A South African engineer, Dr David Milne, with three decades of project experience in South Africa and China, explains how South Africa can build its new nuclear power plants without necessarily incurring cost overruns or schedule delays.
According to Milne, the creation of an Owner Team and the appointment within the team of professional engineers to oversee the project is crucial to ensure the success of the country’s planned 2,500MW nuclear build programme.
By Dr David Milne
In some quarters there is a mistaken belief that South Africa lacks the necessary professional expertise to successfully undertake the management of a nuclear project of this complexity and magnitude. The relevant professional engineering skills are and have been available in South Africa for many years and can be called upon to assist in the execution of this important project.
Fundamental to the successful execution of the nuclear project would be, at the onset of the project, to create a small Owner Team to be staffed by professional engineers. This Owner Team would not undertake the detailed execution of the project but instead would have overall responsibility for its management. The composition of this team would include a professional person for each engineering and project management discipline.
The detailed execution of the project would be assigned to a competent South African Engineering, Procurement, Construction Management (EPCM) contractor to be appointed by the Owner Team and to which, monthly, it would report the status of the project.
All contractors engaged at the Thyspunt project site, including the EPCM contractor, would be obliged to conform to the stringent project management precepts mandated by the International Atomic Energy Agency (IAEA) and the International Project Management Institute (PMI).
Both these agencies, inter alia, require each contractor to summarise and report its progress in such a manner as to establish its compliance with the project’s budget and schedule. It would be the Owner Team’s task to monitor this compliance. The IAEA and the PMI’s precepts would allow the Owner Team to determine at an early project milestone the likelihood of a deviation from the project’s budget or schedule.
This would allow corrective action to be taken while there still is time to do so. Recognition of unfavourable deviations at a late stage of the project invariably results in a fait accompli as there is insufficient remaining time to take any corrective action.
Staying within the budget
At one time it was believed that accounting information could be depended upon to forecast the final cost of a project. This is a fallacy. If, say, the approved project budget is $100 million and commitments (contracts placed and expenditure to date) total, say, $40 million, it does not mean that the final project cost would remain at the sanctioned $100 million.
To determine what the final project cost shall be, it is necessary to use engineering principles to establish the efficiency of the EPCM contractor’s utilisation of project funds. This efficiency factor, then, is used to predict the final cost, if nothing changes and the conduct of project business by the contractor continues on the same path.
Exclusive reliance upon accounting information is certain to ensure a cost overrun and this fact usually only becomes known at a late stage of the project’s lifespan, when there is little if anything, that can be done to redress the situation.
Similarly, with the project schedule. Presupposing that the sanctioned project duration is four years, and eighteen months have elapsed since its start, it cannot be assumed that the project shall be completed in the remaining thirty months’ time.
As with the analysis of project costs, it is essential that engineering principles be applied, to establish the efficiency of the EPCM contractor’s utilisation of time. In turn, this efficiency factor is then used to predict the final completion date, should the conduct of project business by the contractor continue unchanged.
Equally, reliance upon a calendar is certain to ensure a schedule overrun and this fact usually becomes known at a late stage of the project’s lifespan, when there is little, if anything, that can be done to redress the situation.
Concerns: Money leaving the country and foreign skills used
There is an understandable public concern that the costs of the nuclear project are monies that will be transferred offshore. This is not true. In fact, while there will be offshore payments relating to the nuclear reactors, much of the budget would be spent locally with existing South African companies.
These will be spent in South Africa and be spread over the duration of the project, thus creating a boost for the national economy and also very much for the local Eastern Cape economy. Such expenditure would have a knock-on effect in stimulating much needed general economic advance.
Certain critical nuclear reactor work would involve foreign nationals but most of the construction work would be undertaken by competent South African companies. Their activities would be coordinated and controlled by the overall EPCM contractor which, in turn, would report to the Owner Team.
The project labour force would be predominantly South African. All construction materials would be sourced from South Africa. So it is false to project an image that all the nuclear project money would flow out of the country.
The construction phase of the nuclear project would need many skilled artisans. Perhaps the most critical artisan skill required for Thyspunt would be the availability of coded welders.
In simple terms, coded welders are highly skilled individuals who can read an engineering drawing and who have been examined and certified to work with the several ferrous and non-ferrous materials used on a construction site. But many other skilled artisan functions are required.
To make up the required number of artisans the EPCM contractor would be tasked with recruiting suitable candidates from the local communities and with training them under professional supervision, in schools to be established near the project site. These candidates would be guaranteed employment at Thyspunt after graduating. After completion of the nuclear project, these skilled artisans would be available to benefit the South African economy.
Finally, the presence at the Thyspunt site of what effectively would be a captive workforce for several years should encourage a spirit of entrepreneurship amongst the local communities in creating many service industries to provide for the needs of this dynamic large market.
South Africa has all the skills required to develop its nuclear build. We now need the confidence to start.
Dr David Milne is a professional engineer and has been involved in the management of large projects in the mining, process and industrial sectors in South Africa and in China, for over thirty years. He was a founding director and is a Fellow of the Southern African Project Controls Institute and is a Member of Project Management SA and of the American Association of Cost Engineers. He has a PhD in chemical engineering from the University of the Witwatersrand.