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NEC3 case study - Magnox nuclear power station decommissioning

  • Location: Berkeley, Bradwell, Chapelcross, Dungeness A, Hinkley Point A, Hunterston A, Oldbury, Sizewell A
  • Value: £4 billion
  • Contracts used: FC, PSC, ECC, ECSC, TSC, SC
  • Start-finish: 2010-2015
  • Employer: Magnox Limited
  • Contractor: Various
  • Project manager: Magnox Limited

Magnox Limited operates ten licenced nuclear sites across Britain on behalf of the Nuclear Decommissioning Authority (NDA). All sites feature obsolete UK-designed Magnox reactors, which are now being defuelled and decommissioned under a £4billion, 100+ year programme.

In 2010 Magnox rationalised its supply chain using common NEC3 terms of engagement. The aim was to improve performance by reducing complexity and duplication and by improving clarity of purpose and establishing shared goals; drawing on the collaborative approach of NEC3 contracts rather than operating turnkey projects that tend to be remote and cut off from organisational learning. Suppliers are engaged on a longer-term basis under NEC3 Framework Contracts and then contracted under various NEC3 contracts to deliver works, goods or services to meet a particular need within a project.

"The clear advantage of such an EU-compliant approach is the opportunity to retain competitive tension without the need for continual market testing, and to develop more meaningful on-going relationships. This is effective in terms of time, continuous improvement, safety and, by use of fixed-fee agreements for subsequent phases, routinely delivers 5% programme-to-programme savings," claims Commercial Director, Peter Walkden.

Lifecycle stages and programmes
The key aspects of the NEC3 Framework Contracts are a four-stage lifecycle approach design, build, operate, decommission across Magnox's four strategic programmes of plant and structures, intermediate level waste management, fuel element debris treatment, and ponds decommissioning. Each lifecycle stage has its own set of contractors to perform the work within a programme, below which are supply chains of subcontractors working for each main contractor.

Certainly Magnox has taken advantage of the full range of NEC3 contracts, ranging from the NEC3 Engineering Construction Contract and Supply Contract to procure sophisticated dismantling robots, to a facilities management NEC3 Term Service Contract to provide cleaning and laundry services.

"The NEC3 contract suite has become a cornerstone of the Magnox programme and has been used to great effect; from the adoption of better contract management techniques to driving a cultural change based around learning and continuous improvement. The contract management processes and collaborative approach to working have helped us deliver improved value for money in meeting the challenges faced," says Walkden.

Improved contract management
"NEC3 has raised our contract management performance standards and, coupled with the transparency offered through the early warning process, helped our management teams through the complex task of decommissioning sites safely and cost-efficiently."

 "The integration of suppliers through common NEC3 terms of engagement delivers value for both the company and the UK taxpayer. Perhaps most significantly, it also promotes a shared culture of continuous improvement, which in turn encourage timely and safe practices both of which are prerequisites in the nuclear industry," says Walkden.

NEC3 contracts have also fostered better communications at meetings, formal or informal, and via the web and presentations. A further benefit of the integrated supply chain and strategic NEC3 frameworks has been the ability to have shovel ready projects on the shelf whenever priorities change or funding becomes available.

Benefits of NEC

  • NEC3 Framework Contracts ensure flexibility and consistency of procurement across all lifecycle stages and programmes, delivering the tax payer with value for money.
  • The longer-term nature of the NEC3 Framework Contracts have enabled a stronger and deeper understanding of the supply chain, both to understand capacity constraints and to better respond to initiatives such as the governments small and medium-sized enterprise (SME) agenda.
  • Collaborative approach of NEC3 contracts improves communications, encourages long-term relationships and fosters a culture of continuous improvement, helping to deliver safe, sustainable and publicly acceptable solutions.
  • NEC3 contracts have raised contract management performance standards helped deliver the Magnoxs complex programmes more cost-efficiently.
  • The clarity and cooperative nature of the NEC3 contract suite has played a crucial role in Magnoxs desire to attract the best from its supply chain and become a client of choice.