COVER STORY | STAGE GATE SUCCESS He adds: “By standardising designs, with very thoughtful
look-ahead contracting and all the schedule alignment for example means you can also do things with the funding, with permitting and consenting, everything you need to do to get the projects delivered. By thinking about them as a programme and thinking systematically, you can shorten and reduce the cost of all of them collectively.” Stone also notes that while the portfolio view is
absolutely critical it also creates new decisions over what are standardised designs, an integrated schedule, and the strategic approach to the supply chain. “That’s absolutely a critical takeaway,” he says.
More focus on the project, not the stage gate Alongside a more collaborative and portfolio-led philosophy to projects, Stone also argues that the stage- gate process also needs new interpretation for nuclear projects to succeed on time and on budget. Rather than simply using the standard stage gate process as the main method of project management, he points to the benefits of a more nuanced strategy. This is especially important where there may be extended periods between stage gates. “Between gate three, final investment decision, and gate four, commissioning, there could be five or six years when it comes to nuclear and there’s an awful lot that happens between those points. What happens is hugely affected by everything that got decided before final investment decision, because that’s the point when owners are deciding on the design, detailed construction schedule – not just high level ideal milestones – primary contractors and so on.” Instead, he argues that more detailed governance
sessions and process reviews should be held much more regularly and also that the people involved in those governance forums bring deep expertise in project development and delivery, as well as capital management. “For nuclear it means you need daily, weekly, monthly
processe to be established between those gates and making those processes very cross-functional, both before FID and after FID. Many companies do have these, but they are often over engineered, trying to contain every eventuality, resulting in slow and bureaucratic processes; and/or they are not adhered to, with all the complexity that creates.
Companies need to invest in the right level of processes, the right auditing and improvement of those processes – with an eye to performance, not just compliance – and the right people to work through those processes. That’s where so much of the value lies and historically, that’s been somewhat ignored because people relied upon the stage gate process to put the necessary pressures in to actually get the right risk and returns. That is necessary but no longer sufficient,” Stone says. He also notes the striking differences between the
process for a gigawatt-scale plant and an SMR, saying: “We are looking at each project stage gate and the level of confidence you can have in your design, in your schedule, in your risk budgets at a gate three, a final investment decision is going to be very different between those two technologies. At that single project level, what is being reviewed and the risk-return levels that companies need to accept along that pathway needs to fundamentally change and needs to reflect the different technologies which are being deployed.” He continues: “Not only relying upon those gates as a governance framework to make sure the owners put the money in and get the return, but looking at all of the cross-functional processes and all of the cross- functional technologies that glue these projects together is where an area of real value lies.” Stone also notes: “Information Technology is often under
Above: SMRs present a different series of decisions for project managers but the model for success is the same as for gigawatt-scale designs Source: Last Energy
18 | July 2024 |
www.neimagazine.com
invested by capital project owners; or they spend a lot of money on it, but through poor delivery of those IT systems, they never get any benefits from the software. Conversely, we have seen companies utilising both traditional software packages well, and utilising new technologies like AI, with huge benefits. The right IT ecosystem can enable the greater supply chain collaboration described above through advanced work packaging; they can enable better cross functional teaming through things like 5D or 6D BIM; and they can enable the day-week performance management of a project through accurate, trusted data being available to the right people at the right time. Meanwhile, techniques like AI have taken out 40- 60% of the work that humans previously needed to, whilst also increasing quality, again enabling better schedule adherence and lower costs.” Considering a future strategy for energy infrastructure development Stone is clear what needs to change and where the benefits of that change lie: “Companies need to do three things. They need to fundamentally revisit their stage gate process, and determine how it needs to adapted, or multiple versions created, for the new technologies and paradigms capital projects are being delivered in. Secondly, they need to look across their project portfolio, looking at all the opportunities for design, consenting, procurement, scheduling, and resourcing synergies between projects, and how those synergies can be translated into cost, schedule, risk and safety improvements and they also need to go deep below the stage gate process, investing in the processes, governance, technologies, culture and objectives that enable frontline teams to work together, maximising project performance from the frontline”. It’s clear that what the nuclear sector needs most is a programme of multiple developments from SMRs and microreactors right up to the gigawatt-scale giants that are completed on time and within budget. With a more sophisticated approach to project management that can address many of the structural governance issues that have dogged the industry to date that outcome would appear to be much more likely. ■
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