1. ESS Value Engineering and Cost Reduction Initiative
John Haines
Project Manager
1 Feb 2017

2. Outline What are we doing? How are we doing it? Why are we doing it?
Initial Results

3. What we are doing: Value Engineering and Cost Reduction Initiative
Substantial progress has been achieved during the past year on updating the ESS Project plan, budget forecasts, and risks
To manage ESS Project within agreed budget constraints, we launched a Value Engineering and Cost Reduction exercise in Nov 2016
Finding solutions that deliver the same or similar scope at a lower cost – Value Engineering
Looking into possibilities to defer scope to Initial Operations and Operations including consequences for such deferral
Looking at possible scope reductions

4. How we are doing it: Value Engineering and Cost Reduction Process
Systematically review all remaining work scope to identify cost saving and reduction opportunities
Include approved budget as well as forecast items
In-Kind Contributions are to be considered, but they are complicated …
Primary Objective: find cost reductions while
Maintaining ultimate capability of 22 world-class instruments in user program with 5 MW machine and high neutron brightness
Maximizing scope within construction project
This initiative will be a continuous and on-going effort

5. Why we are doing it: Measures are being implemented to manage within funding envelope
Conclusion:
“Value Engineering” initiative launched in 2016 to find cost reductions to offset forecast increases and deal with remaining risks

6. Progress on Value Engineering and Cost Reduction Exercise
Potential VE and Cost Reductions (k€)
Category CF
Accel
Target
ICS
NSS
Central Services*
Total CR
29,194
2,636
4,630
1,218 -
3,437
41,115
EAC
1,000
33,000
2,300
470
1,751
38,521
EVAL
13,436
60,000
4,140
7,735
6,998
92,309 NO
32,174
13,441
16,877
945
6,078
69,516
75,804
109,077
27,947
10,368
18,264
241,461
* Includes Project Support & Administration, ESH&Q, Communications, DG Services, and Technical Management Services
Ready for change in baseline or forecast
Evaluating
Eliminated
Legend CR
Process Change Request immediately
EAC
Implement into Estimate at Completion (EAC) forecast immediately
EVAL
More evaluation needed NO
Do not implement

7. Cost Reduction Measure Estimated Reduction- M€
Summary of Cost Reduction Measures Ready for Implementation in Baseline or Forecast (Items ≥ 1 M€ shown below)
Cost Reduction Measure
Estimated Reduction- M€
Comment
Reduce RF system for HB section (beam power/energy reduced to 3 MW/1.3 GeV) 23 D
Straightforward to recover during initial operations
Outsource electric grid 17
Reduce forecast need for cost to accelerate some IKCs 10 S
Outsource Central Utility Building 7
Preparing to tender
Labor and services reductions (streamlining work and converting consultant positions to employee positions)
5.5
Spread across many parts of ESS
De-scope Logistics Building 3
Use other areas
Defer delivery of Rem Handling transfer casks
Need to restore early in initial ops
Use cheaper type of stainless steel for monolith shielding
1.6
Use 304 type SS vs. 316
Use cheaper facades for some buildings
1.4
Defer development/deployment of some final aspects of ICS
1.2
Misc. reductions in phone subscription, travel, recruiting, office supplies, …
1.1
Reduced site landscaping 1
Total cost reduction = 80 M€
Savings = 33 M€, Deferrals = 47 M€

8. Cost Reduction Measure Estimated Reduction- M€
Summary of Cost Reduction Measures Still Under Evaluation (Items ≥ 1 M€ shown below)
Cost Reduction Measure
Estimated Reduction- M€
Comment
Deferral of cryomodules, modulators, etc. to reduce power/energy to 3 MW/1.3 GeV ?
Disrupts IKC partner's work/contracting; significantly higher cost and delay to restore full capability
Reduce initial build-out of Instrument Support Buildings 7
Defer building several floors in the 5 buildings
Defer ICS based on other sub-projects
5.2
Remove birds nest roof
4.2
Need approval of revised building permit; potential delay associated with redesigning structures
Eliminate on-site solidification of spent ion-exchange column resin 3
Send material to Swedish nuclear waste company (SVAFO)
ICS savings from reorganizing work
2.5
Relax or defer surface treatment in rad areas
Move guard house to Campus Scope
2.3
Reduce number of MB modulators by 2 to take advantage of lower acceleration gradient 1
Change incoterms from DDP/DAP to FCA for commercial contracts
Renegotiate consultant contracts
Total cost reduction = 92 M€
Savings = 20 M€, Deferrals = 72 M€

9. Selected Cost Reduction Measures Eliminated from Further Consideration
Estimated Reduction- M€
Comment
Defer building 4 of 5 Instrument Support Buildings; concrete slabs only
12.4
Defers/delays essential capabilities needed for early instrument operation and science success
Group spoke cavities to better utilize HPRF capability 9
Availability risk; affects IKC package
Defer delivery of Active Cell Equipment
6.2
Risk of having to perform installation in contaminated environment
Reduce by 1/2 the initial size of the long beam line hall
4.1
Too many early instruments need to be in this hall
Defer hydrogen moderator; use dummy water moderator for early ops 4
Schedule delay; no cold neutrons in early operation; will need to commission cold moderator in activated environment
Elimination of off-line testing for cryomodules
3.4
Inconsistent with design approach
Change monolith internal shielding to carbon steel with protective coating 2
Corrosion risk; contamination issues during maintenance operations
Eliminate Stainless Steel liner in Active Cell
1.1
Already contracted, costly maintenance and decontamination during operations
Total cost reduction = 69 M€
Savings = 31 M€, Deferrals = 38 M€

10. Budgetary outlook with initial round of VE planned changes
Situation before Value Engineering and Cost Reduction Exercise
Conclusion: This is a good start but we need additional cost reductions to deal with risks (some ideas shown in slide 8)

11. Concluding Remarks
Value Engineering/Cost Reductions are needed to manage within funding constraints
Primary objectives are:
Maintaining ultimate capability of 22 world-class instruments in user program with 5 MW machine and high neutron brightness
Maximizing scope within construction project