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Capital Projects & Portfolio Management

2014 Transmission & Distribution Benchmarking Insights Conference. Capital Projects & Portfolio Management. June 24-27, 2014 Nashville, TN. Agenda. Portfolio Management Project Management Outcomes Practices. DILBERT. The Capital project process.

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Capital Projects & Portfolio Management

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  1. 2014 Transmission & Distribution Benchmarking Insights Conference Capital Projects & Portfolio Management June 24-27, 2014 Nashville, TN

  2. Agenda • Portfolio Management • Project Management • Outcomes • Practices DILBERT

  3. The Capital project process Role of asset management is described in the individual practice sections • The capital project and portfolio management process is at the heart of a how a utility conducts business. • Phase 1: work plan development creates a feasible schedule for the year • Phase 2: executes the work plan through project and portfolio management

  4. Portfolio Management

  5. 2013 Survey results T&D Projected Capital Spending Most companies are forecasting level capital spending Note: compare to current year data Source: Questions CP125, DF70, TF65, Page 36

  6. 2014 Results CAPITALPROJECTSPENDINGPERASSETNEXT3YEARS-T&D MeanQuartile Mean 26% Comments #35 Transmission Only. Very large scale increase in spending Calculation used ( CP125.1 + CP125.2 + CP125.3 ) / ( DF70.1 + DF70.2 + TF65.1 + TF65.2 ) * 100 , ( CP125.4 + CP125.5 + CP125.6 ) / ( DF70.1 + DF70.2 + TF65.1 + TF65.2 ) * 100 , ( CP125.7 + CP125.8 + CP125.9 ) / ( DF70.1 + DF70.2 + TF65.1 + TF65.2 ) * 100 CP p36

  7. 2014 Results CAPITALPROJECTSPENDINGPERASSETNEXT3YEARS-DISTRIBUTION MeanQuartile Mean 15% Comments Calculation used ( CP125.3 ) / ( DF70.1 ) * 100 , ( CP125.6 ) / ( DF70.1 ) * 100 , ( CP125.9 ) / ( DF70.1 ) * 100 CP p37

  8. 2014 Results CAPITALPROJECTSPENDINGPERASSETNEXT3YEARS-SUBSTATION MeanQuartile Mean 22% Comments #35 Transmission sub only; very large increase projected. Calculation used ( CP125.2 ) / ( DF70.2 + TF65.2 ) * 100 , ( CP125.5 ) / ( DF70.2 + TF65.2 ) * 100 , ( CP125.8 ) / ( DF70.2 + TF65.2 ) * 100 CP p39

  9. 2014 Results CAPITALPROJECTSPENDINGPERASSETNEXT3YEARS-TRANSMISSION MeanQuartile Mean 40% Comments #35 large scale transmission capital spending Calculation used ( CP125.1 ) / ( TF65.1 ) * 100 , ( CP125.4 ) / ( TF65.1 ) * 100 , ( CP125.7 ) / ( TF65.1 ) * 100 CP p40

  10. PERCENTOFTHECOMPLETEDPROJECTSTHATAREWALKED-INDURINGTHEYEAR Comments “Walked in” is terminology from one of our clients that refers to projects that are not in the original annual budget (usually approved prior to January 1 or sooner), but are added during the year. Usually these rush projects do not always get the same degree of planning and vetting. Calculationused CP46.4 CP p11

  11. Key Success Factors:Portfolio Management

  12. PM ROLE

  13. 2013 Results Most utilities have PM’S for all unique projects All projects (5) 37 Distribution Projects - 100% 22 Distribution: Major overhead, URD and Street Light have individual Division managers. Substation: All projects have a project coordinator 35 All capital funded projects have PMs. Serve New > 500KVA, Serve Existing such as large road widening & system improvement type projects. 26 All projects are assigned a PM. 17 PMs are assigned to all capital construction projects regardless of size. Less complex capital projects may be assigned to engineers, designers or planners to fill the role of PM Complex projects (3) 38 Complex, cross -functional and/or highly political projects and programs that usually spend >$5M. 32 230 kV and 500kV and UG Transmission Projects; these are outside consultant PMs. 31 345kV transmission line builds Projects >$1M • 34 Projects > $1,000,000 have PMP PM's, Projects <$100,000 do not require PM 's Projects > $500k 39 Projects that have a budget greater than $500,000 and have an engineering component have Engineering PMs. Line construction projects driven by private new business, public agencies, system integrity and system reinforcement have RMT PMs. Projects >$100k 27 Over $100,000 Source: Question, Page 12

  14. 2014 Survey SIZE/TYPESOFPROJECTSHAVEPROJECTMANAGERS Comments Calculationused CP55.1

  15. 2014 Results FULL-TIMEPROJECTMANAGERS:T,D,&SPER$100MCAPITALADDITIONS Comments #32 reported a very high number of project managers Calculation used ( CP60.1 ) / ( (Total T&D Capital FERC) / 100000000 ) , ( CP60.2 ) / ( (Total T&D Capital FERC) / 100000000 ) , ( CP60.3 ) / ( (Total T&D Capital FERC) / 100000000 ) , ( CP60.4 ) / ( (Total T&D Capital FERC) / 100000000 ) CP p13

  16. 2013 Results Project Managers per $100M Capital Spent • One measure of workload is the capital budget managed by PMs. • A simple ratio of capital additions to PMs is only a proxy, since not all of the projects have PMs. Another complication is that capital additions is a backward looking measure that only occurs once the project is in service. Median 2013DRC = 3.5 FTEs/$100M 2012 = 5 FTEs/$100M 2011 = 3 FTEs/$100M Note: the inverse is Budget Managed per PM Source: Question CP60, page 13

  17. Key Success Factors:Project Management

  18. Key Success Factors:Project Managers

  19. outcomes

  20. CAPITALPROJECTS:AVERAGE"ACTUALASA%OFESTIMATE" Comments Calculationused CP46.1 CP p8

  21. PERCENTOFTHEPROJECTSTHATARETYPICALLYCOMPLETEDONTIME Comments Calculationused CP46.2 CP p9

  22. PROJECTSTHATARETYPICALLYCOMPLETEDONORUNDERBUDGET Comments Calculationused CP46.3 CP p10

  23. Practices and initiatives

  24. Issues found: capital projects

  25. Thank you for your Input and Participation! Your Presenters Ken Buckstaff Ken.Buckstaff@1QConsulting.com310-922-0783 Dave Canon Dave.Canon@1qconsulting.com 817-980-7909 Dave Carter Dave.Carter@1qconsulting.com 414-881-8641 Debi McLain Debi.McLain@1QConsulting.com760-272-7277 Tim. SzybalskiTim.Szybalski@1QConsulting.com 301-535-0590 About 1QC First Quartile Consulting is a utility-focused consultancy providing a full range of consulting services including continuous process improvement, change management, benchmarking and more. You can count on a proven process that assesses and optimizes your resources, processes, leadership management and technology to align your business needs with your customer’s needs. Visit us at www.1stquartileconsulting.com | Follow our updates on LinkedIn Satellite Offices Corporate Offices California 400 Continental Blvd. Suite 600El Segundo, CA 90245(310) 426-2790 Maryland 3 Bethesda Metro Center Suite 700Bethesda, MD 20814(301) 961-1505 New York | Texas | Washington | Wisconsin

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