NEWS MEDIA CONTACT: JEFF SHERWOOD (202)586-5806
September 1, 1993
SECRETARY O'LEARY ANNOUNCES PLAN FOR CONTAINING COSTS OF SUPERCONDUCTING SUPER COLLIDER
Secretary of Energy Hazel R. O'Leary today released a comprehensive report that will be used by the Department of Energy to minimumize the potential for cost overruns in the Superconducting Super Collider (SSC). The document is the most comprehensive independent status report on the project in more than three years. Secretary O'ULeary remarked , This report will be an essential management tool for making the difficult program trade-offs required for successful completion of this important project."
The report was developed by the Baseline Validation Committee which was established as part of the management initiatives for the SSC announced by the Secretary during congressional testimony on June 30, 1993. The charter of the committee was to: 1) validate the progress and status of the SSC; 2) identify risk issues asociated with the project and their impact on final project costs, assuming no managment initiatives; and 3) assess the adequacy of the business management systems at the SSC.
"The good news is that the committee confirmed that the project is 20 percent complete, which is where we should be on the project,"S said the Secretary. The committe also found that the 73 major subcontracts awarded to-date, in aggregate, have come in at approximately seven percent under budget."
In terms of cost risks-- which reflect the potential for cost overruns-- the report identifies approximately $1.5 billion in costs beyond the existing baseline that could occur if no efforts are made to manage these risks. The report makes very clear that these risks assume none of the management initiatives that the Secretary announced during congressional testimony on June 30 and August 4, 1993.
Secretary O'SLeary commented," RThis report is precisely what has been needed to concentrate attention and resources on the management issues that must be resolved to build the SSC as cost-effectively as possible. Although project critics may view this document as evidence of massive cost overruns, the report, in many respects, represents quite the opposite. It is a guide for how to prevent cost overruns. That is certainly how I intend to use it, and already am."
In response to the report, the Secretary announced the following actions:
1. By September 30, 1993, the Director of Energy Research will prepare an implementation plan for the specific recommendations of the Baseline Validation Committee and shall provide quarterly reports on progress in meeting this plan. As necessary, subcontracts associated with cost risk issues should be delayed until risk issues have been resolved.
2. As part of the implementation plan, by September 30, 1993, the SSC Laboratory shall establish value engineering teams for each of the major cost risk items identified by the Baseline Validation Committee. These teams will review the project requirements that are driving potential cost growth and identify alternative engineering and management approaches that will contain the cost risk.
3. By December 31, 1993, the SSC Laboratory and DOE will identify items in the current project design that could be eliminated or altered without causing significant impact on the scientific objectives of the project. The High Energy Physics Advisory Panel (HEPAP) will be asked to review these items and to rank them in order of potential impact on the scientific objectives of the SSC. These project changes will be implemented, in the order established by HEPAP, to the extent that they are necessary to avoid cost overruns in the project.
4. The Director of Energy Research will immediately begin to replan or "rebaseline" the project to conform with the three-year stretch-out schedule in the President's budget. This rebaselining effort, which involves developing a new funding profile and schedule for the project's 40,000 work packages, is to be completed in spring of 1994. The laboratory has been instructed to use the stretch-out to reduce cost risks associated with the original project schedule, which would have required excessive overlap of research, design and construction schedule.
5. As a part of this rebaselining effort, the department and the laboratory will conduct a thorough, bottoms-up review of the workforce and skills mix requirements for the laboratory -- with the goal of achieving savings in administrative personnel costs.
Copies of the "Report of the DOE Review Committee on the Baseline Validation of the Superconducting Super Collider" are available from the Public Inquiries Branch, PA-5, Department of Energy, Washington, D.C. 20585 (phone 202 586 5575).
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