Association for Project Management
Five reasons why the nuclear industry needs to transform how it delivers projects
Blog posted by: Tom Eastup, 16 July 2020.
The nuclear industry could be on the cusp of a new age, with renewed interest in its potential role as a low carbon energy source. However, rapidly-evolving market conditions and a reputation for inconsistent delivery are just two of the reasons why project delivery in the nuclear sector needs to adapt, says Tom Eastup
Technologically the nuclear industry has a track record for learning from experience, innovating and improving. However, the way we deliver projects also needs to adapt, and it must do so quickly to ensure that sector remains competitive in a rapidly-evolving energy landscape. We must earn our right to become a leading player in the low carbon energy mix of the future.
The UK nuclear industry is something we should be proud of. In the UK we have a rich history of technological and operational advancements that have contributed to the emergence of nuclear power as a globally significant source of low carbon, and safe, electricity. We operate a regulatory regime that is respected around the world and we have some of the best and brightest talent engaged in solving complex problems. Despite this, I believe we have an Achilles heel – we seem to have a consistency problem when it comes to delivering projects.
To address this challenge and support the industry to capture the opportunities ahead, we recently established the Nuclear Project Management Specific Interest Group (Nuclear PM SIG) a joint initiative between the Association for Project Management (APM) and the Nuclear Institute (NI). Below I outline five reasons why I believe the nuclear industry needs to adapt its project management approaches, if it is to play a significant part in the UK’s low carbon energy economy.
- Renewed interest in nuclear as a low carbon energy source, but still set against falling levelised cost of electricity for renewables
Within the UK and globally, the energy landscape is changing. The UK Government has outlined (and set in law) its ambition to reach net zero carbon emissions by 2050, which has invigorated the renewable energy sector. Whilst this has renewed focus on nuclear as a potential low carbon energy source, a key trend to observe remains the overall falling levelised cost of electricity (LCOE) for all renewable energy technologies. If nuclear is to remain part of the low carbon energy mix, it must remain competitive. In order to do this, we must find ways of improving cost effectiveness, and we believe project delivery has a critical part to play. Whilst small modular reactors (SMRs) present an opportunity to reduce costs and momentum is picking up, good project management will be critical in getting these projects started and delivering the promised improvements in the economics.
- A (perceived) history of poor cost and schedule performance
Unfortunately, the nuclear sector does not have a reputation for consistently delivering projects within budget or on-time. This is somewhat harsh as the nature of nuclear projects means that they are complex, challenging and high profile. So, when things go wrong, issues are cast into the public eye, whilst on-time and on-budget projects go unnoticed. However, whether there is strict truth is irrelevant. The fact remains that there is the perception of historic poor project cost and schedule performance, and this impacts our reputation amongst government, investment and public stakeholders. To further illustrate the lack of confidence in the sector to deliver, in recent years we have seen the cancellation (at least for now) of two megaprojects within the nuclear new build sector: NuGen’s Moorside project in West Cumbria, and secondly Horizon Nuclear Power’s Wylfa Newydd project on Anglesey. Again, it is likely overly simplistic (and harsh) to attribute these outcomes to poor delivery, but the reputation impacts are nevertheless real and significant.
- Productivity enhancements brought about by digital technology and new operating models
In general, engineering and construction-led sectors are embracing significant technological advancements (such as Building Information Modelling – BIM) that support more efficient project delivery. Whilst BIM and other technologies are important, improving project performance is not only about the tech. New delivery models such as that proposed by the Institution of Civil Engineers’ Project 13 initiative are being developed and trialled. However, both these headline technologies and operating models have been slow to filter down to the nuclear industry. Sellafield’s PPP procurement is an example of delivery model innovation, but we need to see more.
- Labour shortages and capability maturity
At this moment within the UK, there are a significant number of infrastructure projects being delivered concurrently, with potentially more coming as part of the Government’s response to the COVID-19 economic shock. This has, and will, put a strain on the project management and project controls labour force at the national level. Couple this with the fact the nuclear industry itself is early in its journey of adopting new ways of working (for example programme and portfolio management) and an ageing workforce, this creates a challenging environment for organisations looking to level up their project delivery. Whilst we are not able to influence government decision-making on the timing of other infrastructure programmes, we are able to address the labour shortage and capability gaps within the nuclear industry. If the sector is to reach its potential it must meet this challenge head on and find a way of getting enough people with the right knowledge and experience into its projects.
- Government policy has set challenging cost reduction targets
Finally, the recent nuclear sector deal, published in June 2018 by the UK Government, has set challenging targets for the sector to deliver cost reductions for new build and decommissioning of 30 per cent and 20 per cent respectively. These are big numbers that cannot be delivered through incremental improvement alone, but rather will require a total transformation in the way we design, build, commission, operate and dismantle facilities – and this will be underpinned by an enhanced ability to managing projects effectively.
Transforming the way we deliver projects
The scale, range and complexity of projects within the nuclear industry is, if not unique, certainly significant. Managers must balance multifaceted and highly interdependent constraints such as rigorous safety standards, complex hazards, funding cycles, resource constraints, advanced engineering, new technologies and an intricate stakeholder landscape. However, we are not alone in some of these challenges (look at Crossrail and HS2) and even major government IT transformation projects, which may not have the same types of risk around physical safety but certainly impact the lives of communities when they do not deliver as expected (for example Universal Credit).
The point is that, in my view, we must be better at learning from one another, and from those outside the sector. The nuclear industry is at a decisive point – there is the potential to play a major part in the future low carbon energy portfolio. But to succeed we must visibly transform and overcome the challenges highlighted above by continually seeking to improve the way we deliver projects through seeking and embedding more efficient and effective ways of working. It is against this context that we have established this Nuclear Project Management SIG, and I look forward to building a community and working with like-minded professionals to support the sector as we move through an exciting next few years.
If you are passionate about projects and motivated to support the nuclear industry enhance its ability to deliver, then we would love to hear from you. If you would like to know more or contribute, please email firstname.lastname@example.org
About the Author
Tom Eastup is Practice Lead for Project, Programme, Portfolio Management (P3M) Consulting at DAS Ltd, an independent consultancy which supports owners, operators and developers of critical national infrastructure and services solve complex strategic and operational challenges.
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