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Sellafield projects slammed for £1bn in overruns and delays

Sellafield’s major decommissioning projects have been slammed for £1 billion in cost overruns and lengthy delays.

The National Audit Office released a damning report today at the UK’s “largest and most hazardous nuclear site”.

It says “the performance of some of the major projects at Sellafield has been poor.”

Between May 2011 and March 2012, 12 of the Authority’s 14 major projects delivered less than planned, which could “delay risk and hazard reduction”.

It says: “Sellafield Limited extended estimated completion dates for seven and increased the total cost estimate by £0.9 billion.

“Delays in project delivery could jeopardise timetables for risk reduction and increase spending on maintaining legacy facilities.”

The projects are for the design and build of complex chemical engineering projects to retrieve, package and store hazardous nuclear material from old facilities. The projects range in cost from £21 million to £1.3bn.

The report said it is too early to judge whether the Nuclear Decommissioning Authority’s appointment of Nuclear Management Partners Limited as the ‘parent body’ of Sellafield Limited is delivering value for money.

Amyas Morse, head of the National Audit Office said the authority’s “ability to act as an intelligent client, to benchmark proposed levels of performance and to provide better contractual incentives for making faster progress towards risk and hazard reduction”.

It talks about a considerable challenge faced by authority after it inherited “a legacy of poor planning and neglect over several decades when it took ownership of Sellafield in April 2005”.

It says the authority achieved an important milestone in May 2011 when it approved a more robust lifetime plan for the clean-up of Sellafield site by 2120, replacing a previous unrealistic plan.

It adds: “Significant uncertainties and scheduling risks remain, which the authority is working to understand and address.

“For example, there is considerable uncertainty over the time required and cost of completing facilities to treat and store highly radioactive material held in deteriorating legacy ponds and silos.”

Amyas Morse added: “Owing to historic neglect, the Authority faces a considerable challenge in taking forward decommissioning at Sellafield.

“It is good that the Authority now has a more robust lifetime plan in place but it cannot say with certainty how long it will take to deal with hazardous radioactive waste at Sellafield or how much it will cost.”

The report says:

“Between May 2011 and March 2012, 12 of the Authority’s 14 major projects delivered less than planned.

Sellafield Limited extended estimated completion dates for seven and increased the total cost estimate by £0.9 billion.

Delays in project delivery could jeopardise timetables for risk reduction and increase spending on maintaining legacy facilities. We found that between May 2011 and March 2012 Sellafield Limited:

Achieved less than planned in 12 of the 14 major projects, with five achieving less than 90 per cent of the planned scope.  This could jeopardise target dates for risk reduction. Five project overran the budgeted cost of work completed, of which three exceeded it by more than 10 per cent.

Brought forward the estimated completion date for one of the seven projects in the design phase. Five remained unchanged but their overall cost increased by £0.6 billion to £2.8 billion.  The complexity of these projects means that changes during the design stage are inevitable. However, Sellafield Limited did not allow sufficiently for uncertainty in the cost estimates it initially submitted to the Authority for the silos direct encapsulation plant project. It prepared these estimates before I had assessed the full cost implication of the design.  The 92 per cent increase in the estimated cost of the project accounted for nearly all of the £0.6 billion increase.

Put estimated completion dates back by between 2 and 19 months in six of the seven projects in construction.   This was associated with a £0.3 billion increase in the total estimated lifetime cost of these projects to £1.8 billion. Eighty-three per cent of the increase was due to cost escalation in the ‘evaporator D’ project.”

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