ASSET LIFECYCLE MANAGEMENT CASE STUDY
CAPITAL DELIVERY

THE CLIENT

One of the largest investor-owned utilities in the US — serving more than 20 million customers throughout the northeast (the utility). The utility has a multi-state jurisdiction and service area which includes electric transmission and distribution, and gas distribution. Assets include approximately 9,000 miles of electricity transmission and 35,560 miles of gas distribution.

THE CHALLENGE

The utility underwent a comprehensive management audit mandated by a state public service commission. Significant fines had been imposed for missing required in-service dates and the continued need for re-sanctioning (funding) projects that had gone overbudget due to estimating inaccuracies. Key audit findings related to the Capital Delivery and Project Management process included:

  • Annual work plans, especially for mandated projects were not being delivered so that materials can be ordered, and resource schedules prepared in a timely manner. Adequate measures were not in place to address long-lead time materials.
  • Projects were not managed in accordance with Project Management Professional (PMP®) best practices.
  • No demonstration of active monitoring and reviewing of project data other than financials.
  • No common Work Breakdown Structure (WBS) to organize and manage projects.
  • Quality assurance was not a formal element of the project management process.
  • No method to employ a consistent and accurate process to develop engineering and construction project estimates.
  • Frequent re-sanctioning (funding) as projects exceed budget, schedule and/or scope.
  • Inability to determine the actual utilization and productivity of in-house or contractor resources.
  • Capital work orders were not being closed to plant-in-service within 90 days of equipment being energized.

Note: The implementation plan addressed approximately 130 interrogatories from the state public service commission.

Given the multi-billion size of the annual project portfolio and the complexity of an organization with over 22,000 employees with different operating models spread across multiple states, our engagement posed a significant challenge for our engagement team and the client. We worked with Regulatory Affairs and Internal Audit groups to establish periodic updates that allowed the organization to communicate the status of our deliverables to the regulators and address the key areas of concern.

HOW WE HELPED

The design and implementation of a Project Management Center of Excellence (PMCOE). The engagement was termed the “End to End (E2E) Project Management Process”. The engagement was executed over a fourteen (14) month period, commencing with the electric transmission, then electric distribution, and finally gas distribution.

Our first action was to align the leadership team around a common set of guiding principles specifically applicable the utilities strategy for capital delivery, project, and program management. An executive committee was established to govern the engagement led by the Chief Operating Officer (COO).

The E2E project was split into three separate work streams:

  • End to End (E2E) Project Management Process – Playbook Design & Deployment (stage gate process - initiation through close-out)
  • Primavera P6 Scheduling Tool Implementation
  • The establishment of a Capital Delivery organization

We established a joint consultant / company led governance structure and assigned “Project Champions” that were responsible for leading twenty-two (22) action teams that were charted across the three work streams. Many of the action teams address specific findings from the management audit.

Our team was tasked to provide general and role-specific education on portfolio, program and project management fundamentals based on PMI® best practices. We established support services to govern change management, communications, and regulatory response.

The End to End (E2E) Project Management Process and supporting changes were integrated into a comprehensive training program that was delivered to over 2000 employees.

THE RESULTS

The End to End (E2E) Project Management Process fundamentally changed the utility’s organizational structure, the processes employed across the company to deliver projects, and the financial performance achieved through more effective project management. The implementation plan and actions taken successfully addressed the state public service commission’s concerns about project management effectiveness.

  • Improved estimating accuracy 30% in first year, 33% in year two.
  • Key enabler to a $200M cost reduction effort.
  • Elimination of all regulatory fines from poor Project Management performance – Approx. $11M in the previous year.
  • Earned value metrics being monitored and managed for all projects.
  • Quality Management built into the process including a formal change review process and required field constructability reviews.
  • Trained approximately 2000 employees on the new E2E Project Management Process.
  • All projects resource loaded and entered in the P6 system and being tracked through the new Project Management organization.

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