MIT study explores reasons behind new-build cost overruns

The findings of the study have been published in the journal Joule in a paper titled Sources of Cost Overrun in Nuclear Power Plant Construction Call for a New Approach to Engineering Design. The paper is authored by MIT professors Jessika Trancik and Jacopo Buongiorno, along with Philip Eash-Gates, Magdalena Klemun, Goksin Kavlak and James McNerney.

Nuclear plant costs in the USA have repeatedly exceeded projections, according to the paper. The authors have used 50 years of data and "bottom-up" cost modelling to identify the mechanisms behind this. "We observe that nth-of-a-kind plants have been more, not less, expensive than first-of-a-kind plants," they said.

Most of the rise in cost is due to indirect expenses, which are largely 'soft' costs related to changes to the environment in which the construction is happening such as the need to make last-minute design changes based on particular conditions at the construction site or other local circumstances. Changes in safety regulations account for some cost increases but are only one of numerous factors, the authors said.

Building in greater resilience to the factors that cause such cost overruns - and designing plants in a way that minimises the likelihood of those factors arising - could help to bring down plant costs. "[W]e need to be rethinking our approach to engineering design," Trancik said. This requires new methods and theories of technological innovation and change.

Building more plant components - or even the entire plant - offsite under controlled factory conditions, could substantially cut extra costs. This approach is already being advocated for small and modular reactors, which could be completely manufactured off-site. Larger plants could be designed to be assembled on site from an array of smaller factory-built subassemblies. Specific design changes to containment buildings, such as using new kinds of concrete, could also help to reduce costs significantly by reducing the overall amount of material needed. This would cut onsite construction time as well as the material costs.

Bringing the relationship between hardware design and soft costs into the engineering design process will require a concerted effort, and will need to be informed by modelling that accounts for "potential ballooning soft costs", Trancik said. The methodology used by the team to analyse the causes of cost overruns could also be applied to other large, capital intensive projects to deliver "real-world" cost reductions for other technologies with demanding construction requirements.

The work was supported by the David and Lucille Packard Foundation and the MIT Energy Initiative.