Department of Energy faces huge cost increases

By Annette Cary, Herald staff writerOctober 7, 2008 

Cost increases and project delays continue to mount at the Department of Energy's 10 largest projects at nuclear weapons sites, five of them at Hanford, according to a Government Accountability Office report to Congress.

The GAO looked at changes to the cost and schedule estimates for major projects, reasons for the changes and what's hindering DOE's ability to manage the projects well.

Estimated costs for DOE's 10 largest cleanup projects have increased by a combined $25 billion over the past few years, with the largest increase in the cost to clean up and close Hanford's tank farms, where 53 million gallons of radioactive waste are held in underground tanks.

That project was estimated to cost $21.6 billion in 2004 and now DOE says it has only a 50 percent level of confidence the work can be finished for $31 billion and an 80 percent level of confidence the work can be completed for $39.6 billion.

The estimated completion date has moved from 2032 to sometime between 2042 and 2050.

Schedule delays for the 10 projects GAO studied were as long as 15 years, with the longest delays projected at Hanford.

"These changes arose primarily because the initial baselines made schedule assumptions that were not linked to technical or budget realities, and the scope of work included other assumptions that did not prove true," the GAO report said.

At Hanford, delays in building the $12.2 billion vitrification plant have caused cost increases or schedule delays at other projects. DOE had expected the plant to begin operating in 2011 but now it is not expected to be ready until 2019. It's planned to treat much of the radioactive waste held in underground tanks at Hanford.

Latest cost projections for emptying tanks, treating the waste and closing tanks increased by $4.8 billion because of the need to maintain the tanks for longer and to operate the vitrification plant for longer, the GAO said. That cost projection was based on only a five-year delay rather than the current projected delay of eight years.

Also, other projects to handle solid waste and clean up soil and ground water will have increased costs and take 15 years longer because work cannot be completed until the vitrification plant has finished treating tank waste.

Emptying waste tanks also will cost more because DOE underestimated the difficulty of the project, the GAO said.

Because almost half of the 177 underground tanks contain a hardened layer of waste that cannot be retrieved with the technology originally planned, the cost of using another technology will add more than $2 billion to the cost, according to the report.

The four projects GAO considered at Hanford in addition to work at the tank farms include:

w Cleaning up the Plutonium Finishing Plant. Since 2006, estimated cost has increased from almost $3 billion to about $3.4 billion and the work should be completed in 2018 or 2019 instead of 2016.

w Solid waste cleanup and disposal, which ranges from disposing of low-level waste at a Hanford landfill to shipping irradiated nuclear fuel and cesium and strontium capsules to a federal repository in Nevada. Since 2007 the estimated cost has increased from $8.2 billion to a range of $9.5 billion to $10.6 billion, and the schedule has changed from completion in 2035 to completion between 2050 to 2058 after tank waste is treated.

w Soil and ground water cleanup. Since 2007 the cost has increased from $3.9 billion to around $5.6 billion and the schedule has been extended from 2035 to between 2050 and 2059, again after tanks are emptied and closed.

w Cleanup of Hanford along the Columbia River. The cost has remained steady at about $4.8 billion since 2006 and the estimated cleanup date of 2019 has not changed, according to the GAO. However, the GAO said a cost estimate change is expected by the end of the year that would increase the cost by several hundred million dollars. Worse conditions than expected have been found.

Part of the increase in the cost of the solid waste program is tied to DOE's decision to focus on cleaning up areas along the Columbia River in the next four years, the GAO said. Work will be reduced in the solid waste program to allow full funding for river corridor work.

Costs will go up as work is delayed and new workers have to be hired and trained to complete a job that already was under way, the GAO said. The solid waste program includes the Waste Receiving and Processing Facility, which is scheduled to be temporarily closed starting in early 2009.

In some cases, the increases in cost and longer schedules at Hanford and across the DOE complex can be traced to a retreat from DOE's plan in 2002 to accelerate cleanup work. Cost and schedule of work was tied to completion dates and not necessarily the availability of technology to do the work.

DOE also changed its policy for creating project baselines in April 2007, requiring them to be based on expected budget numbers rather than legally required deadlines and unconstrained funding, the GAO report said. The result is increased, but more realistic, cost and schedule estimates, the report said.

The GAO made several recommendations to the energy secretary, including more and better reporting to Congress; consolidating and clarifying guidance for cleanup management to make it easier to follow; and developing independent reviews to better assure the work can be completed on time and for the estimated cost.

DOE told the GAO it already has made changes to improve its project performance and address long-standing problems.

w Annette Cary: 582-1533; acary@tricity herald.com

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