Learning Curves – Why Costs Should Fall With Repetition – Even In Nuclear Energy?
After having sat out of the real estate market since 2003, I recently jumped back in by purchasing a home. I had a learning curves experience yesterday that might help me explain why I stubbornly believe that one of the best ways to lower the cost of manufacturing and constructing any product is to keep repeating the process with improving refinements as you learn more about the steps required.
Our new (to us) home included some windows that did not have any kind of blinds or curtains, so I was motivated yesterday morning to take corrective action. There were two windows at the top our our priority list. Fortunately, both windows were exactly the same size.
Some of the windows in the house had blinds that had been installed by the previous owner and we had decided that we liked the look and functionality of the 2 inch wide, faux wood blinds. Since we had recently looked through a lot of homes in the area of relatively recent vintage, we knew that these blinds were not custom or unique; they were fairly common.
We also figured that, since our home included 4-5 windows with common dimensions, we might be lucky enough to need a size that we could purchase off the shelf. (There are too many different sizes and shapes of windows to call any of them “standard.”) Because we wanted to mount the blinds inside the window frame, we needed to accurately match the dimensions with either off-the-shelf items or by taking advantage of the in store trimming services that some retailers offer.
I measured both windows carefully, twice, and recorded those dimensions. I figured that the local building supply store would be fairly empty early Sunday morning, so if I needed assistance I would not have to wait too long.
Our entering assumptions held true – though there were plenty of options in the big box store, one of the available options was exactly the kind of white blinds I was looking for. They were also exactly the right dimensions in both width and length. The price was about what we expected to pay, so I loaded them up and checked out. I received a pleasant surprise upon check-out. My “Beat Army”, work-around-the-house tee-shirt caused the nice lady at the cash register to ask if she should apply a military discount, so I actually paid about 10% less than the initial cost. (I explained to her that I was retired, but she told me that category qualifies as well, as long as I had my ID with me. Cool.)
I was back at the house before my wife even realized I had gone. There are real advantages to living in a compact city where nothing is very far away.
Fortunately, though I have not owned a home in almost a decade, I never got rid of the tools required for basic home maintenance and improvement. (My hope is that a similar statement can be made about at least some of the suppliers that the nuclear revival will require.) Also, though it has been quite some time since my last “do it yourself project” I have some modicum of admittedly rusty knowledge about basic tool use, measuring, marking, safety, etc.
Since we have recently unpacked all of our possessions, I also had up-to-date knowledge of my tool boxes and their contents. There was little overhead associated with simply finding the right tools. I cleared a large open space in the room where I would be installing the first set of blinds. That would provide a comfortable work space that would allow easy access to all of the necessary parts and tools without slowing me down because of bumping into things.
I left one of the blind boxes in the back of my Jetta (once again thanking the engineers who figured out that even sedan owners occasionally carry long items and made that possible by including rear seats that fold flat) and staged one of the boxed sets in the first room. Like a good nuke, my next step was to locate the installation procedure. Actually, a nuclear energy related tasks would have never gotten this far without following a carefully written procedure.
I carefully opened the packaging so that the box could serve as the holding area for the bits of hardware that I knew would be included in the package. (I have done similar tasks in the distant past, so I had a pretty fair idea what to expect.) As it turned out, I needed to make several trips down to my garage because I had guessed wrong about the tools required or desired. I also had to find the step ladder because that was not one of the things that I had unpacked during the move – fortunately, my wife was home and pointed me to the right place on the first try.
The installation for the first set of blinds went reasonably well, but I learned or remembered several important items during that process. I learned that storing a battery powered screwdriver for 8 years can kill the battery pack’s ability to hold a charge, rendering the tool useless. I learned that an electrically powered variable speed drill can perform the same task if you are really careful about trigger operation.
I also found out that the shape of the substitute tool was not ideal for driving in screws in certain restricted locations – one out of four of each bracket screws had to be done the old fashioned way. I also relearned an old lesson – read your procedure carefully. I overlooked the step that sequenced the valence brackets installation and had to take the blinds down once to provide access to accomplish that task.
The second installation in the room across the hall from the first room went much more quickly. I had all of the tools in place. The blinds were identical, so I knew exactly what I would find in the package. I had already read and performed the procedure; though I had it out and reviewed it briefly, I was able to reduce the reading time by about 90% compared to what I had invested during the first installation. I had also determined a more optimum sequence of steps that minimized shifting my drill from the small bit used to drill pilot holes to the screwdriver bit.
The only real glitch can be partly attributed to the fact I was still using the variable speed drill instead of a purposely designed battery powered screwdriver. The other part of the blame rests squarely on my shoulders. About half way through the installation, I started drifting just a little as I started composing this blog entry in my head. My simple chore was developing into a allegorical tale of how you can slice the time required for any given task with certain common techniques.
That drifting caused me to pull on the drill trigger just enough to cause it to speed up to an uncomfortable rate. My reaction to that speed up resulted in a little damage to the screw head that might have been a real issue except for the lucky fact that the screw was one of those that has both a Phillips head and a flat screwdriver pattern. The Phillips head was now useless because of being rounded off, but the flat head part had not been damaged. I had a flat head driver already available, so the mental lapse did not cause too much schedule disruption.
I am positive that if I had needed to add blinds to four windows, I could have completed the additional two in less time than I spent on the second installation, which was already significantly improved over the first. On a blind installation time per window basis, it was glaringly obvious to me that the most expensive method for covering our windows would be one at a time, especially if I scheduled the task so that I had to make a trip to the store for each new set of blinds.
It was also obvious that some of the time savings associated with the second set of blinds that I installed came from the fact that they were identical to the first set. If we wanted something different in the second room, I would have had to include more time for procedure reading and perhaps additional time for gathering different tools. If we had determined that one window needed curtains and one needed blinds, there would have been two almost completely uni
que tasks, neither of which would gain much benefit from learning on the first task.
After completing the task and putting away all of the debris and tools, I chatted with my wife about the lessons learned. (Yes, I really am a geeky nuke.) She told me how surprised she was at how fast I had moved between needing her help on the first installation to needing it on the second. (There is one step in any large window blind installation that requires more than two hands.) As I explained how I had refined my techniques based on learning, she said she assumed that builders offering standard blinds as part of a new project would schedule the task in such a way as to take full advantage of the kind of learning and task refining that I had used.
I told her that the smart ones would do that and would also ensure that their employees or subcontractors were properly motivated and compensated. She gave me a funny look and then realized what I was saying.
The indisputable existence of learning curves does not mean that there are automatic savings available. Lessons do not have to be learned, even if they are available to be learned. Process improvements do not have to be adopted and new tools that make the processes better do not have to be purchased. It is also not uncommon for subcontractors or employees, if they are always paid by the hour, to avoid time saving techniques so that they can stretch tasks to fill more hours.
However, those cost and time saving opportunities do exist and can allow unit 4 to cost less than unit 1 and allow unit 8 to cost even less than unit 4. For certain types of very complex tasks that involve a lot of human activity and brain power, properly leveraged learning curves can even ensure that unit 200 costs less than unit 100 and that unit 2000 costs less than unit 1000. The bottom line for me is that there are potential advantages to smaller unit sizes compared to a situation where extra large is the only available choice.
Test.
The tension between gauge and frequency is a common one and shows up in many areas of industry and commerce. Unfortunately there is no one right answer that can be applied universally or even within a domain, at best one must look at each situation and try and balance all the parameters such that an optimal solution is found.
I have always thought that installations like Bruce, Darlington, and Pickering Nuclear Generating Stations in Ontario, with the twenty CANDU reactors they have between them are a case where that balance was found.
Since NRC opened their doors in 1975 not one single reactor project has been initiated that successfully became an operating nuclear reactor.
Not one project begun under NRC regulatory supervision has made it through the regulatory and construction process in 35 long years, NOT ONE PROJECT.
All of America’s current operating fleet of 104 commercial power reactors was initiated as projects prior to 1975 under AEC regulatory supervision.
In a different regulatory environment, a bit more friendly to nuclear technology, I would have an easier time entertaining the concept of cost reductions from SMRs that result from repetitive manufacturing.
We live in a regulatory environment where NRC determines the delay (and since in large commercial projects, time is money) the cost of any nuclear technology. Our current nuclear universe is not driven by the cost of labor, or materials, or of engineering, but rather by the cost of NRC review and licensing and the pacing that this process forces on real projects.
Without real regulatory reform, and a series of NRC rulings that establish a streamlined and cost reduced path for SMRs, there will be no SMR revival of nuclear in the USA.
While I favor reforming nuclear regulation, I would also say that what limited interaction I have had with NRC and its staff leads me to believe that NRC is one of the better functioning agencies in government.
I do not believe problems with NRC derive from laziness on the part of their staff or any incompetence.
It appears to me that problems derive from the directions NRC receives from Congress and the excessively strict rulemaking that NRC as a “pure regulator” then generates.
Balance is missing in our current regulatory arrangements, and demands for ever higher assurance of public safety from the anti-nuclear/environmental lobby are heard by sympathetic Congressmen aligned with the cause and this turns into unrealistically strict congressional guidance to NRC.
On a cumulative basis, the body of regulation that NRC produces under guidance from Congress continually raises the regulatory obstacles to building new nuclear.
Regulation, as we practice it, no longer provides additional public safety but just prices up nuclear to the point it is no longer given practical consideration by States and communities needing reliable power.
NRC considers itself as “pros”, fervently protecting public safety with clean hands unsullied by any compromises that would come from promotional support of the nuclear industry.
While this approach might sound like it is better from the standpoint of potential conflict of interest, in the end you get politically driven, imbalanced, and excessively restrictive regulation which is not proportionate to the probable risks entailed in nuclear technology.
AEC did a better and more effective job overall in balancing the tasks of promotion and regulatory restriction. Under the AEC we built real reactors while still doing an excellent job ensuring public safety.
Our current largely antagonistic style of nuclear regulation is designed to permit only a tiny trickle of reactors, and significantly fewer reactors than will be needed to replace reactors being lost to end of life retirement, to get built.
Unless an expedited and trimmed down regulatory path for SMRs is invented, it will not matter if repetitive manufacturing economies are found in building SMRs. You will not be able to get regulatory authority to build even one SMR (and the costs benefits that result from repetitive manufacturing will be largely lost with this limited production).
The unfortunate consequence of NRC-style regulation is that safety is decreased. This is because instead of building nuclear power plants for our electricity, we build fossil fuel plants. There is no system-level view of power generation health and safety. This is part of the failure of the direction given to the NRC. Their focus is solely on the safety of nuclear power plants. There is no consideration given to the health and safety consequences of not building a nuclear power plant. Some sort of generating plant is going to provide the electricity we need. A disservice is being done by focusing on nuclear power plants and making them “as safe as possible.” We have gone beyond the point of diminishing returns with too many NRC regulations. The focus needs to be on comparing the risk of nuclear energy to the alternatives. If “safety” regulations cause a nuclear power plant not to be built, and a less safe alternative is built, then the “safety” regulations have failed to provide safety, and the whole environment for nuclear power (safety reguations included) needs to be changed.
Because of the capital-intensive nature of nuclear power plants, it is in the self-interest of the owners to run them safely and reliably. Clean-up after an accident can be very costly. It is where the capital costs are relatively low (e.g., gas turbines) that safety is more likely to be neglected.
donb – I would just like to thank you for your penetrating observations – great insights on the influence of excessive regulation on safety.
@Robert Steinhaus: Definitely something to think about, but that string of zeros appears to be finally on it’s way to being broken – Rod has talked quite a bit about several nuclear reactor projects which are progressing right now, and look like they may be completed on-time, on-budget, and get approval. Although, I suppose it’s quite possible the NRC could still mess everything up.
One example:
http://atomicinsights.blogspot.com/2010/10/scana-v-c-summer-project-on-track-and.html
Perhaps there’s hope.
@Jeff – In many aspects of life there is some wisdom on trying to “stay on the sunny side” of life and keep some optimism even when a sober review of recent history shows little grounds for optimism.
I would like to thank you for the link to the Scana project.
I share great enthusiasm for the Small Modular Reactor concept, and wish guys like Rod all success in pursuing it. I regret that it does not appear to me that we have a sufficiently supportive regulatory structure in place in the United States to allow SMRs to get licensed and built, even in token numbers.
The sad fact is that not one successful nuclear reactor project has been initiated in 35 years under the current antagonistic and hostile NRC “pure regulatory” approach. All of America’s 104 commercial nuclear reactors were started as projects under the older unified AEC regulatory approach.
I believe that we should abandon the experiment initiated by The Energy Reorganization Act of 1974 that segregates nuclear regulation into technology advocacy (this is nominally done by the Department of Energy) and restrictive “gatekeeper” regulatory functions (currently performed by the Nuclear Regulatory Commission).
Under the older unified regulatory approach of the AEC, all 104 of America? commercial nuclear reactors were started as projects and it was under AEC regulatory supervision that America had ALL of its success in initiating building of new reactors.
We need to reform nuclear regulation to return to a unified regulatory approach which combines nuclear technology advocacy and restrictive gatekeeping. I believe that what is most urgently needed is regulatory reform that reunites the two functions of a nuclear regulator. A unified regulator, like the current FAA or the old AEC combines technology advocacy and restrictive gatekeeping in one agency. A unified regulator would never see driving the industry they regulate into the ground through their regulatory action a ?uccess? A split regulator, like the NRC, is capable of shuttering a vital industry and forcing a selloff of all nuclear industry assets to large foreign interests while seeing themselves as pure regulatory professionals that put public safety above all other considerations. Segregating regulatory functions and providing restrictive guidance to the agency from Congress resulted in a body of rulings and regulation that has shuttered the US nuclear industry and has prevented successful construction of even one new reactor since NRC has opened its doors in 1975. A unified regulator would grow the nuclear industry while guiding its growth with prudent and efficient regulation.