Sellafield projects 'not delivering value for money'

7 November 2012

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7 November 2012 | Adam Leach

Project deadlines are being missed and costs are overrunning at the UK’s largest nuclear facility less than two years into a plan that runs until 2120, according to the National Audit Office (NAO).

In May 2011, the lifetime plan for the Sellafield nuclear plant, the largest in the UK, was agreed by privately owned Sellafield Limited which manages the facility, and the Nuclear Decommissioning Agency (NDA) to outline operations at the plant up to its decommissioning, which will take more than 100 years. But this plan – drawn up after the original was rejected by the NDA for not meeting key objectives - is not yet delivering value for money.

The report Nuclear Decommissioning Authority: Managing risk reduction at Sellafield, published today, found since the signing of the agreement, deadlines have passed and project costs have increased. In the period between May 2011 and March 2012, 12 out of the 14 projects the NAO investigated achieved less than planned, with five achieving less than 90 per cent. In terms of cost, five projects exceeded their budget, of which three increased by more than 10 per cent.

Under the contract the NDA reimburses ‘allowable costs’ and the NAO called for the NDA to benchmark these costs put forward by the contractor Sellafield so it better understands them. Further, it called on the authority to learn from other organisations that use the cost reimbursement model to identify “incentives for risk reduction that sufficiently emphasise the timely completion of projects”.

Amyas Morse, head of the NAO, said: “Securing future value for money will depend on the authority’s ability to act as an intelligent client, to benchmark proposed levels of performance and to provide better contractual incentives for making faster progress towards risk and hazard reduction.”

Commenting on the report, Margaret Hodge MP, chair of the committee of public accounts, which will question NDA officials on the NAO findings, said: “My concern is that unless the authority holds Sellafield Limited to a clear and rigorously benchmarked plan, timetables will continue to slip and costs spiral. It is totally unacceptable to allow today’s poor management to shift the burden and expense of Sellafield to future generations of taxpayers and their families.”

In response to the report, Sellafield said it had already identified potential problems with its project management and is working to address them. "This is a problem we have recognised, and we have already taken steps to strengthen our approach, both in terms of how we manage projects as a whole and how we develop better, more beneficial relationships with the supply chain.”

The NDA said: “As the client, the NDA will continue to work closely with Sellafield Limited and Nuclear Management Partners [the parent company of Sellafield] to improve capability and performance on what remains a unique and highly complex national priority.”

The NAO also called for the routine external reports to be published on Sellafield so that parliament and the public can better hold it to account over its work on the plant.

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