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Project Management

Workers safely demolished a 175-foot-high exhaust stack at the Hanford Site in southeastern Washington State, a project supported by $420,000 in Recovery Act funds.

Workers safely demolished a 175-foot-high exhaust stack at the Hanford Site in southeastern Washington State, a project supported by $420,000 in Recovery Act funds.

EM CAPITAL PORTFOLIO

EM is tasked with solving the large scale, technically challenging risks and hazardous conditions posed by the world’s largest nuclear cleanup. The EM portfolio of programs, projects, and activities is the largest and most diverse when compared with other DOE organizations with major contracts and projects. These nuclear cleanup activities are located at 21 sites covering more than two million acres in 13 states, and employing more than 30,000 Federal and contractor employees, including scientists, engineers, and hazardous waste technician.

EM has been continually improving processes and procedures to more effectively manage the cost and schedule performance of capital asset projects. As a result of these project management improvements, the U.S. Government Accountability Office (GAO) has removed EM from its High Risk list for projects less than $750 million. EM remains committed to maintaining and strengthening these improvements to reduce EM’s vulnerability to fraud, waste, and abuse and to fully meet the GAO’s criteria for removal from the High Risk list.

Since establishing its capital asset project portfolio beginning in 2005, EM has completed 89 cleanup and construction projects at 26 different sites across the United States. The total cost of these projects was budgeted at $19.0 billion; however EM was able to complete them at a total cost of only $16.8 billion. EM saved the majority of this cost at the Rocky Flats Closure Site, where the project budgeted for $7.5 billion was completed for $6.7 billion. EM has also achieved great successes with funding from the American Recovery and Reinvestment Act (ARRA). Of the 89 completed capital asset projects, 39 were funded by ARRA. These 36 projects were budgeted to cost $2.0 billion and were completed costing only $1.5 billion, allowing over $430 million to accomplish additional cleanup across the EM portfolio.

Click for a map of where EM has been or is currently responsible for cleaning up sites across the United States: Sites/Locations

EM CAPITAL ASSET PROJECTS

EM capital asset projects are managed in accordance with the priorities of DOE Order 413.3B, Program and Project Management for the Acquisition of Capital Assets. The purpose of this Order is to:

  • Provide the Department of Energy (DOE) Elements with program and project management direction for the acquisition of capital assets with the goal of delivering projects within the original performance baseline (PB), cost and schedule, and fully capable of meeting mission performance, safeguards and security, and environmental, safety, and health requirements unless impacted by a directed change; and,
  • Implement Office of Management and Budget (OMB) Circulars to include: OMB Capital Programming Guide, which prescribes new requirements and leading practices for project and acquisition management; A-123, Management’s Responsibility for Internal Control, which defines management’s responsibility for internal control in Federal agencies; and A-131, Value Engineering, which requires that all Federal agencies use Value Engineering (VE) as a management tool.

Click for the list of current EM capital asset projects. Capital assets are land, structures, or major equipment, which are used by the Federal Government and have an estimated useful life of two years or more. A capital asset project is defined as a project with start and end points required in the acquisition of capital assets. Capital asset projects include the environmental remediation of land to make it useful. They exclude activities such as repair, maintenance and surveillance, or minor alterations that are part of routine operations and maintenance functions. Built on interdependent activities that are planned to meet a common objective, a capital asset project focuses on attaining or completing a deliverable within a predetermined cost, schedule and technical scope baseline.

The EM capital asset projects fall into the following two categories:

  • Line-Item Construction Projects: A distinct design, construction, betterment or fabrication activity, effort or project for which Congress will be requested to authorize and appropriate specific funds (capital and/or operating), and where the resulting asset (structure, equipment, facility, product, system or plant) has an estimated useful life of two years or more. A full-scale test asset or other pilot/prototype asset primarily constructed for experimental or demonstration purposes, but planned to continue to operate beyond the experimental or demonstration phase is included in this definition.
  • Cleanup Projects: This category includes capital asset projects greater than $10 million being executed for site cleanup with operating expense funding. This includes the capital phase of environmental restoration (i.e., soil and water remediation) and facility decommissioning and demolition.

As of October 6, 2014, EM’s portfolio consists of 11 line-item construction projects and 17 clean-up projects which have a rough order-of-magnitude cost (high end) of $53.1 Billion.

The capital asset projects are managed through various Critical Decision (CD) Stages:

Active Capital Asset Projects at Each CD Stage (as of August 28, 2014)
CD Stage Name of CD Stage  #
CD-0 Approve Mission Need 8
CD-1 Approve Alternative Selection and Cost Range 8
CD-2  Approve Performance Baseline 1
CD-3  Approve Start of Construction or Execution 11

  

The EM program considers the following attributes for capital asset projects prior to establishing performance baselines (at CD-2):

  • Time Horizon: Minimize the time horizon and risk to the maximum extent possible. Ideally, execution should take no more than four (4) years starting from CD-3.
  • Funding Profile: Develop each project’s funding profile to support the optimum project schedule; fully fund when appropriate, and deliver projects quickly.
  • Segregate by Building or Group Similar Types of Facilities: Segregate nuclear from non-nuclear work; utility systems/buildings from general use facilities; fixed price work from cost reimbursable work.
  • Phase Projects: Execute well-defined, lower-risk, complete and usable projects first, allowing additional time to advance designs on more complex and/or technical projects. Project phases should not impede one another.
  • Span of Control: Ensure that the planned scope and pace of work is matched to the capacity and capabilities of the management team.
  • Segregate Projects by Geographic Area: Occasionally, projects involve separate geographic locations with different site conditions, construction workforce environments, and regulatory and political pressures.
  • Workforce Phasing: Phase construction and environmental remediation projects within the program to take advantage of “leap-frogging” trades (i.e., concrete workers moving from one project to the next).

GAO Reviews of EM Portfolio

GAO High Risk List Report (Feb 14, 2013) (http://www.gao.gov/products/GAO-13-283) DOE has continued to take many steps to address contract and project management weaknesses, including:

  • Demonstrating strong commitment and top leadership support
  • Developing a corrective action plan that identifies effective solutions
  • Demonstrating progress toward implementing corrective measures

To recognize progress at DOE on NNSA and EM execution of non-major projects (< $750 million), GAO is shifting the focus of its high-risk designation to major contracts and projects executed by NNSA and EM, those contracts and projects with values of $750 million or greater

Better Information Needed to Determine If Nonmajor Projects Meet Performance Targets (Dec 19, 2012) (http://www.gao.gov/products/GAO-13-129) Additional actions are needed to meet the remaining criteria to be removed entirely from the High Risk list:

  • Commit sufficient people and resources to resolve EM’s contract management problems
  • Monitor and independently validate the effectiveness and sustainability of EM’s corrective measures

DOE Recovery Act (Oct 15, 2012) (http://www.gao.gov/products/GAO-13-23) Concluded “Most DOE Cleanup Projects Are Complete, but Project Management Guidance Could Be Strengthened”

Made the following four recommendations:

  • “Develop and issue a policy that clearly sets out the criteria with more specificity for reclassifying capital asset projects over $10 million into smaller operation activity projects under $10 million in value.”
  • Provide the Office of Acquisition and Project Management with information on EM’s project classification decisions to ensure that all capital asset projects have been appropriately classified and are managed in accordance with DOE Order 413.3B.
  • Clarify guidance for operation activity projects to specify how and when performance baselines (i.e., for scope, cost, and schedule targets), which EM calls key performance metrics for operations activity projects, are to be established and documented to help ensure consistent assessment of performance.
  • Clarify guidance for operation activity projects to specify how and when performance baselines (i.e., for scope, cost, and schedule targets), which EM calls key performance metrics for operations activity projects, are to be established and documented to help ensure consistent assessment of performance.