The Tool Desk
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Small modular reactor (SMR) construction risks include first-of-a-kind design uncertainty, licensing and site delays, cost growth, supply-chain gaps, contractor oversight, workforce constraints, and commissioning problems. Developers can reduce exposure with a stable design, early regulatory and site work, qualified suppliers, realistic cost and schedule reserves, capable owner oversight, and disciplined project controls—but none of these measures eliminates risk or guarantees that a factory-built approach will save time or money.
The central distinction is between a first-of-a-kind (FOAK) project and a repeat build. A design’s potential for standardized production and learning-curve savings matters only if the project can actually repeat the design, use capable suppliers, and manage the interfaces between factory and site work. Evidence and figures below are tied to the scope and dates of the cited sources; they are not universal forecasts for every reactor or jurisdiction.
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Why is an SMR build still a major construction project?
“Small” describes a reactor’s relative size or output; it does not make the project simple. An SMR still depends on a coordinated sequence of design, licensing, procurement, fabrication, civil construction, installation, testing, and approval for operation. A delay or change in one area can affect others: revised design information may alter a supplier’s work, a permit may constrain site activity, or a late component may disrupt installation and commissioning.
SMRs are often associated with factory production and modular assembly, but those are conditional advantages, not automatic properties of every project. The U.S. Department of Energy’s 2025 advanced-nuclear update says the value proposition depends on moving substantial project spending into factory settings. It also notes that dedicated modular assembly capacity is design-specific and that design selection matters for standardization. If a project retains substantial site-built work or lacks a capable assembly pathway, it may carry conventional civil-works exposure without realizing the anticipated factory benefits.
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That qualification matters because nuclear construction has long lead times and many interacting organizations. The International Atomic Energy Agency’s guidance on project management and financing of nuclear power plants covers general nuclear new-build risk rather than SMRs alone. Its categories are useful for analyzing SMR projects, but project-specific risk depends on design, site, jurisdiction, financing, contract structure, and supply chain.
How does first-of-a-kind status change the risk?
A first project using a design, delivery model, or regulatory pathway has less demonstrated evidence to rely on than a repeat build. The IAEA states that “the risks associated with first-of-a-kind (FOAK) units can be significantly greater than for follow-on units.” Design changes or unresolved assumptions can propagate through engineering, licensing, procurement, manufacturing, and construction.
Follow-on projects may benefit from lessons and repeatable work, but those benefits should be treated as potential until demonstrated for the relevant design and supply chain. The OECD Nuclear Energy Agency’s 2024 second edition of The NEA Small Modular Reactor Dashboard found no indication of serial Nth-of-a-kind (NOAK) construction among the designs it assessed at that time. That is a dated snapshot of the design and deployment landscape—not a claim about what every project will achieve in the future.
How developers can reduce FOAK exposure: stabilize the design before major procurement and construction; use formal configuration control so changes are assessed across engineering, licensing, supplier work, and site installation; use proven components where they fit the design and safety case; and make contingency assumptions explicit. These are project-control responses to uncertainty, not guarantees of lower cost. A project should also distinguish a design that is conceptually mature from one with relevant licensing, manufacturing, and construction experience.
How can licensing and permitting delay construction?
A project cannot treat regulatory decisions as paperwork to finish after construction planning. Licensing and permitting decisions can determine what design evidence is needed, when work may proceed, and whether the project can move from construction into operation. Unclear or untested regulatory pathways can make review timing and outcomes uncertain for both developers and utilities.
The DOE’s Business Case for Small Modular Reactors (2015) describes licensing-process timing and outcome uncertainty as an economic concern. It is an older analysis, so it supports the mechanism—not any current estimate of review durations. The project’s actual pathway and timeline depend on the applicable regulator, design, and jurisdiction.
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Mitigation: identify required regulatory decisions and permits early; map the evidence and design assumptions behind each decision onto the integrated project schedule; engage the relevant regulator through the appropriate channels; and preserve schedule allowance for reviews, permits, and legal processes. Design changes need to be checked against the safety case and regulatory submissions rather than handled solely as construction-field decisions. No source cited here establishes one review duration or schedule reserve that fits all SMR projects.
What site conditions can create construction risk?
Site selection shapes the technical, environmental, licensing, construction, and public-acceptance work that follows. Seismic conditions, cooling-water access, proximity to population centers, sensitive environments, access roads, and local infrastructure can all influence requirements and delivery. An otherwise mature design does not remove site-specific work: the project must establish that its chosen location and supporting infrastructure fit the design and applicable approvals.
Mitigation: complete site characterization and infrastructure planning early enough to inform design and licensing; include site-specific constraints in cost and schedule baselines; and track roads, utilities, water arrangements, and other external works as project dependencies. A site issue discovered late can force redesign, additional approvals, or construction resequencing. The specific studies, permits, and acceptance criteria are jurisdiction- and design-dependent, so they cannot be reduced to a universal checklist of technical thresholds.
Why can SMR costs rise even when the plant is smaller?
Smaller scale does not by itself mean a lower cost per unit of capacity or a lower probability of an overrun. Nuclear projects require complex, long-duration construction and equipment procurement. Estimating uncertainty, changes, delays, and the cost of financing capital already spent can all increase the final bill. A schedule slip can defer operation and revenue while adding carrying or financing costs; the size of that effect depends on the financing and contract structure.
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The DOE’s 2025 advanced-nuclear update gives modeled comparison values, not observed project outcomes or universal forecasts. In its illustration, a modeled $4 billion SMR with a 50% overrun would finish at $6 billion, while a $10 billion large reactor with the same 50% overrun would finish at $15 billion. The example shows a lower absolute dollar increase for the smaller starting project, not a lower chance of an overrun. The report also gives modeled median costs of about $13,000 per kilowatt for small reactors and $8,500 per kilowatt for large reactors, with modeled total reactor cost medians of roughly $4 billion and $12 billion, respectively. Those figures belong to the report’s model comparison; they are not bids or guaranteed prices for a particular project.
Mitigation: build bottom-up cost estimates around the project’s scope and maturity; state escalation and contingency assumptions; align contract incentives and risk allocation with risks the parties can actually manage; and stress-test delayed operation and financing costs. A headline estimate without a transparent scope, schedule basis, and allowance for uncertainty is not enough to judge affordability. The available evidence does not establish a universal contingency percentage or a single best contract type.
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Does modular construction remove schedule risk?
No. Factory production can change where work occurs and create opportunities for repeatability, but it also shifts work and interfaces. Components made away from the site must still be manufactured to the approved configuration, inspected, tested, transported, received, and installed in coordination with site work. A module arriving late, out of specification, or out of sequence can affect dependent activities. Factory work also requires effective oversight even when the owner or regulator is not directly supervising every task.
The NEA’s 2022 survey on regulatory oversight of new nuclear construction discusses oversight challenges as industry adopts factory and modular construction and other new methods. The survey concerns nuclear construction oversight in NEA countries broadly, not an SMR-only failure rate or a prescribed modular workflow.
Mitigation: confirm that manufacturing and assembly capacity is qualified for the selected design; maintain consistent configuration and interface information between factory, transport, and site teams; and coordinate inspection, testing, delivery, receipt, and installation as connected activities. The owner needs a clear view of work performed by external organizations and a process for resolving discrepancies before they affect downstream work. The project should verify what proportion of scope is genuinely planned for factory production rather than relying on the label “modular.”
How should developers manage suppliers and long-lead equipment?
Supply-chain maturity varies by design and technology. The NEA’s 2024 dashboard says water-cooled SMRs can draw on a larger pool of existing qualified suppliers for many components. It also reports that higher supply-chain integration can provide more control over critical activities and may reduce risk for innovative designs with less mature supply chains.
The same dashboard found that 67% of assessed microreactor designs and 50% of assessed fast-spectrum, molten-salt, and gas-cooled designs had not secured at least one binding contract for services and materials. These are design-pipeline metrics as assessed for that edition—not probabilities that an individual project will fail. Technology categories can overlap because a design can have multiple attributes. A public announcement, memorandum, or expression of interest should not be treated as equivalent to a binding procurement commitment.
Mitigation: qualify suppliers and set out how their work will be monitored; identify single-source and long-lead items; distinguish firm contractual commitments from announcements; and coordinate the owner, manufacturers, and construction contractors early. For a new or global supply chain, the owner needs enough technical capability to understand and challenge supplier work, not simply receive status reports. Integration or partnerships may help control critical activities, but the project must still assess the capability and quality systems of its actual suppliers.
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What can go wrong with contractors and workforce planning?
The NEA’s 2022 oversight survey identifies several sources of delay at nuclear construction projects in NEA countries: fabrication and construction errors, problems controlling contracted work, engineering errors such as translation and unit-conversion mistakes, globalized supply chains, and availability of qualified craft workers. It also notes the challenge existing nuclear operators face when they rely on external construction organizations. This is broader nuclear-construction evidence, not a statistical estimate specific to SMRs.
Contracting out work does not contract away the owner’s need to understand whether it is being performed correctly. Fragmented responsibility can make it harder to spot inconsistent documents, unclear interfaces, or problems that cross supplier boundaries. Workforce shortages can also affect multiple phases, from engineering and fabrication to site installation, testing, and commissioning.
Mitigation: retain an informed owner team with clear authority and technical capability; define document, language, unit, quality, and change-control requirements; monitor work at supplier and contractor tiers; and plan skill needs across the full project lifecycle. Oversight should follow the work to where it is performed, whether at the site or at an external factory. The project should also establish who has authority to stop, correct, and accept work when a quality or interface issue appears.
Why does commissioning need to be planned before construction ends?
Mechanical completion is not the same as readiness for commercial operation. System completion, commissioning, start-up, and testing are critical transitions; a missed performance or timing milestone can delay operation, reduce available capacity, or defer revenue. The IAEA includes completion and commissioning among nuclear-project risks.
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Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What does the Carbon Free Power Project teach about governance?
The Carbon Free Power Project (CFPP) provides a specific example of why risk governance and public-award oversight matter. It was planned as a FOAK SMR demonstration and commercial deployment at Idaho National Laboratory. The project received a $1.36 billion U.S. Department of Energy cost-share award in October 2020 and was terminated by mutual agreement in November 2023.
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A 2026 DOE Office of Inspector General audit, DOE-OIG-26-25, found that DOE had not effectively evaluated critical risks before award, structured the award to monitor risks, provided sufficient oversight, or ensured costs were allowable. The audit says project-management failures may have contributed to termination; it does not establish that they were the sole cause. Nor does one project show that every SMR project shares the same failure mode.
The practical lesson is to make risk review, monitoring, cost controls, and clear decision rights part of project governance from the outset. Funding approval is not a substitute for ongoing oversight, and an award structure should make it possible to identify changing risks and act on them. The case is relevant to public-award management, not a universal verdict on the technology.
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Use the same evidence-based questions for each project instead of comparing headline capacity, target dates, or projected costs in isolation. The following framework synthesizes the risk factors in the IAEA guidance, NEA publications, and DOE update; it is not a validated universal scoring formula.
- FOAK or repeat build: What construction experience exists for this design and supply chain? Which claimed repeat-build efficiencies have already been demonstrated?
- Design maturity: Is the design stable enough for major procurement? How are configuration changes assessed across engineering, licensing, fabrication, and site work?
- Factory and modular scope: What work is actually planned for factories? Is the necessary design-specific assembly capability available, and are factory-to-site interfaces defined?
- Supplier readiness: Which critical items have qualified suppliers and binding commitments? What long-lead or single-source components could constrain the schedule?
- Regulatory pathway: What decisions, permits, and evidence are required in the target jurisdiction? Are design assumptions consistent with the planned submissions?
- Site readiness: Have seismic, water, environmental, access, population-proximity, and infrastructure factors been addressed at a level appropriate to the project?
- Owner capability: Can the owner oversee contractors and external manufacturing, control quality, resolve interfaces, and challenge supplier information?
- Commercial resilience: How mature are the cost estimate and schedule? What contingency and schedule reserve are explicit, and how does financing respond to delayed operation?
- Completion evidence: Is there a credible path from construction through system turnover, integrated testing, required approvals, and commercial readiness?
These questions help expose what a project has demonstrated versus what it still assumes. They do not yield a universal ranking: a site, design, regulatory regime, financing arrangement, and contract structure can change the relative importance of each risk.
What is the practical bottom line for developers?
SMR construction risk is manageable only when it is treated as a connected project-delivery problem, not as a technology claim or a promise that modularity will make construction routine. The strongest mitigation strategy is to make assumptions visible and testable: stabilize the design, advance site and regulatory dependencies early, secure capable suppliers, control factory-to-site interfaces, retain informed owner oversight, budget and schedule for uncertainty, and plan commissioning from the start. Repeat-build savings, cost certainty, and schedule advantages should remain hypotheses until the relevant project and supply chain demonstrate them.
Frequently Asked Questions
Are small modular reactors already being built as repeatable factory products?
The NEA’s 2024 second-edition dashboard reported no indication of serial Nth-of-a-kind construction among the designs it assessed. That snapshot does not rule out later progress, but it means readers should distinguish a proposed manufacturing model from an established serial-production record.
Does the NEA figure of 67% mean microreactor projects have a 67% chance of failure?
No. It refers to the share of assessed microreactor designs that had not secured at least one binding contract for services and materials at the dashboard’s assessment point. It is a procurement-readiness indicator, not a project-failure probability.
Why can delays increase a nuclear project’s cost even if no new equipment is added?
Capital already spent may continue to incur carrying or financing charges while the project waits to operate, and delayed operation can defer revenue. The amount depends on the project’s financing and contract arrangements, so there is no single delay-cost figure that applies to all builds.
Is the Carbon Free Power Project audit proof that SMRs cannot be built successfully?
No. The DOE Inspector General audit examined risk evaluation, award structure, oversight, and cost controls for one U.S. project. Its findings support lessons about governance and public-award management, but they do not establish that those failures were the sole reason for termination or predict the outcome of every SMR project.
