Report says better system for cost estimates would have prevented DOE problems

By Annette Cary, Tri-City HeraldMay 9, 2013 

A better system for cost estimating might have helped prevent Department of Energy problems such as the tripling of the price tag for Hanford's vitrification plant, according to the Government Accountability Office.

The Senate Armed Services Subcomittee on Strategic Forces heard testimony this week from David Trimble, GAO director of Natural Resources and Environment.

The GAO has been reporting on the problems the DOE Office of Environmental Management and National Nuclear Security Administration have had meeting cost estimates on large projects for more than a decade.

Some improvement has been made, but all ongoing major projects continue to have significant increased costs and schedule delays, Trimble said.

"Without accurate cost and budget information, DOE is not in a position to effectively manage the critical projects and programs carried out by its contractors," he said. And Congress needs accurate and reliable information on cost to make difficult budget decisions, he said.

"Without improvements in this information, and DOE's capabilities to use and effectively apply this information, DOE will continue to be surprised by cost and schedule problems, and will continue to be forced to manage these problems through reactive and stopgap measures such as suspending programs, reducing the scope of critical projects, while robbing Peter to pay Paul," he said.

The Hanford vitrification plant, being built to treat 56 million gallons of radioactive waste from weapons plutonium production, has tripled in cost to $13.4 billion since 2000, according to GAO testimony. Its start date has been extended for a decade until 2019.

The GAO in 2008 recommended DOE establish a cost-estimating policy for projects such as the vitrification plant, but instead DOE revised its project management order and supplemental guidance that sets requirements and provides suggestions on how to manage capital asset acquisition projects, the GAO said in written testimony it submitted.

The project management order does not meet best practices for cost-estimating, the GAO found in 2010. The order did not say how cost estimates should be developed, which phases of a project should be included in the estimate, how the estimate should be maintained through conclusion of the project and when an independent cost estimate should be prepared.

Those concerns have been only partially addressed, according to the GAO.

The GAO also is interested in looking at whether a cost-estimating policy could be developed to improve DOE projects, such as operating programs.

"As GAO has noted, DOE continues to act on the recommendations GAO has made to improve cost estimating," said DOE spokeswoman Lindsey Geisler. "The DOE's Office of Environmental Management, in accordance with GAO's recommendation, has adopted polices and practices to support cost estimating and continues working to improve these."

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