The cleanup act
PMI 2007 PROJECT OF THE YEAR
It was an unwelcome reminder of a time long since passed—and residents weren't happy about having it in their backyard. Located in a rural area northwest of Cincinnati, Ohio, USA, the Fernald Feed Materials Production Center had delivered high-grade uranium metal products to the U.S. military throughout the Cold War. Long shrouded in secrecy, even from community members, the facility ceased production in 1989.
It was the end of one era—and the beginning of another.
Three years later, the U.S. Department of Energy (DOE) hired Dallas, Texas, USA-based Fluor Corp. to launch one of the largest environmental cleanup operations in the country's history.
When Fluor took over, the site had suffered widespread contamination, primarily through soil and groundwater pathways. With extensive news coverage prompting attention from both regulators and the public, the company was operating in a contentious social and political environment.
Given the stakes, the cleanup project could have easily succumbed to turf battles and warring priorities between the DOE and Fluor. But they showed a dogged willingness to work together and embrace enormous change.
There was an overwhelming sense of camaraderie, says Con Murphy, who served as president and site manager at the Fluor Fernald closure project. “It's unusual in a large environmental project for everybody to be happy, but this was unique in that everybody was in the same boat rowing in the right direction,” he says.
In 2006, Fluor closed the project 12 years earlier and $7.8 billion below initial estimates.
“It was a tremendous collective effort,” says Johnny Reising, site director, Fernald closure project, DOE, Fernald, Ohio. “I can't talk enough about the teamwork of the contractor, regulators and stakeholders. It's only by talking and educating one another that we could have this success.”
And a success it was, with the Fluor Fernald cleanup securing PMI's 2007 Project of the Year award.
A BIG MESS
The scope of the Fernald project was massive—and downright dangerous. The site contained:
■ Two concrete silos with 8,900 cubic yards of radium-bearing sludge
■ One concrete silo holding 5,100 cubic yards of cold metal oxides
■ Six waste pits containing more than 1 million tons of low-level radioactive waste
■ 6 million cubic feet of containerized low-level waste
■ 174,912 gallons of low-level liquid mixed waste
■ 31 million pounds of nuclear product
■ 224 process-related and administrative structures
■ 400 acres of contaminated soil
■ A 225-acre plume of contamination in an underground aquifer.
During its production years, Fernald was closed off to both the public and regulators. Not surprisingly, those 37 years of secrecy resulted in an angry and suspicious attitude from the surrounding community and the press.
“As the news started to break out after the Cold War about what had been done there and how much the environment had been damaged, people discovered that it was 10 times worse than they had thought,” says Rex Norton, director of contracts and acquisitions for the Fluor Fernald project. “As a result, there was a hostile public forum and zero trust.”
Team members had to find a way to calm an unfriendly community, while at the same time convincing employees to close a plant, a move that would essentially put them out of a job.
And they had to do it all with the somewhat uncertain support of government funding.
“In 1989 they expected this to be a 30-year, $12 billion cleanup,” Mr. Norton says. “When I came here in 1992, I thought there was no way we'll be able to clean this up.”
But they did indeed clean it up, and innovative project management played a crucial role.
Fluor's first contract for the project was a standard cost-plus-award arrangement, with the DOE acting as overseer. “We set the milestones and Fluor met them, but it took the incentive for innovation away from Fluor,” Mr. Reising says.
In 1996, Fluor developed the first closure plan that proposed an accelerated cleanup and allowed the company to aggressively manage the project.
The final condition of the site had already been defined through the U.S. Environmental Protection Agency (EPA) records of decision, which laid out acceptable levels of cleanliness for every contaminant. “Because we knew what the end state was, we were able to write a pretty tight contract,” Mr. Reising says.
So in 2000, the DOE modified the contract and awarded it to Fluor on a cost-plus-incentive fee basis.
“This contract put the majority of the risk on the contractor. From a DOE administrative standpoint, it was a breath of fresh air,” Mr. Reising says.
“The 2000 contract was significant in that it said, ‘Contractor, you clean up the site as defined by the EPA's records of decisions and in a safe manner, and DOE will pay you X amount of money if done by certain dates,” Mr. Norton says. “The sooner and cheaper you get it done, the more profit you'll get—and the inverse was true as well.”
With that incentive, Fluor developed a number of strategies to make money stretch further, including agreeing to defer a significant portion of its provisional fee until contract completion. That move created a pool of funds that could then be used to accelerate cleanup activities. The company also implemented an austerity program designed to approve only essential costs. “The bar was raised as far as expectations,” Mr. Norton says.
■ The U.S. Department of Energy (DOE) awards Fluor Corp. the first environmental remediation contract of the Fernald Feed Materials Production Center outside of Cincinnati, Ohio, USA.
■ Aware of public hostility toward the project, Fluor launches a “public participation strategy” to engage local stakeholders.
■ A safety program is initiated.
■ DOE awards Fluor a reworked contract aimed at closing the site in 2010.
■ Fluor accelerates the project's target completion date to December 2006.
■ The last of the contaminated materials to move offsite are shipped out.
■ The on-site disposal facility is completed.
■ The site is certified as meeting regulatory mandated cleanup levels.
■ A public ceremony is held to introduce the Fernald Preserve, a 1,050-acre undeveloped park.
BETTER SAFE THAN SORRY
Even under tight deadlines and a strict budget, Fluor Corp. and the U.S. Department of Energy (DOE) took safety seriously at the Fluor Fernald site.
“It literally got down to counting how many Band-Aids we handed out,” says Rex Norton, Fluor.
The stakes were high. The site was a mess—and a dangerous one at that.
“We have high standards for safety performance, and the DOE has a very strong safety culture and high expectations of contractor performance,” says Con Murphy, Fluor.
The Dallas, Texas, USA-based company launched an integrated site-wide program to instill a safety culture across the project.
The first tenet of the program was to shift workers' perceptions that safety was a management issue and instead have them take responsibility for themselves.
The company also assigned employees to a safety work group, and empowered them to stop a task if necessary to address safety concerns. Each group included a safety advocate to ensure issues raised by the participants were addressed, as well as to alert leadership to potential problems. Through ongoing education and communication about workforce accidents, Fluor sought to mitigate repeat incidents.
The initiative paid off. The project not only beat all expectations for time and budget—it did it with a stellar safety record.
“You don't have a successful project unless you have an excellent safety record,” says Johnny Reising of the DOE. “Fluor came in and did a lot of things to change safety, and it was a prime factor as to why we did so well.”
THE LEAD ROLE
The new contract necessitated a rather drastic cultural change for both the client and contractor. DOE project managers who were accustomed to hands-on direction had to learn to let Fluor take the lead. “It was difficult for some of the [DOE] project managers to get away from the ability to more or less direct work,” Mr. Reising says. “We had to have training sessions that helped us use the contract the best way we could. We had to commit to staying out of the way and giving [Fluor] the flexibility to innovate and succeed.”
At the same time, the Fluor team had to make some changes as well. “They could no longer say, ‘We'll work toward this mandated milestone—for example, removing 1,000 barrels of waste this month,” he says. “There was a lot more accountability and responsibility and risk on them.”
Mr. Reising credits Fluor with rising to the challenge. By creating its own metrics and value systems that measured progress and tracked spending, the company helped keep the project on schedule. “Fluor embraced the opportunity to do its own thing,” he says.
ONE SINGLE SOLUTION
Instead of breaking Fernald into a number of smaller, separate projects, Fluor built an integrated site-wide plan with more than 17,000 activities.
“It was very complex, with pits, silos, contaminated soil and an on-site disposal facility,” Mr. Reising says. “I think one of the key things that Fluor did was to look at the site as a single project with many activities in it.”
Doing so helped Fluor find efficiencies and build a timeline based on related activities. For example, the proposed demolition of a building would dictate when waste needed to be removed and repackaged. The team could look forward and come up with workarounds that took into consideration the repercussions on ancillary activities.
“Project integration was the key, because each project relied on the others,” Mr. Murphy says.
Taking the single project approach meant the company could have work on deck if another activity was stalled or if additional funding surfaced. “Fluor always had another project ready to go—if they got knocked down one way, they would get right back up,” Mr. Reising says.
The single project baseline also allowed Fluor to develop and use sytems that could be implemented across the entire effort in an integrated fashion. The so-called Fernald Toolbox included project controls, earned value management, quantity management, integrated management, quality management and financials.
And then there was the war room, where senior management met biweekly. The onsite location contained the latest cost and schedule information on the walls so anybody, including the client, could walk through and see the data. “There were very detailed looks down to each project level to ensure that resources were being properly allocated to meet the ultimate goal of the site cleanup,” Mr. Norton says.
The room helped Fluor prioritize resources and gauge performance across a number of sectors. “It helped measure the value of pieces of work and roll that up to the integrated work schedule,” he says. “From a project management perspective, the war room ratcheted up the level of sophistication of site management.”
That level of detail allowed Fluor to squeeze an amazing amount of work from the funding provided. “We generally planned for 10 percent more work than we had budgeted for and tried to figure out how to get that money,” Mr. Norton says. “We ended up doing essentially what was planned to cost $334 million with $324 million in any given year.”
Given the project environment, Fluor knew it had to reach out to stakeholders. Citizens didn't trust management and demanded a voice in cleanup decisions.
The company held public meetings and established a citizen's advisory board aimed at giving local stakeholders a voice in the cleanup process. Public leaders were included in reviews and helped define the cleanup levels for the EPA's records of decision. “They had access to the top Fluor guy and the top DOE guy,” Mr. Norton says. “They could pick up the phone and tell us what they thought.”
The team also launched an envoy program, sending out the team to spread the word on project progress. “People who worked the site—anybody from field workers to upper management—would meet with community people and keep them informed on the cleanup,” Mr. Reising says. “It built excellent camaraderie.”
For example, Mr. Reising served as the envoy for the Fernald Residents for Environmental Safety and Health, a key grassroots group. “I met with them every week [to keep] them updated,” he says. “The whole spirit of cooperation and openness was key to the success of the project.”
RETRAINING THE TROOPS
When Fluor started the Fernald cleanup project, it faced a local workforce skilled in running a uranium processing site—but novices at environmental remediation. Plus, more than 2,000 people were being asked to work on a project that would essentially put them out of a job. It didn't seem much of a pressing problem at first. “In 1996, it was pretty radical to think that the job could be done in 10 years,” Mr. Norton says. “Most people didn't believe it was going to happen.”
As Fluor initiated the accelerated cleanup plan, that perception began to change.
The company started working with a number of unions to make sure their members would have the skills necessary to land a job once the site closed. It wasn't a simple task, given that many unions were more interested in retaining jobs than speeding up the unemployment process.
“What is really interesting to me is the evolution of the support we got from the unions there,” says Paul Mohr, director of business operations at Fernald, and now a consultant for Fluor. “I had a union leader who worked there for 53 years. He wanted nothing to do with us. But by the end, he was one of our greatest supporters. How we got there was relationship-building and constant communication.”
Fluor started with an extensive education program, setting up programs with neighboring universities and vocational schools. The company picked up the bulk of the tab, which came to about $20 million, Mr. Murphy says.
“We put a whole bunch of people through bachelor's, master's and associate degree programs,” Mr. Norton says. “There were even some Ph.Ds.”
As the unions saw the value of education, they threw their support behind the programs. “We had some of the union representatives teaching commercial truck driving—they'd stay after work and teach in the far corner of a parking lot,” Mr. Mohr says. “Those programs were very effective and helped people leave with better skills.”
Fluor also found inventive ways to place workers in new positions as phases of the project ended. For example, once the company eliminated all the waste drums, they might reassign those workers to bulldozers, educating them on the skills necessary for the new position.
Not every worker could be reassigned, and Fluor had to build a workforce-reduction program. Again, the team succeeded by establishing a consistent policy and communicating it to all involved parties. The company also tried to give as much advance warning as possible. “The severance program was established from the beginning, and we tried to give anticipated release dates as far out as we possibly could,” Mr. Norton says. “It took away the fear of the unknown, and helped people to build plans of action.”
The assistance fostered goodwill among a once-hostile group. “Our three unions were so cooperative at the end because we worked with them—not just to get the job done, but to get workers ready to leave,” Mr. Mohr says.
Fluor worked toward a target date of December 2006, knowing it would earn an $8.1 million incentive for every month it came in early. And the clock was ticking.
“As the CEO used to say, it was $256,000 a day that the company was losing,” Mr. Norton says. “He took it down to the minute, which was important.”
The result: The site was officially declared closed in October of 2006.
But the team wasn't quite done yet. The following year, the 1,050-acre Fernald nature reserve was opened to the public—marking the site's formal transition from weapons to wetlands. PM
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