MREFC Process

1. MREFC Process Mark Coles Deputy Director, Large Facility Projects Office of Budget, Finance, and Award Management NSF June 12, 2006

2. Topics • MREFC process for preconstruction planning and budgeting, prioritization • Timeline for planning • Budget status and plans • Budget issues surrounding the MREFC account

3. New NSF process for pre-construction planning • “Guidelines for Planning and Managing the Major Research Equipment and Facilities Construction (MREFC) Account” • Outlines a formal process for planning and developing large facilities that coordinates development of scope, budget, and NSF plans for oversight • On NSF external web site • Attempt to implement the best features of processes used by other agencies and still preserve NSF’s ability to respond flexibly to community needs and initiatives

4. Motivations for MREFC process • Lack of a formal process has resulted in NSB approval of some projects whose scope was not well defined, nor fully budgeted • Resulted in descoping, cancellation, and deferral of construction start • Brinkman Report: “Setting Priorities for Large Research Facility Projects Supported by the NSF” • Addressed these issues • Cited need for a well-defined, rigorous pre-construction planning process

5. DOE Translation: CD 0 CD 1 CD 2 CD 3 CD 4 Approve construction start Approve operations start Approve alternate selection and cost range Approve mission need Approve performance baseline NSF pre-construction planning process Conceptual Design Preliminary Design Final Design Construction Operations R&RA $ R&RA $ R&RA $ MREFC $ R&RA $

6. Conceptual Design Stage Readiness Stage Board Approved Stage Construction Concept development – Expend approximately 1/3 of total pre-construction planning budget Develop construction budget based on conceptual design Develop budget requirements for advanced planning Estimate ops $ Preliminary design Expend approx 1/3 of total pre-construction planning budget Construction estimate based on prelim design Update ops $ estimate Final design over ~ 2 years Expend approx 1/3 of total pre-construction planning budget Construction-ready budget & contingency estimates Expenditure of budget and contingency per baseline Refine ops budget Budget evolution Funded by R&RA or EHR $ MREFC $ Conceptual design Formulation of science questions Requirements definition, prioritization, and review Identify critical enabling technologies and high risk items Development of conceptual design Top down parametric cost and contingency estimates Formulate initial risk assessment Initial proposal submission to NSF Initial draft of Project Execution Plan Preliminary Design Develop site-specific preliminary design, environmental impacts Develop enabling technology Bottoms-up cost and contingency estimates, updated risk analysis Develop preliminary operations cost estimate Develop Project Management Control System Update of Project Execution Plan Final Design Development of final construction-ready design and Project Execution Plan Industrialize key technologies Refine bottoms-up cost and contingency estimates Finalize Risk Assessment and Mitigation, and Management Plan Complete recruitment of key staff Construction per baseline Project evolution Proponents development strategy defined in Project Development Plan Described by Project Execution Plan NSF oversight defined in Internal Management Plan, updated by development phase NSF Director approves Internal Management Plan Formulate/approve Project Development Plan & budget; include in NSF Facilities Plan Preliminary design review and integrated baseline review Evaluate ops $ projections Evaluate forward design costs and schedules Forecast interagency and international decision milestones NSF approves submission to NSB Merit review, apply 1st and 2nd ranking criteria MREFC Panel briefings Forward estimates of Preliminary Design costs and schedules Establishment of interim review schedules and competition milestones Forecast international and interagency participation and constraints Initial consideration of NSF risks and opportunities Conceptual design review Apply 3rd ranking criteria NSB prioritization OMB/Congress budget negotiations based on Prelim design budget Semi-annual reassessment of baseline and projected ops budget for projects not started construction Finalization of interagency and international requirements Final design review, fix baseline Congress appropriates MREFC funds & NSB approves obligation Periodic external review during construction Review of project reporting Site visit and assessment Oversight evolution MREFC Panel recommends and NSF Director approves advance to Readiness NSF approves submission to NSB Congress appropriates funds

7. Conceptual Design • Definition of science objectives and quantitative science requirements • Notional proposal that NSF can react to and encourage or discourage • Conceptual design report • System definitions • Site independent design • Top-down budget and contingency estimates • Forecasts for international partnership • Operations budget estimates • Conceptual design review by NSF • NSB approval to enter “Readiness Stage” (preliminary design)

8. Preliminary Design - aka “Readiness Stage” • Project baseline defined - detailed design and planning activities that form the basis for a request to Congress for construction funds • All significant cost drivers and major risk factors understood • Site specific design • NEPA/NHPA impacts and mitigations budgeted • Partnership intentions firmly stated • How NSF will manage the project is described in an Internal Management Plan, approved by NSF Director • Preliminary Design and Final Design activities defined by proponents in Project Development Plan – budget, schedule, deliverables • Projects failing to progress against objectives of PDP fall out of Readiness Stage • Projects emerge following successful Preliminary Design Review by NSF

9. Final Design – aka Board Approved Stage – aka “the Queue” MREFC panel proposes a prioritization to NSF Director Director consults with OMB, and brings a project forward for NSB consideration only if construction appropriation is likely within period budget estimates are valid Director recommends project to NSB with prioritization NSB reviews NSF external review results, PEP and IMP NSB annually reprioritizes approved projects in NSF budget request to Congress Project proceeds with final pre-construction planning activities during period prior to Congressional appropriation and construction start

10. Construction Stage Construction proceeds according to PEP Periodic external review by NSF Construction scope includes commissioning activities Considerable latitude in defining scope of construction activity during pre-construction, but must adhere to that definition during construction period

11. Example timeline Calendar year Fall 2006 PDR Winter NSF assessment March or May 2007 NSB approval Summer submission of FY09 budget Fall OMB negotiations Feb 2008 submission to Congress Spring 2008 appropriations hearings Oct ’08 (or later) FY09 appropriation NSF approval to obligate MREFC funds Construction begins in FY09 2006 2007 2008 2008 or 09

12. Readiness Stage – Preliminary Design • Entrance and exit from Readiness Stage controlled by MREFC Panel • NSF Deputy Director (chair) + AD’s and Office Heads • Ensures uniformly high standards are applied • Reviews competition for NSF resources and recommends to NSF Director a relative prioritization for projects entering and exiting • NSF Director • reviews/approves MREFC Panel recommendations • Approves Internal Management Plan (how NSF will provide oversight, how NSF will fund this activity) • Recommends projects to NSB for construction funding, with priority • NSB • Annually reprioritizes the queue of projects awaiting construction funding

13. Projects in construction • Atacama Large Millimeter Array MPS • EarthScope GEO • IceCube OPP-MPS • Scientific Ocean Drilling Vessel GEO • South Pole Station Modification OPP

14. Projects approved by NSB for construction but not appropriated by Congress The “Queue” • NEON (BIO) - FY07 start request • ARRV (GEO) - FY07 “ “ • OOI (GEO) - FY07 “ “ • Advanced LIGO (MPS) - FY08 “ “

15. Projects in Readiness Stage • Advanced Technology Solar Telescope (MPS) • possible FY09 start • PDR planned for October 2006

17. New start profiles are NSF’s best understanding at this point, but could change

18. Possible scenario for ATST – pre-PDR estimates

19. Example projects that may progress to Readiness Stage: • GENI CISE • CLEANER ENG • EarthScope InSAR GEO • GEOS GEO • Petascale Cyber Infrastructure for Geoscience GEO • ERL Phase II/XFEL MPS • DUSEL MPS • EVLA Phase II MPS • LSST MPS • Square Kilometer Array MPS • Thirty Meter Telescope MPS Considerations in starting a new project • Some attempt for balance across NSF in range of disciplines supported by MREFC • Competition from Computer Science, Engineering, Earth Science, as well as Physics and Astronomy for future projects.

20. Other considerations • Desire to close out queue in FY07 budget request – no long-term queue residents • Likelihood of near-term funding will be a consideration in proposing future projects for construction funding • “Appetite control” • Enforced by high standards and a rigorous process of pre-construction planning • Competition with base program activities

21. Pre-construction funding • Why not an agency-wide account for advanced preconstruction planning and development? • Pre and post construction annual outlays are about equal. NSF capability to support pre-construction and post-construction are linked. • Preconstruction planning ranges from 5-25% of total construction cost. • Annual operating costs + science utilization are 10-25% of total construction cost. • Avoid “politicizing” the facility selection process • Preserve objectivity of selection and prioritization process, based on expert assessment and peer review. • Preserve “off-ramps” for projects in advanced planning that should not be built. Size of base program is the limiting factor in new facility construction

22. Backup materials