Cause of poor DOE estimates investigated by advisory board

Annette Cary, Tri-City HeraldMay 22, 2014 

The Department of Energy needs to get to the bottom of why cost and schedule projections on its large projects are so often underestimated, said David Huizenga, the top official in DOE's Office of Environmental Management.

"It bothers me to think that collectively we cannot do a better job of getting our arms around these large projects," he told the DOE Environmental Management Advisory Board, which visited Hanford this week.

He asked the board Thursday to look at that and two other issues as DOE faces likely tight budgets in the coming years.

He'd like more money allocated to technical development and more opportunities for DOE contractors to be innovative, with the goal of saving money long term on environmental cleanup projects.

He also is interested in looking at how work is being prioritized at individual cleanup sites, including Hanford, particularly as risk is considered, he said.

DOE has a long history of large projects, has contractors experienced in large projects, has experts on staff and has regulator oversight, but still continues to underestimate how difficult it will be to build and start up large projects, he said.

The estimated cost of the Hanford vitrification plant, being built to treat up to 56 million gallons of radioactive waste for disposal, jumped from $5.5 billion in 2003 to $12.2 billion in 2006. No current estimate is available as work progresses to solve technical issues, but DOE has warned the cost will rise again.

In a wide-ranging discussion, board member Paul Dabbar of J.P. Morgan Securities said he sees the same issue of large cost escalation in private industry projects, particularly those that are large and first-of-a-kind like some DOE projects.

"You are not unique," he said.

DOE might consider scaling projects to a more reasonable size and avoiding adding "bells and whistles" on first-of-a-kind projects, he said. "Scope creep" is a problem, he said.

If parts of the vitrification plant had started out with a smaller scale and simpler design, it might have been able to start up sooner, he said. The plant was once planned to start treating waste in 2011 and now may not meet a deadline to be ready to operate in 2019.

DOE has had a history of being frightened to admit the true costs of its projects, although that may be changing, said Jane Hedges, the Washington state nuclear waste program manager.

When former vitrification plant contractor BNFL said the plant would cost $14 billion and then was replaced by a new contractor, the cost dropped to $5 billion. But then the cost estimate kept climbing every few years, she pointed out.

There also may be a tendency to kick a problem down the road to let someone else solve it, Hedges said.

Hedges and Huizenga brought up a tank manufactured overseas for the vitrification plant that arrived in the United States with obviously faulty welds and was rejected.

"Really? A tank got from England to here and looked like that?" Hedges said.

The issue was resolved with the tank being designated for required full-scale testing of vit plant mixing issues that will be done with a nonradioactive waste simulant. But it still would be a good incident for the advisory board to consider and determine what lessons could be learned, Huizenga said.

Huizenga said the correct incentives for contractors also might be an issue in getting work done promptly.

Work to clean up the Rocky Flats, Colo., site carried a large incentive, but money was saved in the long run by having the work finished, he said.

On the issue of technical development, Huizenga said spending $10 million to $20 million a year is not sufficient, as DOE needs to work smarter in a time of flat budgets. Spending might need to be 10 times that amount, he said.

Research to load more waste into each glass canister at Hanford could save large amounts of money, he said.

At the Savannah River, S.C., site, spending $50 million over a decade to determine a better way to remove cesium from liquids will save $1.5 billion in operating costs, he said.

But too often research may be only a third complete, and despite appearing promising, is stopped because of lack of money, he said.

It's an issue he also expects Energy Secretary Ernest Moniz's advisory board to look at and the two advisory board may be able to work on the issue in partnership, he said.

Contractors also need to be given opportunities to be innovative, he said.

At Hanford, the most efficient way to dispose of large pieces of contaminated equipment, such as pumps from its waste tanks, is to place them on blocks in the bottom of the Environmental Restoration Disposal Facility, a lined landfill, and then pour grout around them in the place were they will be disposed of permanently, said Doug Shoop, DOE deputy site manager for the Richland Operations Office.

That method presents less risk to workers and the environment, and it is significantly less expensive than preparing the equipment for disposal before it is placed in the landfill, he said.

However, regulations prohibit the disposal of waste before it is treated, and DOE is talking with regulators about the practice.

On the third issue -- prioritization of work based on risk --Huizenga said that across the DOE cleanup complex work is generally risk based. A third or more of the cleanup budget is spent on high level radioactive waste projects, he said.

But he's interested in a look at prioritization of work at individual sites, particularly at Hanford and Savannah River, the largest cleanup sites.

Focusing on risk is not always possible, he said. In some cases it's safest to do work in a certain sequence, such as tearing down buildings before workers fall through roofs, he said.

Any prioritization of work needs to be done in a transparent way with regulators and communities, he said.

-- Annette Cary: 582-1533; acary@tricityherald.com; Twitter: @HanfordNews

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