Great article, thanks! I'm running through this on a smaller scale myself, and we're due to spend almost 10% of budget just to get to the estimations & costings stage with the most awkward engineering done. If the estimation doesn't work, the remaining 90% might not happen and I'm lining us up to engage suppliers for quoting the big stuff in 6 or 7 weeks, while we run engineering in parallel. Fun times!
Thank you for this. I live near Syracuse, NY. Micron is currently building a massive chip fab plant. I expect that 30 miles north they will build another nuclear reactor to go with three already there. I suspect that two mega projects so close to each other will create problems beyond what you described. Going to be interesting.
Thanks Chris. That was a good story. I spent most of a long career in and around science megaprojects. So much of what happened for that reactor rings familiar. Just as for software your estimate of how long it will take is always too low, for megaprojects your estimate of cost, no matter how high, is never high enough.
Chris. This is a great show and interview. I was involved with the installation, comissioning and first decade of technical support for the first Polymer finishing line at NovaChem in Red Deer 2000-2002. The work and the people involved are still keeping in touch.
One thing I realized as a (semi) retired from engineering was the complete lack of a formal college courses anywhere in process scaleup. If there was a class on this, it should NOT try to provide the specific answers to a test question. The issue is that you have to think about how something can scale up from many technical angles (as well as business and financial ones).
What almost worries us more than the actual cost and complexity is the the loss of the sheer drive and ambition to build these kinds of things, the loss of/lack of depth of design, engineering and construction talent, and how regulatory obstacles only exacerbate the situation.
I think you commonly use the term "we forgot how to build stuff in the West." The forgetting, the loss of accumulated institutional knowledge, the labor talent, the drive/pride that went into mega projects. That eats at us.
What is the appropriate discount rate for evaluating a project like a nuclear power plan?
For me, your comment raises eyebrows. I understand how a private investor or bank decides the required rate of return to finance a project, and I trust they evaluate project risk appropriately.
To give a government wide latitude to decide it's discount rate seems to completely dismantle the filtration mechanism that rejects projects with little value. I understand that the rate required for financing by a private actor is not the same thing as the rate a government entity should apply in evaluating the net present value of a long-lived asset.
But I can't shake the feeling that for decisions involving the allocation of billions of dollars of capital, I fundamentally trust and understand the private process, whereas the process in governments feels very suspect.
It is possible to be successful with large projects as well. Peak construction manning 25 000. On time, on budget, on spec product in record time, excellent safety records.
The Borouge 2 expansion project achieved international recognition when it was awarded the "Project of the Year" accolade at the Middle East Chemical Week award 2011.
World-Scale Infrastructure: The expansion famously included a 1.5 million tonnes/year ethane cracker and an olefins conversion unit (OCU), which stood as the world's largest OCU at the time of its commissioning.
An interesting follow up question: what would it cost to duiplicate the Sturgeon refinery now?
And how much should be changed to optimize for what they now know, but how much cost/risk would that impose on the project?;
Yes, this seems like a project Alberta and Canada should replicate several times over.
Great article, thanks! I'm running through this on a smaller scale myself, and we're due to spend almost 10% of budget just to get to the estimations & costings stage with the most awkward engineering done. If the estimation doesn't work, the remaining 90% might not happen and I'm lining us up to engage suppliers for quoting the big stuff in 6 or 7 weeks, while we run engineering in parallel. Fun times!
Given the state of the diesel market now, I bet Canada wishes they had a few more Sturgeon refineries today.
Thank you for this. I live near Syracuse, NY. Micron is currently building a massive chip fab plant. I expect that 30 miles north they will build another nuclear reactor to go with three already there. I suspect that two mega projects so close to each other will create problems beyond what you described. Going to be interesting.
Thanks Chris. That was a good story. I spent most of a long career in and around science megaprojects. So much of what happened for that reactor rings familiar. Just as for software your estimate of how long it will take is always too low, for megaprojects your estimate of cost, no matter how high, is never high enough.
Chris. This is a great show and interview. I was involved with the installation, comissioning and first decade of technical support for the first Polymer finishing line at NovaChem in Red Deer 2000-2002. The work and the people involved are still keeping in touch.
One thing I realized as a (semi) retired from engineering was the complete lack of a formal college courses anywhere in process scaleup. If there was a class on this, it should NOT try to provide the specific answers to a test question. The issue is that you have to think about how something can scale up from many technical angles (as well as business and financial ones).
Regarding the government getting involved with long range projects, you do not have to look beyond the rare earth issues to see that the absence of government involvement in the last 15 years has really hurt the west. Instead we invest $5 Billion for Twinkies….literally https://www.entrepreneur.com/business-news/smuckers-ceo-said-buying-twinkies-tastes-like-growth-three-years-later-it-tastes-like-a-5-billion-mistake
Great post, Chris.
What almost worries us more than the actual cost and complexity is the the loss of the sheer drive and ambition to build these kinds of things, the loss of/lack of depth of design, engineering and construction talent, and how regulatory obstacles only exacerbate the situation.
I think you commonly use the term "we forgot how to build stuff in the West." The forgetting, the loss of accumulated institutional knowledge, the labor talent, the drive/pride that went into mega projects. That eats at us.
Another good episode. Would be interested in hearing his thoughts on how you go about assembling the right team and processes.
This was a very enjoyable read. I'm biased, but it is one of my favorites. Well done!
What is the appropriate discount rate for evaluating a project like a nuclear power plan?
For me, your comment raises eyebrows. I understand how a private investor or bank decides the required rate of return to finance a project, and I trust they evaluate project risk appropriately.
To give a government wide latitude to decide it's discount rate seems to completely dismantle the filtration mechanism that rejects projects with little value. I understand that the rate required for financing by a private actor is not the same thing as the rate a government entity should apply in evaluating the net present value of a long-lived asset.
But I can't shake the feeling that for decisions involving the allocation of billions of dollars of capital, I fundamentally trust and understand the private process, whereas the process in governments feels very suspect.
Great post! But is it true that states really have long time horizons?...those horizons in practice often seem paced by the electoral cycle.
It is possible to be successful with large projects as well. Peak construction manning 25 000. On time, on budget, on spec product in record time, excellent safety records.
The Borouge 2 expansion project achieved international recognition when it was awarded the "Project of the Year" accolade at the Middle East Chemical Week award 2011.
World-Scale Infrastructure: The expansion famously included a 1.5 million tonnes/year ethane cracker and an olefins conversion unit (OCU), which stood as the world's largest OCU at the time of its commissioning.