We spotted this article at a popular website, TheStreet.com. It is not accessible to most, because it is part of a paid subscription service, RealMoney. Because we liked it so much, we sought, and received permission to reprint the article, with credit. Why were we so impressed with this analysis by author Glenn Williams?
First, we have experience in Program and Project Management (PPM) in the Nuclear industry, and we continue to follow it. Second, although the article is a financial analysis, it demonstrates great insights, in estimating, in research, and analysis, in a complex subject. Third, Mr. Williams demonstrates the type of professional PPM competence that every Executive should be able to depend upon for advice in strategic decisions. Thank you Glenn, for being such a great example!
And Now, the Article
With license in hand, Southern (SO) is ready to build the [USA] nation’s first generation-III nuclear power plant. While this does not signal any nuclear renaissance, it does provide the nation with badly needed generation. The challenge will be for Southern to build Plant Vogtle’s additions on time and on schedule.
The reality is that cost and schedule will be difficult to achieve. In fact, the probability that Southern’s two 1,154-megawatt units will be operating by 2016/2017 and will have a final cost of $14 billion is about zero. Of course, the best available estimate is being used to forecast the project’s outcome. History has taught us 110 times before, however, that utility estimates for nuclear power plants include dozens of assumptions.
If one of those assumptions is wrong, the estimate is wrong. Remember, the Vogtle project is an attempt to build a first-of-its-kind nuclear power plant.
The question is how far off are Southern’s estimates? The answer is nobody knows. And, if anyone claims they know, they’re lying to you. Continue reading