What makes nuclear projects unpredictable? The decision-making dilemma
Nuclear projects represent some of the most impressive achievements of the human race, delivering scientific firsts that will find a place in history books for centuries to come. However, for several reasons, including public perception and shifting political will, UK nuclear projects have failed to evolve into a repeatable cycle of new builds. As a result, every project is a first of a kind or worse still, one of a kind. This causes a circular problem as poor repeatability leads to investor reticence and greater delays between project starts. And this seems to be getting worse: in the last few weeks, we have seen yet another investor walk away from a UK nuclear new build; with Hitachi ending its interest in the Wylfa Newydd project.
The recently established Nuclear Project Management Specific Interest Group, a joint initiative between the Association for Project Management and the Nuclear Institute, has been reviewing this challenge and in this blog, I discuss some of the issues involved.
What factors cause this unpredictability?
Both unique to nuclear and unique to the UK, there are several issues that contribute to the lack of predictability.
- The UK nuclear industry has become progressively more fragmented. This makes decision-making complex, with more stakeholders wishing to be involved, leading to decision paralysis in some cases.
- Engineering design solutions have become increasingly complicated to meet modern expectations and standards.
- Driven by the overriding desire for safe operation, has the culture of the industry become institutionally risk averse, which also affects how it deals with commercial risk?
- In the UK, there’s a tendency to focus on the project (input) specification rather than (output) objectives. This is driven by a more commercial approach to project management which enables a clearer transfer of scope and hence risk to vendors.
- Complex operating models (partly a result of industry fragmentation) make close collaboration difficult, even using modern IT tools that have produced significant results in other sectors.
All of the above affect the speed of decision-making, meaning that the window of opportunity to mitigate risk or realise opportunities is often lost. This leads to a hypothesis that the Nuclear PM SIG plans to examine further:
Complex nuclear projects need timely decision making to be successful but slow governance inherent in western nuclear projects makes this challenging. This is a major inhibitor to predictability and market-competitive time-cost performance
Evidence to support the hypothesis
There have been a number of NAO and Government Committee reviews into the nuclear sector which have identified the impact of decision-making on project risk and investor confidence, most notably the Energy and Climate Change Committee report published in 2016 looking into the issues underlying poor investor confidence in the sector. The independent literature has much to say on why megaprojects, including nuclear power plants, are late and over-budget. SIG member Professor G Locatelli, in his paper Why are megaprojects, including nuclear power plants, delivered over budget and late? reviews the literature and identifies some significant thoughts about the relevance of decision-making to megaproject performance.
However, there is little quantitative data on the performance of the decision-making process within nuclear projects or any guidance on how to identify solutions.
Developing a better approach
The Nuclear PM SIG has identified a range of issues to be addressed. These are:
Specific aspects of nuclear projects are unique and compound this issue
The fragmentation of the industry creates overlapping and duplication in governance resulting in severe delays to key decisions. In addition, the regulatory process needs to take place in series with project and shareholder governance processes; requiring internal approval before submission to the regulator. Often regulators may require six months to consider a major change and this time period in itself rules out a number of, if not most, potential risk mitigation options that require a major safety case change.
Knock-on effects compound the root cause of slow decision-making and reveal themselves in different ways.
For example, it is often quoted that the key lesson from previous nuclear projects is to agree the detailed design before build, but all nuclear projects suffer from late identification of unknown requirements and a slow decision-making cycle means the design can’t be updated quickly enough to ensure it is fixed before the next key stage of the project has to commence to maintain the planned end date. The full range of consequences of the inability to make rapid decisions warrants closer examination. There are probably many other hidden consequences, perhaps linked to the culture instilled by a feeling of being hamstrung by the project’s own governance arrangements. This stifling of innovation could be the single biggest consequence of a slow decision-making culture.
There is no definitive data linking the speed of governance/decision-making on nuclear projects with project performance.
This is an area that the Nuclear PM SIG wishes to explore in more detail. As Edwards Deming, the initiator of the Japanese quality revolution, said ‘without data you’re just another person with an opinion’ and at present I do not believe there is any definitive data on this issue. Projects monitor many things and for commercial reasons decision-making time is often measured, so there should be data available.
Project complexity compounds the issue of slow decision-making on all projects.
In the nuclear sector, smaller, less complicated projects may find themselves mired in lengthy governance procedures designed for megaprojects. This may be a consequence of a failure to recognise that megaprojects should be considered as permanent organisations with separate governance arrangements distinct from their parent organisations. We should also consider whether a standard governance model could be beneficial by creating a common understanding of how the industry works, facilitating learning and enabling easier practitioner transfer from project to project in a skills-challenged sector.
We hope to broaden the debate across the nuclear and project management communities with a webinar next week on Wednesday 21 October: Perspectives on why nuclear projects suffer from poor predictability. And if you have access to data on decision-making, I would love to hear from you. Visit the Nuclear PM SIG’s website to find out more and stay up to date with our work.
You may also be interested in
- Joining the APM community
- Five reasons why the nuclear industry needs to transform how it delivers projects
- The APM Podcasts