External Independent Review (EIR) Princeton University External Independent Review (EIR) of NCSX March 13-14, 2008 Cost and Schedule Ron Strykowsky PU External Independent Review March 13-14, 2008

PU External Independent Review March 13-14, 2008 Topics Cost, Schedule and Contingency Development Process Basis and Assumptions Contingency Cost Summary Schedule Summary Cost Profile Staffing EIR Summary Assessment PU External Independent Review March 13-14, 2008

Process of Establishing a New Project Baseline Job Managers Reviewed and Updated WAF’s (realistic not best case) Additional scope per August Lehman review recommendations Critically reviewed all job estimates to reflect current design maturity & experiences to date Internal Engineering Department Review for Critical and Large Job Estimates Updated overhead and labor rates Updated resource Loaded Schedule Focus on critical path optimization Off critical path scope (maximize free float) Fit Program funding targets Expanded and quantified project risks Contingency analysis process (probabilistic approach) March 13-14 PU Review Follow-up actions complete data processing and analysis Final Updates, Packaging, Documentation Submit New Baseline Proposal to OFES March 26 Office of Science Review April 8-10 Submit Baseline Change Proposal to OECM April 21 External Independent Review May 20-22 The WAF’s are the basis of all estimates The resource loaded schedule is the master schedule and cost estimate data base PU External Independent Review March 13-14, 2008

Refined Estimating packages (table 1 of 6) Table 1 - Work Approval Form PU External Independent Review March 13-14, 2008

Refined Estimating packages (table 2 of 6) Table 2 - Design PU External Independent Review March 13-14, 2008

Refined Estimating packages (table 3 of 6) Materials and Procurements PU External Independent Review March 13-14, 2008

Refined Estimating packages (table 4 of 6) Fabrication and Assembly PU External Independent Review March 13-14, 2008

Refined Estimating packages (table 5 of 6) Estimate Uncertainty and Risk PU External Independent Review March 13-14, 2008

Refined Estimating packages (table 6 of 6) Basis of estimate PU External Independent Review March 13-14, 2008

Key Planning Basis and Assumptions ETC forward from February 1st, 2008 Cost Incurred from April 1, 2003 (MIE project inception) Every Job Reviewed, most re-estimated GPP and Infrastructure not part of MIE project. (Progress coordinated and tracked by Erik Perry) Program BA constraints Institutional Overhead Rates (CAS Compliant) Standard work week 8 hrs/day 5 days/week (Exceptions: Field period assy (sta3 FPA#3, station 5, and Final Machine assy make use of select 2 shift operations). No overtime or Saturday work planned. Holidays Contingency Allocation by fiscal year (commensurate with risk & cost uncertainty) Task durations - more detail on critical path and near term PU External Independent Review March 13-14, 2008

PU External Independent Review March 13-14, 2008 Scheduling - Process Based on deliverables and/or tasks identified by the job managers Input varied from resource loaded schedules to deliverables and resource estimate only Established tasks, internal milestones (PDR’s, FDR’s, contract awards) Task durations based on realistic resource loadings & crew sizes Logically linked (2,170 tasks, 2900 individual resource loadings) Non-critical path tasks scheduled within BA constraints with free float to critical path Schedule iterated based on Optimizing the critical path. (use of 2 shift operations, floor space for assembly tasks, metrology/back-office support, crane utilization studies) Maximizing free float for non critical path tasks (ie procurements) Front end loading system designs Annual contingency set-asides Resource leveling exercises to optimize techs and key engineers (did not impact critical path or cost) PU External Independent Review March 13-14, 2008

Cost Basis - Resource types and Rates Resource Types, labor and overhead rates Non-Labor Resource Labor Skills (hourly rates) Overhead and escalation rates PU External Independent Review March 13-14, 2008

PU External Independent Review March 13-14, 2008 Contingency - Process Structured process - probabilistic risk analysis based (Monte Carlo Analysis) Objective was to assess and analyze all areas of uncertainty and risk that might affect the cost and schedule estimates Project Risk Registry key input (grown from 36 to 88 risks & monitored monthly) Job Manager and Project Team input Cost and schedule contingencies quantified Contingency Allowance Range - 90% and 80% confidence levels analyzed New process being followed Chris Gruber to provide comprehensive analysis PU External Independent Review March 13-14, 2008

PU External Independent Review March 13-14, 2008 Contingency – Results Need to finalize our contingency proposal going forward Use 90% confidence case for preliminary analysis being presented PU External Independent Review March 13-14, 2008

Results –Cost Reconciliation Highlight cost drivers PU External Independent Review March 13-14, 2008

Cost growth by category PU External Independent Review March 13-14, 2008

Results – Cost by RLM and Job PU External Independent Review March 13-14, 2008

Results – Cost by RLM and Job (con’t) PU External Independent Review March 13-14, 2008

Results – Cost by RLM and Job (con’t) LOE budgeting applies mainly to management, supervision, & technical support functions-basis of estimates shown in WAF’s. PU External Independent Review March 13-14, 2008

Results – Program BA Profile Delayed research start Schedule requires further iteration to improve contingency distribution PU External Independent Review March 13-14, 2008

Results – Schedule (Summary) Critical path through field period assembly, final machine assembly and start-up operations Major procurement of components as well as ancillary system have ample schedule margin (months off critical path) PU External Independent Review March 13-14, 2008

PU External Independent Review March 13-14, 2008 Results – Milestones Milestones provide good metric of schedule progress Distribution of milestones reasonable Must still set DOE dates by adding schedule contingency PU External Independent Review March 13-14, 2008

Results – Resource Loaded Schedule Total float in working days (~1 month = 21 days) Planning assumption: 1 shift per day or 2 shifts per day Cost (= hours x rates) Resource skill and hours (from WAF) EXAMPLE PU External Independent Review March 13-14, 2008

Staffing Requirements- Technicians TFTR D&D manpower profile for comparison Staffing requirements achievable and being satisfied PU External Independent Review March 13-14, 2008

Staffing Requirements- Engrs & Designers Future needs achievable with new hires to provide depth & backup PU External Independent Review March 13-14, 2008

Staffing Requirements- ORNL & Metrology PU External Independent Review March 13-14, 2008

EIR Summary Assessments 1. Resource loaded Schedule Organized by WBS (refer to WBS and WBS Dictionary) Resource estimate loading based on detail WAF packages signed by Job managers. (see detailed WAF packages) Estimates based on prior experience, vendor quotes, fabrication estimates, design calculations. Basis of estimates include in WAF’s. (requires analysis and verification of resource loading) Task durations based on realistic manpower loadings and crew sizes. Balance of task durations based on reasonable loadings Schedule detail commensurate with schedule criticality (e.g. wbs 18 job 1810. minimum task duration 1 day). Proposed baseline BCWS and contingency profile consistent with anticipated funding levels. Shows estimate detail and priced cost estimate (see resource loaded schedule) PU External Independent Review March 13-14, 2008

EIR Summary Assessments (continued) 2. Key Project Cost and Schedule Assumptions Standard 8 hour/day 5 day/week work assumed except where 2 shift operations called out in resource loaded schedule. (see slide 10) Institutional overhead and labor rates utilized (see slide 11) Contingency quantified based on estimate uncertainty and risk using Monte Carlo simulation plus a subjective increment based on project management experience. (see slides 12 & 13 and detailed contingency analysis) Contingency distributed annually consistent with needs. (NO -WORK IN PROGRESS). PU External Independent Review March 13-14, 2008

EIR Summary Assessments (continued) 3. Critical Path See critical path plot on wall See detail Primavera predecessor & successor report for logic linkages 4. Funding Profile Project proposed baseline consistent with preliminary guidance (see slide 17) 5. Work Breakdown Structure Resource loaded schedule is organized by WBS (see WBS and WBS Dictionary) PU External Independent Review March 13-14, 2008

PU External Independent Review March 13-14, 2008 SUMMARY Project has followed a disciplined path for updating its cost and schedule estimates highlighted by; Formal & consistent basis of estimate Independent reviews by PPPL engineering and PU Focus on obtaining realistic estimates from job managers Project has followed a methodical process for quantifying cost as well as schedule contingency. Project has expanded its risk registry and incorporated into monthly status review meetings Project has proposed a sound baseline cost estimate backed-up by a resource loaded schedule and detailed estimate basis. Completion of data analysis and verification of resource loaded schedule required to ensure completeness PU External Independent Review March 13-14, 2008

DETAILED STAFFING BACKUP Designers PU External Independent Review March 13-14, 2008

DETAILED STAFFING BACKUP Analysts/Mechanical Engineers (EA) PU External Independent Review March 13-14, 2008

DETAILED STAFFING BACKUP Electrical and FO&M Engineers PU External Independent Review March 13-14, 2008

DETAILED STAFFING BACKUP ORNL Engineers/Designers PU External Independent Review March 13-14, 2008