Vendor/Contractor Design Performance
Xcel Energy – Nuclear Department
Adam C. Annis
June 26, 2012
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Presentation Overview
►Identified Areas for Improvement in Project
Performance (Benchmarking Drivers)
►Summary of Industry Benchmarking Observations
►Resultant Xcel Energy Organizational Shift
►Approach on Providing Vendor Oversight for
Projects
►Current Challenges at Xcel Energy
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Identified Need for Benchmarking
►Driver #1 – Engineering Support for Projects
► Identified organizational inefficiencies
►Driver #2 – Improved Organizational Alignment in
Support of Project Effectiveness
► INPO identified Area For Improvement (AFI)
►Driver #3 – Project Schedule and Cost Performance
Improvement
► Xcel Energy identified areas for improvement in predictability of
Capital Projects
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Driver #1 – Engineering Support for
Projects
►Other business models may provide high quality
engineering products with lower O&M cost and less
burden on station engineering than the current
structure
►The 2010 Xcel Project Engineering business model required
a large project engineering staff
►2010 Project Engineering contract staff represented a
significant O&M cost burden
►Significant company resources spent managing a large
number of staff augmentation and vendor contracts
►Significant site engineering burden to support orientation of
contract and new hire engineers
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Driver #2– Organizational Alignment
►Area for Improvement (CO.3-2)
The nuclear projects and nuclear operations (fleet, Prairie
Island, and Monticello plant operations) organizations
have not developed shared roles, responsibilities,
accountabilities, and ownership to implement major and
routine capital projects effectively. These two
organizations are misaligned and a team approach is not
modeled or reinforced from the corporate level down to
the working level and sometimes results in in ineffective:
decision-making, project sponsorship, line engagement,
and project coordination.
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Driver #3 – Xcel Identified Need for Project
Performance Improvement
►Documented budget and schedule overruns and
cost carryovers for Capital Projects
►Root Cause Evaluation highlighted several areas
for improvement:
►Lack of alignment of roles and
responsibilities for projects
►Poor vendor controls and weak contract
development results in high cost
►Lack of technical expertise in Site and
Project Engineering organizations
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Overview of Benchmarking
►Benchmarking Performed in 1st Quarter 2010
►Formal benchmarking of several Plants with
different business models
►Informal Benchmarking discussions with:
►Xcel Energy (Fossil/E&C)
►INPO
►Other external stakeholders
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Benchmarking Observations
Plant 1
► INPO AFI for Projects in 2005 →INPO Strength in 2007
[Communication + Integration + Alignment]
► Projects organization has strong operational focus and
alignment station goals and standards
► Strong site leadership engagement in projects priorities, scope,
budget
► Vendors are qualified to the site processes
► 3 primary vendors for design work
► Internal focus on beginning and end of project
► Planning/scoping and alternative selection by Projects and
site engineering is key element in preparation
► 15% of total engineering budget for each projects spent on
design verification by site design engineering
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Benchmarking Observations (cont’d)
Plant 1 (cont’d)
► Project engineering team aligned with Project Mgmt but with significant
dedicated support embedded in site engineering
► Weekly alignment/status meeting between Projects, Project
Engineering, Site Engineering
► Capital funding for supplemental staff in site engineering
► Capital Projects personnel alignment
► Manager of Projects (MoP) under contract
► 5 Direct reports to MoP to perform oversight of Projects functions
► Scheduler →Long-range resource loaded work plan
► All supplemental craft work managed to Site Projects
► Evaluation of alternatives and project development done by Projects
and engineering before budget development…included in annual
budget & planning
► Projects are run in accordance with plant procedures
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Benchmarking Observations (cont’d)
Plant 2
► Primary focus is on alignment with operations
► No functional differentiation between capital and O&M projects (other than
accounting)
► Strong engagement from site personnel in project governance
► Projects group organized similar to Xcel Energy Nuclear Projects, but
higher concentration of contract personnel
► Intent of Projects group is to provide project management skills to all
work groups and leverage the larger site organization (supply chain,
contract management, etc.)
► Small Project Engineering group in Site Engineering to manage
engineering contracts for many projects (RV Head, License Renewal)
► Many capital projects managed within line organization
► Projects group includes SG and Turbine Project Management
► License renewal resides in Project Engineering organization
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Benchmarking Observations (cont’d)
Plant 2 (cont’d)
►Vendor site group dedicated to support site capital projects
►Alliance between Plant 2, Vendor and NSSS Supplier; no
other engineering firm performing design changes
►Vendor manager aligned as direct report to Design
Engineering Manager
►Vendor site personnel qualified to plant processes, but offsite personnel are not
►Vendor contract has incentives & metrics in place to ensure
product quality, schedule, and budget
►Quality of deliverables continues to be a concern for the
plant
►Management of Vendor contract within site engineering
►1 – 2 year transition to gain familiarity with site
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Benchmarking Observations (cont’d)
Plant 3
►Entire modification process outsourced to a vendor
under a service contract
►75% of onsite vendor staff are former utility staff
►All outsourced engineers are in utility ESP program
►Contract includes significant commercial stake in
plant performance
►Technical Conscience Group review of products
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Benchmarking Observations (cont’d)
Company A
►Site Design Group retains majority of design work
►Approx. 80% of design performed by site design
engineering, with 20% of design performed by Site Major
Projects group using vendors
►Site Major Projects group includes project
engineering to oversee implementation and closeout
►Project engineer provides vendor interface
►Undergoing reorganization to centralized design
organization
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Benchmarking Observations (cont’d)
Company B
►Project Management performed by Engineers under
site Design Engineering Manager
►Project Managers perform vendor interface function
►Three vendors are contracted for design work
►Distribution of workload to maintain stable portfolio
►Majority of projects are implemented by utility
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Benchmarking Observations (cont’d)
INPO
►Successful organizations have reporting alignment of Site
Engineering, Project Engineering, & Site Project
Management
►Major Capital Projects have a separate reporting structure
►Site “Liaison” (see Plant 1 + Xcel Energy E&C)
►Regulatory Program is a separate function
►Manage staff as a “portfolio” of project and operational
resources with focus on plant operations, site
responsiveness, and collective execution of projects
►Strong focus on leveraging contractors as part of staff
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Benchmarking Observations (cont’d)
Xcel Energy - Fossil
► Routine capital projects are run at the station with resource
augmentation from E&C as necessary (predominantly
contractors)
► Major Capital Projects heavily focused on contractor
management
► Relatively low ratio of FTE/Contractors
► Effective tool to manage personnel
► Workload-based
► Performance-based
► Supplemental craft strategy managed by single organization
► Effective performance tool (Seabrook)
► Station staff assigned to major capital projects and are part
of project resource budget
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Benchmarking Observations (cont’d)
Observations of other external stakeholders
►Ineffective teamwork between Projects and Site at PINGP
having negative impact on operations
►Experience at other utilities indicates successful projects
require alignment between site engineering, project
engineering, & site project management
►Projects organization has opportunity to be more
supportive of site operations organization in recovery
effort
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Conclusions from Benchmarking:
►INPO recognizes “Strength” in Capital Projects is
linked to organizational alignment
►Smaller nuclear fleets depend heavily on contract
personnel
►Some sites are using a dedicated engineering
design vendor on-site with specific successes
►Greatest opportunity for economic gains appears to be
with Major Capital projects
►Smaller scale projects can be done more effectively by
site engineering personnel
►Anecdotal evidence is mixed on dedicated vendor model
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Conclusions from Benchmarking (cont’d)
►Successful projects organizations have strong
operational and procedural focus which follows the
station standards
►The same rigor applied to operational processes
must be applied to projects processes, especially
economic controls with station-based governance
being driver
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Challenges Seen at Xcel Energy (to 2010)
►Technical Issues with Vendor supplied
modifications
►Misalignment of site engineering organization,
capital projects organization, and multiple
engineering vendors
►Lack of ownership by vendors in project
performance issues
►Casual evaluations not being performed by vendors to
identify appropriate actions to take to prevent
reoccurrence
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Xcel Projects Organization (to 2010)
► Management of Projects
► Performed by Xcel Project Managers (permanent and staff
augmentation) at site level
► Engineering Support for Projects
► Project Engineering group at each plant site
► Technical lead for projects provided by Xcel Project Engineering
Organization
► Permanent and staff aug Project Engineers represent Xcel
interest and provide technical oversight and QA interface of
vendor design work
► Multiple external design organizations (vendors) utilized to
perform design work for projects
► Interface with site engineering is through Project Engineering
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Xcel Projects Organization (to 2010)
Site VP
VP of Nuclear Projects
Major Projects
(organization not
shown on this
chart)
Manager of
Projects
(1 per site)
General Mgr
Project Engineering
Site Engineering
Director
Project Managers
Mgr Project Eng
PINGP
Mgr Project Eng
MNGP
Engineering
Supervisor(s)
Engineering
Supervisor(s)
Project Engineers
Project Engineers
Department
Managers
Engineering
Supervisors
System/Program/
Design
Engineers
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Implementation of Nuclear Services
Contract
►Nuclear Service Contract (NSC) with single vendor
►Contract finalized in early 2011
►Single source for engineering products and
staff augmentation
►Design/Build capability for projects provided:
►Defined engineering staff (onsite and off)
►Construction Management and resources
►Planning and Project Controls staff
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Implementation of Nuclear Services
Contract
►Contract Controls:
►Commissioned effort scorecard based on
quality and schedule performance
►Quality and performance oversight by Xcel
Engineering and Project Management
►Quarterly management review of NSC
performance
►Causal analyses and corrective actions reviewed
►Contract management by dedicated Supply
Chain resources at both sites
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Xcel Projects Organization (Current)
► Management of Projects
►Performed by Xcel Project Managers (permanent and staff
augmentation) at site level
►Project Controls provided by NSC Vendor
► Engineering Support for Projects
►NSC Vendor Onsite Engineering organization oversees
Vendor offsite design
►NSC Vendor Offsite performs detailed design work
► Implementation Support
►NSC Vendor supplies planners
►NSC Vendor manages construction
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Xcel Onsite Vendor Design
► Multi-discipline engineering department under a single NSC
Vendor (non-Xcel) supervisor
► Onsite Vendor Engineering Supervisor has Xcel supervisor
training qualifications
► Onsite lead identified for each project
►Performs Xcel Responsible Engineer function
► Part of site ESP training population
► Qualified under NSPM (Xcel) 10CFR 50 Appendix B Quality
Assurance Program
► Acts as QA design interface with offsite NSC Vendor
organization
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Xcel Offsite Vendor Design
► Multi-discipline engineering department
► Responsible Engineer assigned as lead for each project
► Specialized engineering support when needed
► Working under NSC Vendor QA Program
► Qualified to project specific vendor processes
► Xcel processes are defined in contract and invoked by vendor
processes
► NSC Vendor provides additional services
► Field Engineering
► Work order planning
► Engineering Change Closeout
► Construction services
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Vendor Design Oversight
►Stakeholder involvement through Design Review
Meetings
►Owner’s Acceptance through Design Review Board
►Site Performed risk assessments result in
additional reviews
►Challenge boards
►Third party reviews
►Plant operations review committee for Safety
Related and Augmented Quality modifications
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Vendor Design Oversight
► Engineering Oversight Function performed by Fleet Design
Engineering:
►Monitor, gauge, and report on site stakeholder
involvement
►Mentor onsite vendor engineering staff
►Monitor adherence to Xcel engineering process
►Monitor onsite and offsite NSC Vendor engineering
performance for identification and resolution of technical
issues
►Provide feedback to management on contractor
performance
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Current Challenges at Xcel Energy
►Understanding of roles and responsibilities
►Misalignment on expectations for product quality
►Vendor internal struggles between onsite and
offsite vendor resources
►Measuring stakeholder engagement
►Identification of legacy issues during design
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Current Challenges (cont’d)
►Communication issues between vendor and
stakeholders
►Vendor understanding of site specific design basis
►Lack of vendor perspective on past station issues
►Unclear definition of vendor work scope by site
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Questions?
If you have any questions on the materials that have
been presented, feel free to contact the presenter:
Adam C. Annis
Xcel Energy | Responsible By Nature
Engineer - FT Nuclear Engineering Support
414 Nicollett Mall, MP-4, Minneapolis, MN 55401
P: 612-330-5542 F: 612.330.7797
E: Adam.Annis@xenuclear.com
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