Wasting Energy

THE DAILY FED

Wasting Energy

Since 1980, most of the department's 80 projects designated as major-scale acquisitions, each costing from $100 million to billions of dollars, have run behind schedule and have incurred costs higher than originally projected. Thirty-one projects were terminated before they were completed. While 15 projects have been completed, three of them have not yet been used for their original purposes. Many of the 34 projects that are ongoing have experienced "schedule slippages."

The GAO report cited four primary reasons why DOE has had so many problems with large-scale projects:

• DOE's missions have continually changed over the last 20 years, from developing alternative sources of energy and developing commercial nuclear power in the late 1970s to building and rebuilding the nuclear weapons complex in the 1980s to cleaning up contamination and promoting scientific competitiveness in the 1990s. Projects have often outlived their usefulness and relevance to the agency's goals.
• Incremental funding of projects has increased costs because Congress has often underfunded Energy's projects, leading to construction delays and putting projects behind schedule.
• Performance-based incentives are rarely used for DOE's employees and contractors. Managers often view themselves as advocates for their projects, and tend not to reveal problems that could lead to projects being terminated.
• The department has long faced a shortage of technical expertise. Many project managers simply do not have the experience necessary to run large scale, high-risk projects.