Analysis: the South Korean nuclear industry

What can we learn from the South Korean example of programme management? How does programme management contribute to effective performance?

This graph illustrates the learning gained from the South Korean model.

On the x axis, the start dates indicate thestart of construction. They axisshows thelength of construction in years. The reactor in each case is the standard 1 GWe (gigawatt electrical) Korean Reactor and the different colours show the different sites where reactors have been built.

This graph shows that there is a clear trend: construction time has decreased over the years.

This graph suggests there has been a learning curve in the delivery of power plants. This appears to be a consequence of the standardisation created through the programme approach adopted in South Korea. This learning curve has reduced construction times and costs. South Korea consistently delivers nuclear power plants in about half the time it usually takes in this sector - five to six years compared with ten or more.

This graph has been created using public information from the International Atomic Energy Agency (IAEA). You might wonder why the measure of time has been used instead of cost. This is because cost data is more subject to manipulation. For instance, it is possible for a researcher to misrepresent or manipulate exchange rates, including or excluding interest on the capital borrowed. We also have to make assumptions about the inflation rate etc. However, if you measure using construction time, you do not need to interpret this data and you cannot manipulate it, so this allows you to make a very reliable comparison.

Operational benefits of programme management

You have seen the advantage that a programme structure provides in reducing construction time. What impact does a programme approach have on a plant’s operational phase?

The benefits of focussing on a programme rather than a single project is evident even when we consider the operation phase. The graphic shown here is taken from the paper by Sungyeol Choi et al (2009). On the x-axis, you can see the years to which the analysis refers. The purple dots represent localisation factors (%), the yellow bars represent unplanned outage (number of events) and the red line represents the load or capacity factor (%).

1. Localisation factors

The purple dots represent the localisation factors, ie how much of the construction was allocated to the South Korean industry. At the beginning, this percentage was close to zero since US industries did most of the work. The South Korean companies gradually increased their share and, nowadays, almost the entire project delivery chain is in South Korea.

2. Unplanned outage

The yellow bars represent the unplanned outage. According to the IAEA (2017, n.p) the 'outage' is defined as: “any status of a reactor unit, when its actual output power is lower than the reference unit power for a period of time ”.

This can happen when you do not maintain the parameters of a reactor: eg. when the temperature rises above a certain threshold or the pressure goes under a certain value. In such cases, you can stop the reactor (or reduce the power) to check what is happening. This is not a nuclear incident, but the frequency of these events demonstrates that the reactor is unstable or not properly managed. In South Korea, the frequency of these events decreased over time so that now these events are incredibly rare. This shows that these reactors are reliable and that the utility is very good at running them. Standardisation and programme management have been key to this.

3. Capacity factor

The red line indicates the capacity factor, which is a consequence of what we have noted about the “unplanned outage”. The IAEA (2017. n.p) define the capacity factor as “The actual energy output of an electricity-generating device divided by the energy output that would be produced if it operated at its rated power output (Reference Unit Power) for the entire year. ”

Therefore, if the capacity factor is 100%, it means that the reactor worked full power for 365 days a year. As most costs in the nuclear sector are 'sunk' cost (a cost that has already been paid, like the construction cost) or fixed cost (a cost independent from the energy produced, like personnel or insurance), it is very important to have a high capacity factor.

In summary, these reactors now operate well. They are very reliable and they work with a very high capacity factor. This is a key consequence of managing the construction of nuclear power plants as a programme rather than as single independent projects. This is the case for nuclear projects, but also true for other major engineering projects.

Please refer to the glossary to check any terminology you are unfamiliar with: Glossary of Project Management Terms

Coming up...

In the next section, you will discuss your views of programme management.