TVA reaps big savings by letting powerplant work to outside firms

This abstract is the entire text of the article. In a report to Congress, the Tennessee Valley Authority says its shift to full reliance on outside contractors for powerplant construction and modification work saved a net $54M in the first half of 1992. TVA says that total savings from lower overhead and increased efficiency were $75M, but that was partially offset by $21M in one-time mobilization/de-mobilization charges. TVA has a budget of $1.7B this year for new plant and equipment. That will rise to over $2B in the next two years. About 70% of the work involves nuclear plant work. Several members of Congress from the area criticized TVA in mid-1991 when it cut more than 5,000 hourly construction jobs and several hundred salaried construction jobs. The agency said the cuts let it concentrate on power production and promised to make semi-annual reports to Congress detailing the results of contracting out. In the agency's first report, TVA Chairman John Waters says that it saved $19.2M in personnel costs and staff overhead over the six-month period ending June 30, 1992. At the same time, $21.8M was saved through increased construction efficiency and productivity. Waters also says that the switch caused minimal impact on the local work force. Contractors employed 6,166 craft workers on their TVA projects at mid-year, compared with the 5,200 dropped by the agency in mid-1991