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Cost Estimating&

Decommissioning Funding

ANL Decommissioning Training Course

Joseph E. CarignanJECarignan@aol.com

423-488-3393 Cell

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Cost Estimating &Decommissioning Funding

– Understand Purpose And Types Of Estimates Advantages/Disadvantages

– Understand And Describe The Approaches Used For Cost Estimating

– Obtain A Basic Understanding Of The Cost Estimating Elements/Terminology

– Identify Key Factors Affecting The Cost Estimate Results

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Introduction:Purpose

• Assures Adequate Funds Identified• Establishes Bases For:

– Evaluating Contractor Bids– Comparison of Approaches– Risk Management– Management Communication Tool

• Satisfies Regulatory Requirements • Establishes Oversight Confidence

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Introduction:Accuracy

• Association for the Advancement of Cost Engineering (AACE) Definitions:– Order of Magnitude CE -30% to +50%

• W/O Detailed Engineering Data (Scaling factors/ratios)• Scope not well defined

– Budgetary CE -15% to +30 • Scope defined – Have Site Plans/Drawings/Equipment

– Definitive CE - 5 % to +15%• Accurate Site Drawings/Records Available

(Examples - Plot Plans/Elevations, P&IDs, Equipment Data Sheets)

• Scope Well Defined/Characterization/Approach

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Introduction:Quality

• Poorly Prepared or No CE May Result In:– Insufficient Funds – Re-planning / Base lining– Poor Public Relations/Loss of Confidence– Non-compliance– Risk exposure– Poor Stewardship

• “Black Box” Cost Estimates Not Sufficient.

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Background:Funding Requirements

U.S. Power Reactors(10 CFR 50.75)

- NRC Minimum PWR – $105MM, BWR $135MM - Minimums

Adjusted Over Time

- Funds Collected From Rate Payers- Financial Assurance - Update Report Every Other Year

U.S. Non-Power Reactors(10 CFR 50.33 & 50.75)- No NRC Minimum- Decommissioning Report (10 CFR 50.33)- Financial Assurance Required

Other Facilities - Fed Government Sites Funds Collected From Taxpayers

• No Generic Minimum Required • Congressional Funding Allocated (Yearly)• > 5 Million Additional Oversight

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Background:Basis

• 1986 Guidelines Report (AIF/NESP-036)– “Guidelines for Producing Commercial Nuclear

Power Plant Decommissioning Cost Estimates”• Approach –

– Unit Cost Factors and Detailed Plant Inventory• Widely Accepted by Regulatory Authorities

– PUC– Federal Funding Agencies – NRC /DOE

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Background:Tools and Applications

• Commercial Estimating Applications Available• Customized Estimating Tools Available, Designed

By D&D Professionals– RACER– POWERtool– Others

• Maintains A ‘Library’ Of Activity Estimates/Rates, Based On Actual Data From Other D&D Projects, To Use On Future D&D Projects

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Preparing A Cost Estimate:Key Cost Elements

Activity-dependent Costs

Period-dependent Costs

Collateral Costs/Special Items Costs

Contingency

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Preparing A Cost Estimate:Activity-Dependent Costs

“Hands –On” Activities Clearly Defined Tasks/Normally Repetitive Removal, Decontamination, Packaging, Shipping and

BurialUsed to Develop Site-specific Unit Cost

Factors Site/regional Cost For Labor And Materials Work Adjustment Factors For Site Conditions

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Preparing A Cost Estimate:Period-Dependent Costs

• Directly Related To Project Duration• Necessary Functions For Program Management

– Engineering, Administration, Quality Assurance, Licensing, Operations, Maintenance, Security and Radiation Protection, Planning/Scheduling, Field Supervision

• Staff Composition/Level – Synchronized With Decommissioning Phases And Support Requirements

• Costs – Direct (Base Salaries)– Indirect Overhead (Fixed And Variable Components)– Transition, Severance, Training And Retention

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Preparing A Cost Estimate:Collateral / Special Item Cost

• Insurance, Taxes, Permits, Fees• Engineering

– Contracted or Off Site Support.

• Other Costs– Material/Supplies– Identified As a Cost Not Captured Elsewhere

• Scrap• Salvage

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Preparing A Cost Estimate:Other Cost Definitions/Elements

• Other Elements of the Cost Estimate– Scrap Costs

• Clean Material – may be recycled

– Salvage Costs• Material for Resale or Reuse – Must Evaluate Cost Benefit

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Preparing A Cost Estimate:Other Cost Definitions/Elements

• Work Breakdown Structure (WB)– Originally developed by the military ((MIL-STD 881B

(25 Mar 93))– A deliverable oriented hierarchical description of the

work to be performed – Organizes/defines the total scope of the project– Each descending level provides form detailed

definition of the work to be performed and eventually work packages.

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Preparing A Cost Estimate:Work Breakdown Structure

• Work Breakdown Structure (WBS)– A deliverable oriented hierarchical work activity description – Organizes/defines the total scope of the project– Each descending level provides detailed description of the work

to be performed

– Should correlate to final work packages .– Typically related to the accounting system used for budgeting– Track major elements against decommissioning costs

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Preparing A Cost Estimate:Other Cost Definitions/Elements

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Preparing A Cost Estimate:Work Breakdown Structure - Level 5 Example

X ResearchReactor1

Pre-planning1.1

DecommissioningPlanning1.3

DecommissioningActivities1.4

TransitionActivities1.2

Etc.1.x

DecontaminationPrimary Systems1.4.1

DecontaminationSecondary Systems1.4.2

Dismantleequipment in Room 1A1.4.3

Dismantleequipment in Room 1B1.4.3

Etc.1.4.x

General deconof room1.4.3.1

Remove allpiping1.4.3.2

Remove tank1A-21.4.3.3

Remove tank1A-21.4.3.4

Etc.1.4.3.x

Ensure pipingIs drained1.4.3.2.1

Disconnect Pipingfrom tank 1A-11.4.3.2.2

Disconnect Pipingfrom tank 1A-21.4.3.2.3

Etc.1.4.3.2.x

From IAEA Presentation

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Preparing A Cost Estimate:Work Breakdown Structure - Example

1.0 Site Preparation1.01 Mobilization1.02 Site Infrastructure/Setup...

2.0 Characterization/Investigation 3.0 Preparation For Dismantling

3.01 Preparations3.02 Engineering and Planning..3.10 Overhead Costs

4.0 Dismantling/Decommissioning5.0 Site Restoration

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Preparing A Cost Estimate:Work Element Definition Sheet – Example

WBS No. Sequential Number of specific ActivityWBS Title: Title of Tasks To Be PerformedWBS Description of the Work:

This section describes specific tasks necessary to complete the Activity.

WBS Deliverable:

Describes the End Point Criteria for the Specific Tasks.

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Preparing A Cost Estimate:Contingency

• Definition* “specific provision for unforeseeable elements of cost within the defined project scope; particularly important where previous experience relating estimates and actual costs has shown that unforeseeable events which will increase costs are likely to occur.”

• Provides Funding Assurance• Not a Safety Factor & Expected to Be Spent • Industry Wide Acceptance • May be built into each activity or applied as line

item or project specific– DOE does not allow the project to control contingency

* Association for the Advancement of Cost Engineering International

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Preparing A Cost Estimate:Contingency/Management Reserve

• DOE“the portion of the project budget that the government holds in reserve to accommodate unknowns regarding requirements and uncertainty that is outside the scope of the contract, but is within the scope of the project. Contingency maybe used for additional scope and work that is necessary to meet current requirements. Contingency is not used for new requirements.

The contractor uses management reserve. Management reserve is not allocated to work packages or planning packages, but is held in reserve by management to provide flexibility to manage within the contractor Performance Measurement Baseline. Management reserve is used to control the workflow and adjust work packages for rate changes and other unknowns, but is never used for additional scope outside of the authorized work scope.”

* DOE M 413.3-13-28-03

Preparing A Cost Estimate:Overview

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1.Define Work

Scope

3.Collect

Information

2.Determine

Options

6.Develop

UCF & ProductivityFactors

4.Define

Assumptions

5.ID Activities

& Tasks

7.Develop Activity

Estimates

9.Prepare Final CostEstimate/Schedule

8.Develop

Project Schedule

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Preparing A Cost Estimate:First Things First

– This Bounds the Cost Study and Describes The Overall Approach

– Determines What Scenarios will be included in the Cost Study such as Prompt Decon.

– Site Inventory / Drawings / Records– Interviews / Misc Data

1.Define Work

Scope

3.Collect

Information

2.Determine

Options

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Preparing A Cost Estimate:First Things First

Assumptions Affect Approach & Costs (+ or -)

– Technical– Scope, Contamination Levels, Quantities, Subcontracts– Scrap/Salvage, Plant Conditions– Radiation Conditions, Activation Modeling

– Cost– Present Year Dollars?, Rates, Escalation, Interest, etc.– Labor Costs (severance, security, salaries)

– Funding– Multi-year, Single Year, etc.

– End State– Remaining Contamination Levels– Remaining Site Condition

4.Define

Assumptions

3.Collect

Information

5.ID Activities

& Tasks

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Preparing A Cost Estimate:

Identify Activities or Tasks

– Use Inventory to Determine What Has to be removed.

– Group Tasks– Equipment Types– Divide Into Most Like Areas– Unique Factors

6.Develop

UCF & Prod. Factors

4.Define

Assumptions

5.ID Activities

& Tasks

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Preparing A Cost Estimate:Develop or Identify Unit Cost Factors

• Unit Cost Factors (UCF) – Determine the Cost for Specific Tasks Under Ideal

Conditions

• Example:

UCFRemoval of contaminated pump motors which are 300-

1000 pounds

Description of UCF:Motors for pumps 300 to 1,000 lbs will be manually removed by chain falls or small hoists. The motor will be transferred to the waste processing area for final disposition.

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Preparing A Cost Estimate:Incorporate Productivity Factors*

• Productivity Factors – Used to Adjust Activities or Tasks Based on Site Specific Conditions that affect worker performance:

– Heat Stress– Accessibility / Close environments– Controlled Access / Security– Examples

• Respiratory Protection: 10 to 50% inefficiency• ALARA 10 to 50% inefficiency• Protective Clothing 15 to 30% inefficiency• Accessibility 10 to 20% inefficiency• Work Breaks 8 to 10% inefficiency• Productivity 10 to 15% inefficiency

* Also Referred To As Work Difficulty Factors

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Preparing A Cost Estimate:Assemble the Cost Estimate – Site Inventory

111

11510

Collect Inventory and Other Data

6.Develop UCF & PF

8.Develop Project

Schedules

7.Develop

Activity Estimates

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Preparing A Cost Estimate:Assemble the Cost Estimate – Use UCF and PF

1 1 1 0.1 0.25 0.1 0.3 0.081

6.Develop UCF & PF

8.Develop

Project Schedules

7.Develop

Activity Estimates

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Preparing A Cost Estimate:Assemble the Cost Estimate – Integrate Results

2.00

69 36.00

1.00

38.20

0 .50 0. 1.00 40.0

20.00 0.0 45.23 139.00

18.00

45.23

39.2040.00

38.20

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Preparing A Cost Estimate:Assemble the Cost Estimate – Integrate Results

$65.24

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Removal of contaminated pump motors, 300-1000 pound

Motors for pumps 300 to 1,000 lb will be removed by chain falls or smallhoists. The motor will be transferred to the waste processing area.

Act Activity Act. CrtID Description Dur Dur---------------------------------------------------------------------------a Verify equipment de-energized & disconnected 30 30b Rig for removal 15 (a)c Remove motor from supports and pump 15 15d Remove motor, wrap in plastic and remove to waste processing area

20 20----- -----

Totals (Activity/Critical) 80 65

Duration adjustment(s):+ Respiratory protection adjustment( 50 % of critical duration ) 32+ Radiation/ALARA adjustment( 37.08333 % of critical duration ) 24

-----Adjusted work duration 121+ Protective clothing adjustment ( 30 % of adjusted duration ) 36

-----Productive work duration 157+ Work break adjustment( 8.33 % of productive duration ) 13

-----Total work duration 170 min

*** Total duration = 2.833 hr ***

Preparing A Cost Estimate - UCF Example

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Removal of contaminated pump motors,300-1000 pound (cont'd)

Crew Number Duration Rate Cost(hr) ($/hr)

--------------------------------------------------------------------------Laborers 2.00 2.833 $34.59 $195.99Craftsmen 2.00 2.833 $43.06 $243.98Foreman 0.50 2.833 $43.98 $62.30General Foreman 0.13 2.833 $44.98 $15.93Health Physics Technician 1.00 2.833 $46.00 $130.32

---------Total labor cost $648.52

Equipment Costs noneConsumables/Materials Costs-Blotting paper 100 @ $0.45/sq ft { 2} $45.00-Plastic sheets/bags 100 @ $0.11/sq ft { 3} $11.00

---------Subtotal cost of equipment and materials $56.00Overhead & profit on equipment and materials @ 16.500 % $9.24

---------Total costs, equipment & material $65.24

TOTAL COST Removal of contaminated pump motors, 300-1000 pound$713.76

Total labor cost $648.52Total equipment/material costs $65.24TOTAL CRAFT LABOR man-hours required per unit 15.936

Preparing A Cost Estimate - UCF Example

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Preparing A Cost Estimate:Assemble the Cost Estimate - Project Schedules

Calculate durations for completing a unit of work (based on working conditions)Assign number of crews to each Work Area or

taskCombine the work area inventory, number of

crews, and adjusted task durationsDevelop a Work Area “Total Task Duration”

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Preparing A Cost Estimate:Assemble the Cost Estimate – Integrate Project Schedules

EXAMPLE

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Preparing A Cost Estimate:Assemble the Cost Estimate – Final Estimate and Schedule

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Example: WBS ScheduleExample: WBS Schedule

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WBS # Task Name

Labor Hours

(x 1000)

Budget (includes labor) (x 1000€)

T = - 3 Months T = 0

T = 3 Months

T = 6 Months

T= 9 Months

T = 12 Months

T = 15 Months

T = 18 Months

T = 24 Months

1 Decommission Research Reactor 20001.1 Pre-shutdown planning 301.2 Final Shutdown === Milestone1.3 Preliminary Studies 301.4 Project Execution 1905

1.4.1 Decommissioning Activities 17401.4.1.1 Decon/Remove Auxilary Systems 8701.4.1.2 Decon/Remove Reactor Systems 8701.4.2 Final Status Surveys 1501.4.3 Confirmatory Surveys 151.4.4 License Termination === Milestone1.5 Closeout Actions 35

1.5.1 Non-radiological remediation 251.5.2 Demobilization 51.5.3 Closeout Documentation 5

From IAEA Presentation

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Preparing A Cost Estimate:Assemble the Cost Estimate - Site Restoration / S&M

• Structural Damage / Degradation • Abandoned Facilities Will Quickly Degrade

– Breeding Ground for Vermin & Other Biological Hazards– Groundwater Intrusion– Safety Hazard / Personnel Intrusion– Dismantling cost increases with time.

• Surveillance & Maintenance Costs Must Be Factored Into Overall Costs

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Example: Decommissioning Cost Elements:1100 MWe PWR – 1999 U.S. Dollars

Example: Decommissioning Cost Elements:1100 MWe PWR – 1999 U.S. Dollars

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SUMMARY:• Quality CE and Up-Front Planning is Critical

• Don’t Underestimate The Value Of Your Assumptions

• Site Specific CE Necessary for Near Term D&D– Keep CE Up-To-Date (Decommissioning Is Imminent)

• Cost Study Used To Develop Baseline

• Don’t Reinvent – Use Proven Software and Expertise

• Contingency Is An Integral Part of the Cost Estimate

• Don’t Underestimate “soft” costs - Engineering and Licensing Support

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SUMMARY

CHEAP – FAST – GOOD