Major Research and Facilities
Construction
Mark Coles
Deputy Director, Large Facility Projects
National Science Foundation
Sept 14, 2010
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Topics
• Overview of the Major Research and Facilities
Construction Account (MREFC):
– For acquisition, construction, and commissioning
of capital assets, with values exceeding 10% of
annual budget of sponsoring Directorate or Office
• Planning and preparatory activities, and
essential characteristics of projects qualified
to receive MREFC funds
• MREFC for ship construction
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NSF’s large facility project planning process
Horizon planning and
Conceptual Design
Readiness
Preliminary
Design
NSB Approved
Final
Design
Construction
Conceptual
Preliminary
Final
Design Review Design Review Design Review
(CDR)
(PDR)
(FDR)
Operations
Operations
Review
Review Decision
• Review science goals
• Conceptual Design Stage
– Requirements, initial estimates of cost (including operations), risk
and schedule
• Preliminary Design (“Readiness”) Stage
– Definition and design of major elements, detailed estimates of cost,
risk and schedule, partnerships, siting
• Final Design Stage (“Board Approved”) Stage
– Interconnections and fit-ups of functional elements, refined cost
estimates based substantially on vendor quotes, construction team
substantially in place
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Comparison of agency planning processes
Horizon planning and
Conceptual Design
Readiness
NSB Approved
Preliminary
Design
Final
Design
Construction
Conceptual
Preliminary
Final
Design Review Design Review Design Review
(CDR)
(PDR)
(FDR)
Initiation
Pre-conceptual
Planning
DOE Critical Decisions:
Operations
Review
Review Decision
Execution
Preliminary
Design
Final
Design
Construction
Operations
CD-0
CD-1
CD-2
CD-3
CD-4
Approve
mission
need
Approve
alternatives
selection
Approve
Performance
baseline
Approve
construction
start
Approve
operations
start
Pre-Phase A
Concept
Studies
Key Decision Points:
Definition
Conceptual
Design
Operations
Formulation
Phase A
Phase B
Concept &
Prelim Design &
Tech Completion
Tech Devel
KDP-A
KDP-B
KDP-C
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Implementation
Phase C
Phase D Phase E
Assembly,
Final Design &
Integ & Test, Operations
Fabrication
Launch
KDP-D
KDP-E
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Details of the NSF’s MREFC Process
• NSF Large Facility Manual:
– http://www.nsf.gov/publications/pub_summ.jsp?
ods_key=lfm
• Describes process steps and expectations in
detail, and coordination of processes for:
– project development by community,
– oversight and review within NSF,
– budget development, request, appropriation, and
obligation process.
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Allow at least 2 years between PDR
and construction start
Calendar Year N
See also NSB 10-66, Aug. 26, 2010
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FY N+2
Calendar Year N+2 Feb – submit FY N+3 budget to Congress
Spring – appropriations hearings
Oct (or later!) – appropriated funds available
About time of appropriation – FDR
Following FDR – NSB approval to obligate construction funds
FY N+1
Calendar Year N+1 Feb – NSF Facility Plan presentation to NSB
March – May – NSB/NSF facility portfolio review
June – OMB budget guidance issued
Aug – approval and priority order for inclusion in budget request
Sept – budget submission to OMB
Fall – Cost update review to ensure continued validity of budget
Dec – OMB feedback and budget modifications
Fiscal Year N
Fall PDR
Internal NSF assessment
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MREFC funding in the
FY 2011 Congressional Budget Request
Millions of Dollars in Fiscal Year
Omnibus
Actual
ARRA
Actual
2009
2009
2010
2011
2012
2013
2014
2015
2016
Sponsor
Facility
Total
Cost,
$M
BIO
NEON
434
-
-
-
$20.0
$87.9
$101.1
$103.4
$86.2
$32.1
OOI
386
-
$105.9
$14.3
$90.7
$102.8
$46.8
$20.0
-
-
ARRV
200
$14.1
$148.1
-
-
-
-
-
-
-
ATST
298
-
*see note
$13.0
$17.0
$20.0
$20.0
$20.0
$20.0
$20.0
AdvLIGO
205
$51.4
-
$46.3
$23.6
$21.0
$15.2
$14.9
-
-
ALMA
499
$82.3
-
$42.8
$13.9
$3.0
-
-
-
242
$11.9
-
$1.0
-
-
-
-
-
-
149
$1.1
-
-
-
Total:
$160.8
$254.0
$117.3
$165.2
$234.7
$183.0
$158.4
$106.2
$52.1
Estimate Request Estimate Estimate Estimate Estimate Estimate
GEO
MPS
MPS/OPP IceCube
OPP
SPSM
*ATST’s FY 2009 $146M ARRA was obligated in FY 2010
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MREFC project portfolio: construction vs. funding
Sponsor
Facility
OPP
SPSM
MPS/OPP IceCube
MPS
GEO
BIO
Mar-10
$1.0 M
Feb-11
ALMA
42.8
13.9
3.0
AdvLIGO
46.3
23.6
21.0
15.2
14.9
ATST
13.0
17.0
20.0
20.0
20.0
Dec-12
ARRV
20.0
20.0
Feb-17
Jan-14
OOI
14.3
NEON
FY
Sep-15
Oct-10
2010
90.7
102.8
46.8
20.0
20.0
87.9
101.1
103.4
2011
2012
2014
86.2
2015
32.1
2016
Oct-16
2017
NEON
$300
$200
2013
Apr-15
$235 M
$165 M
In construction
$183 M
$158 M
$117 M
$106 M
$100
$52 M
$0
MREFC account funding ($M in Fiscal Year)
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Specifics
• Preconstruction investment 5-25% - R&RA
• PDR provides basis for construction request  credible
cost estimate that includes risk-based contingency
• PDR must provide a credible project execution plan (refer
to Large Facilities Manual, appendix 3 for essential
elements)
• A principal PDR goal is to assess credibility of proposing
team: can the key staff lead a team to accomplish the
project?
• Projections of operating costs are difficult, so PDR, FDR,
and other reviews during construction revisit this:
– Has the team put forward a realistic and affordable operations
plan and budget for the facility?
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Challenges
• Projecting bids 2 years forward in a volatile
economic environment
• Synchronizing development process when there
are other partners or potential partners
• Projecting operating costs forward from CDR and
PDR, since these are the limiting factors in NSF’s
capacity to build new infrastructure.
– See Astronomy senior review:
http://www.nsf.gov/mps/ast/ast_senior_review.jsp
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More Challenges:
• Operating funds must be accompanied by
adequate funding to researchers for exploiting
its capabilities – realization of return on
investment
• This is more complex in partnerships,
especially international:
– Roles and responsibilities of host country, access and data
sharing, intellectual property issues, dispute resolution,
withdrawal mechanism, agency role with respect to
governance, etc.
– Critical review of MOU prior to implementation essential
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And Still More Challenges:
• MREFC projects are inherently part of political
dialogue because of the size of projected budgets
• Projects have foundered when political influence has
resulted in premature project start with incomplete plans
(RSVP, ITER, SSC,…) and there has been painful rescoping
with others (ALMA, SODV…)
• Cost growth between initial designs and FDR costs have
sometimes been 2-3 times initial estimates, or more (OOI,
ARRV…)
• Essential role of NSF and NSB in ensuring this is a
deliberative, objective process with best portfolio balance,
and high confidence in budget request matched to scope
and risk of project.
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FY 09 Budget Request
Introduced New Change
to MREFC Process
• “No cost overrun” policy:
– Requires that the cost estimate at PDR have adequate
contingency to cover all foreseeable risks, and any cost
increases not covered by contingency be accommodated
by scope reduction
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Budget and Budget Contingency
• Get multiple independent cost estimates. NSF will
also do that to cross-check at PDR.
• NSF has had good experience contracting for independent
parametric cost estimates (SODV and ARRV).
• Good experience at NSF with PDR and FDR subpanels that do a complete drill down in several
WBS areas to check basis of estimate and overall
estimating methodology (ARRV, NEON, OOI..)
• Risk management plan must encapsulate the
known-unknowns and translate this risk into a
budget contingency.
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More on Budget and Budget
Contingency
• Contingency is held by the project – an essential tool of the
project manager, not a slush fund. The mean risks will
occur, and NSF expects that the contingency budget will be
spent by the project.
• The project’s change control process must inform NSF of all
uses and seek concurrence for uses exceeding a predefined
threshold.
• Descoping must also be part of the risk management plan,
and planned in advance. This can be, for example,
outfitting or other equipment that is less important – buy
this last.
BE BROKE AND DONE ON THE LAST DAY!
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Schedule and Schedule Contingency
• Schedule management is an important
component of project risk management.
• Projects need “industrial strength” software tools
for creating and managing a resource loaded
schedule, and optimizing use of float
• Include defined schedule contingency and
manage centrally. Suggest managing to early
dates, reporting to NSF relative to late dates
• Choose software that can readily integrate with
shipyard reporting, to satisfy Earned Value
reporting requirements
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Scope and Scope Contingency
• Minimize Owner Furnished Equipment (OFE) and keep
it off the critical path
– Long lead time for ARRV propulsion system procurement
paces ship construction time (~3 years)
• MREFC scope includes commissioning (can include a
warranty operating period and spares for example).
Don’t change definition during the project.
• Changes to scope are possible, but needs to be
managed openly and transparently, and with
appropriate levels of concurrence.
– Example: NSB, OMB, and Congress informed as SODV refit
scope, budget, and schedule changed
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Some rules of thumb
• Greater investment in preconstruction planning will reduce
contingency in construction
• Project management during construction (includes
schedule management, QA, ES&H, contracts and
acquisitions, etc.) ~10% of total construction cost
• Most projects have budget contingency of 25-35%,
algorithmically defined bottom-up estimate
• Investment in project management tools and labor to
develop and code the logic can cost 1-2% of project cost.
• OMB and Congress have been persuaded by funding
profiles that are limited by rate technical work can be
accomplished, not by rate funds can be delivered, since this
results in the lowest total cost
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Ship specifics
• Funding dependency on multi-year appropriation increases
risk and cost.
– Shipyards must price risk of possible funding hiatus.
• Future NSF-funded ships are highly likely to be built in US
yards. Plan for the cost premium and use an open
solicitation to prospective US yards that invites interest.
• Good experience with ARRV with a two-step process:
bidder qualification and best value.
– Mature “Build to print” design  reduced risk and lower risk
contingency in FFP bid process
• If there are design options, ask that these be priced options
during bidding, so that there is price competition.
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Project Science
• For 10 years, NSF has funded a workshop, held
about annually, to provide training to
community on planning for future
infrastructure. Next one is:
– Nov 7-11, Fort Lauderdale
• Info at
http://www.projectscience.org/
• Highly recommended
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Backup materials
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LARGE FACILITIES MANUAL Appendix 3 - PROJECT MANAGEMENT COMPONENTS OF A CONSTRUCTION-READY PROJECT EXECUTION PLAN
Essential components of a construction-ready Project Execution Plan, common to most plans for construction of large facilities, are listed below, as an example of the
extensive nature of the pre-construction planning that should be conducted prior to expending MREFC funds to execute the project. Additions or alterations to this
list are likely, due to the unique nature of each specific project. While many of the listed topics cannot be substantively addressed at the earliest stage of project
planning, it is important that project advocates are aware, at the outset, of the full scope of pre-construction planning activities that should be undertaken and the
consequent pre-resources required. As the project matures through Conceptual Design, Preliminary and Final design, these topics become correspondingly well
defined.
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Description of the research objectives motivating the facility proposal
Comprehensive statement of the science requirements to be fulfilled by the proposed facility (to the extent possible identifying minimum essential as well as
desirable quantitative requirements), which provide a basis for determining the scope of the associated infrastructure requirements;
Description of the infrastructure necessary to obtain the research objectives
Work breakdown structure (WBS)
Work breakdown structure dictionary defining scope of WBS elements
Project budget, by WBS element
Description of the basis of estimate for budget components
Project risk analysis and description analysis methodology
Contingency budget and description of method for calculating contingency
Project schedule (and eventually a resource-loaded schedule)
Organizational structure
Plans and commitments for interagency and international partnerships
Acquisition plans, sub-awards and subcontracting strategy
Project technical and financial status reporting, function of the PMCS, and description of financial and business controls
Project governance
Configuration control plans
Contingency management
Internal and institutional oversight plans, advisory committees, and plans for building and maintaining effective relationships with the broader research
community that will eventually utilize the facility to conduct research
Quality control and quality assurance plans
Environmental plans, permitting and assessment
Safety and health issues
Systems engineering requirements
Systems integration, testing, acceptance, commissioning and operational readiness criteria
Plans for transitioning to operational status
Estimates of operational cost for the facility
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