A three-year schedule delay and cost overruns of about $2 billion plaguing the Tennessee Valley Authority’s (TVA’s) project to build a second Watts Bar reactor are directly attributable to deficiencies in the “project set-up” and “ineffective management oversight,” the federal corporation’s Office of the Inspector General (OIG) said in a report last week.

The Watts Bar Nuclear Plant Unit 2 was originally expected to be completed in October 2012 at a cost of just under $2.5 billion, but the TVA said in April that the project needed $1.5 billion to $2 billion more and would not be finished by at least September 2015.

In its assessment last week, the OIG reported that after attending meetings at the project site to discuss construction issues, “it became evident in 2010 that many of the issues raised in meetings were symptomatic of much broader problems that increased the risk of exceeding the project’s schedule and budget.” During these meetings, TVA management characterized construction issues “as recoverable or normal construction problems,” the report said.

The OIG pointed to specific problems with the original project set-up. One was that the detailed scoping, estimating, and planning study was “not as in-depth as it should have been”; another was that the TVA’s inability to implement prime subcontractors’ agreements contributed to project delays. The OIG also said that engineering, procurement, and construction contractor Bechtel (with whom the TVA entered into a $1 billion contact in 2007 for Watts Bar 2) was the American Society of Mechanical Engineers (ASME) certification holder, and that limited the TVA’s ability to remove Bechtel from the project if problems occurred. Finally, it said, “construction began before adequate engineering had been completed.”

According to the report, Bechtel disagreed with "several of the Draft Report’s implications," and identified conclusions that it said were not supported by the project record. While TVA management agreed with the OIG’s recommendations, it also went so far as to say that Bechtel’s formal response to the report "ignored" the firm’s contributions to the project’s problems.

Overall, improvements were under way, the OIG said. “TVA recognizes the problems associated with the construction of WBN Unit 2 and has publicly acknowledged them. In addition, TVA has taken several actions to address the problems identified at WBN Unit 2 and offer an accurate reflection of the progress of the project, engage and improve the relationship with the project workers, and promote transparency,” the report concludes.

Among the TVA’s planned actions to remedy the issues found by the OIG is a pledge to review the accuracy of estimates for the Bellefonte reactor under construction in Alabama. “TVA’s actions are positive and should help to improve the process for WBN Unit 2 and future projects,” the OIG said.

Sources: POWERnews, TVA, TVA OIG