, these documents were reconciled with c.ttendance control logs prepared by time checkers and security guards. The verified time sheets, together with labor rates, served as a basis for payroll preparation.
'Ihe field payroll process was subject to audit by Ebasco's home office and Louisiane Power & Light Company.
DOCUMENT CONTROL v The purpose of document control is to provide adequate identification, storage, retrieval and safeguarding of project records. Records on a nuclear power plant project are classified into two groups, safety related and non-safety related. The safety related records are managed in accordance with requirements of applicable quality assurance programs. Other records are controlled in accordance with written procedures defining acceptable methods throughout the project for document identification, filing, retrieval and facility security. On Waterford 3, documentation control was conducted in accordance with applicable Ebasco's procedures. Presently, the process is under way to transfer documentation control responsibilities from Ebasco to LP&L in preparation for plant operation. 1 LEGAL SUPPORT On a typical project, legel services are usually provided by the utility companis law department. Because of the significant number of changes which affected the nuclear industry during the 1970s, p Louisiana Power & Light decided to strengthen Waterford 3 legal .( I support, and thus assure that its interests are well protected at all times. in support of this philocophy, Louisiana Power & Light had Page S-15
I its general counsel, the New Orleans firm of Monroe and Lemann, provide the services of one of its attorneys almost excl sively to the Waterford 3 project. In addition, LP&L requested Ebasco to provide on-site legal support by appointing a Project Legal Advisor. The Project Legal Advisor on Waterford 3 reports to the Project Manager. I!!s responsibilities are to assist the Project Team in all legal matters and to assure that the interests of LP&L and Ebasco are well protected. CONSTRUCTION MANAGEMENT PROCEDURES In addition to the above functions, Decision Management Company reviewed a nun.ber of Ebasco's site procedures used in the Waterford 3 project. Following is an overview of contents of the procedures selected for review. o ASP-I-2, Organization and Responsibilities- This procedure describes the organizational structure, functional responsibilities and lines of communication for management, direction and execution of quality related activities at the site organization level for Ebasco's Construction Department. o ASP-IV-33, Contractor Payments- Eis procedure describes the preparation, documentation, review, approval, internal controls and auditing of payments to contractors performing construction work at the site, o ASP-IV-10, Material Receiving, Warehousing and Control- Ris procedure establishes the responsibilities of the warehouse personnel and sets forth the methods to be followed in the receiving, storing and controlling material and equipment for Waterford 3. o ASP-IV-13, Contract Administration- This procedure established measures to ensure that submittals issued to and required from contractors are issued, received, reviewed, approved where required and controlled in a proper and timely manner, o ASP-IV-42, Supplemental Wot k Authorization / Supplemental Work Orders- This procedure was used to establish activities and responsibilities for Supplemental Work Authorization (SWA) use, preparation, implementation, monitoring and close-out, and the same for Supplemental Work Oroers (SWO's). o ASP-IV-56, Control of Information Requests Between Ebasco and Site Contractors- This procedure provided visibility to the existence and applicability of design control requirements between Ebasco and the Waterford 3 site contractors. Page S-16
o ASP-IV-57, Contract Close-out Procedure- This procedure described the responsibilities and activities fer close-out of site (Q / contractor ccatract work. . o ASP-IV-85, Preparation and Control of Procas Piping Travelers-
'Ihis procedure established the responsibility, defined t'le methods to be used, and provided guidelines to prepare and control the piping travelers required by ANSI B31.1 (Power Piping).
DECUSSION In general, the Waterford 3 construction support functions were conducted by means of methods similar to those used in the construction industri as a whole. In addition, wa find that Ebasco's procedures were similar both in form and in the scope of coverage ' with those commonly used the nuclear industry. The only two construction support functions which fall outside the industry norm are legal services and site security, These differences are outlined below: o Creation of a position of project legal advisor provided for a better liaison with LP&L's general counsel and assured that information necessary to support claims to litigate lawsuits was adequately documented and preperly developed. m I 'l -
~
o Security force inspections are common industry practices used to deter theft. However, at Waterford 3, the Fuard force was much more visible to the craftsmen and not relegated to specific' site areas. The guard force staff, although not excessive, was adequate enotch to cover gate access as well as work aress. CONCLUBIONS Decision Management Company, Inc. reviewed the Waterford 3 construction support functions and site procedures in light of criteria defined in Section S-1. Based upon this analysis, we have determined the following:
- a. Waterford 3 construction support functions were similar in scope end the quality of implementation to the industry norm,
- b. Waterford 3 site procedures were similar to common industry practice and adequate in light of project needs.
Based upon the above considerations, DMC concludes that LP&L and Ebasco acted prudently with regard to the above matters.
/~% 'l Page S-17
5.0 S%nificant Construction Methods While nost of the Waterford 3 construction was accomplished by means of conventional construction techniques, the constution methods discussed below are innovative, and thus merit further discussion. o The site was excaveted to EL.-48 feet MSL (65.5 feet below tinished grade) with approximately 800,000 cubic yards of earth removed. The dewatering of the upper soils permitted concrete construction work to progress while c on t r olli r g uplift pressures on the f ou nd a tion. The excavation / dewatering / recharge of the Waterford 3 site was the largest and deepest that close to the Mississippi River. Dewatering started in 1972 and continued through 1974. The dewatering / recharge was completed in 1978. The recharging, in particular, was a very sensitivo and controlled methodology in that the nuclear island foundation became a " floating" structure. As a result, the groundwater returned to its natural level with the net downward pressure of the structure equal to the pressure of the soil removed. o RCD Model--A complete model of the Reactor Containment Building was made by Ebasco to assist in their construction planning and work scheduling activities. Additionally, the model was used extensively in contractor and craft foreman training programs. o Reacter Containment Building--The shield building construction was accomptished using a slip-form method of concrete placement instead of the more common step-forming methods. The work was completed in three weeks at 24 hours / day. o Coincident with construction of the shield bulhding, the containment vessel was erected using a " tops off" approach that permitted early stress relieving as well as civil construction work inside the containment building. Further. dome piping and painting were done at ground level and set in place es a completed unit and knuckle plates were fabricated and installed using en in-containment crawler crane, o The spent fuel, condensate and refueling water pool liners were prefabricated and set in place as completed units. While the above construction, methods are not unique to Waterford 3, they resulted in improvement of the prgject scheduM because work could be accomplished in parallel with other activities. In summary, Decision Managemant Company, Inc. concludes tilat the Waterford 3 construction management effort was similar to practices commonly used in the nuclear power plant construction, but that the results achieved were abcVe the industry norm. Page S-18 _ _ _ _ l
O RGURES e l O c O Page S-19
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