What you can learn from First-of-a-Kind (FOAK) projects in nuclear? A lot, it appears. I’m currently doing an in-depth analysis of nuclear sector with some of the best experts in the field, and here is what I’ve found.
Nuclear FOAK projects are notorious for their complexity, and this is reflected in their cost overruns. The first decade of this century saw over a dosen FOAKs in building so-called Generation III/III+ reactors. Most of the nuclear reactors in operation have been built around 1970-1980’s, and are known as Generation II reactors. The latest generation came in with improved safety features.
The FOAKs of these new generation of reactors had costs overruns at least twice the budget. At the planning starge, costs would be estimated at around 2300USD per kW, but upon completion, the real costs shot up to 5300 USD/kW on average. Some, such as the EPR reactor at Flamanville in France was initially budgeted at 1,886 USD/kW, but the final cost ballooned to 8,620 USD/kW.
1. The Real Risk: Planning, Not Technology
A key takeaway from nuclear FOAK projects is that, at the FOAK stage, technology risk is surprisingly low. The real challenges lie in planning and execution. In the Flamanville project, the project documentation was modified 4500 times while the construction was already going. At the same time, two similar reactors in China were built with “only” twice the planned time and 1,6 times over budget. For non-nuclear FOAKs, the lesson is clear: focus on planning from the outset.
2. The Temptation Trap: Don’t Lowball Your Estimates
It’s hugely tempting to present low cost estimates to attract investors and stakeholders. However, as nuclear projects have shown, this can have disastrous consequences. Both successful and unsuccessful FOAK projects have demonstrated that lowballing costs to gain early support often leads to significant overruns later on. Take the APR 1400 in Korea—initially budgeted at 1,828 USD/kW, the final cost came in at 2,410 USD/kW, which was still one of the more successful projects. The lesson here? Underpromise and overdeliver. Be realistic in your projections and avoid the temptation to lowball.
3. Simplify Management: The Achilles’ Heel of FOAK Projects
One glaring issue in nuclear FOAKs was the complexity of project management. In many cases, equipment supply agreements became too complicated, and decision-making was fragmented across multiple bodies. Contracts with equipments suppliers were overly complex. The takeaway? Keep your management structure simple and ensure there is a single, clear decision-making authority.
Conclusion: Apply Nuclear FOAK Lessons to All FOAK Ventures
Whether you’re working on the next generation of nuclear reactors or pioneering a new technology in a completely different field, the lessons from nuclear FOAK projects are invaluable. Remember that the primary risks are not technological but managerial and financial. Plan thoroughly, simplify management, and always aim to underpromise and overdeliver.
Thanks to Arkady Karneev for the help in preparing this article.