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| Electricity Industry - Capital Works Program |
Context / Scope of project
A state-wide electricity transmission business had experienced:
- An organisational redesign that had been based on sound basic principles that had seen pockets of asset specification and design expertise redistributed across different departments
- A change in the regulatory framework for the approval of capital spend (which in turn drove revenue entitlements) from an ex post to an ex ante sequence, and had lead to the organisation committing to a specific capital works spend against specific criteria over the next five years
- An accelerating need for network capacity extension, upgrade and new connections
- A move to the appointment of panel contractors for Design and Construct contracts based on a forward program of work
The process to initiate projects and get them ready for contractors to commence work was an area of concern for senior management. Symptoms and issues included:
- A large number of projects at the early and poorly defined stage of the process, all making uncertain progress down the pipeline to readiness for contract.
- Scratching around for work to keep panel contractors busy.
- No information on specific project status, ownership, next steps, or dates for completion of each phase.
- Poor or disputed information on general program performance, future workload and priorities.
- Blurred accountability for specific technical, regulatory, financial, network and other decisions.
- Information on capital spend that didn’t usefully explain if, for example, low cumulative spend meant poor progress, good savings, timing differences or even bad data.
- Were the right people working on the right priorities?
- Were decisions being taken at the right time in the process by the right people with the relevant information?
- Was there a hidden pending bottleneck in, say, development approvals or equipment supply?
- Should some advanced procurement be instigated and if so what?
- Was an avalanche of work awaiting the currently idle contractors?
- Would it make it impossible to meet the five year program – with attendant network security, regulatory compliance and revenue entitlement failures?
- Would the seasonal and outage constraints on work become unmanageable?
Client achieved:
- Clear, appropriate, understood and accepted allocation of accountabilities and responsibilities.
- A simple practical suite of KPIs, tightly linked to individuals, and able to measure and predict performance against schedule requirements.
- A fresh approach to clearly communicating and cascading priorities and therefore efficiently managing resource allocation based on PIP’s Results-Action-Review approach.
- Confidence that better design and commercial solutions were possible by taking a systematic approach to determining who would contribute to the design and specification process, when, and with what status. This put an end to re-litigation, delay and confusion over whether a decision was made or not.
- Avoidance of rework with a continuous approach to establishing and managing a scheduled capital works program out seven to 10 years, integrated from initial system planning, through regulatory approval, to more detailed technical specification, planning approval, outage planning and early contractor involvement.
- Throughput capacity increase – client went from seeking to add staff to freeing up existing staff to work on longer range projects, anticipation of the next regulatory submission, and continuous improvement opportunities.
- Dramatic reduction in times from initiation to handover to contractors (from many months to a matter of weeks).
- Real confidence about the status of works in development, where any bottle necks or issues arose, what priority next steps were and who was accountable
- An ability to expect works to be delivered for construction when promised.
- Improved ability to forward manage contractor capacity and outage requirements.
- Better co-ordination of capital works with seasonal power demands and winter limitations on undertaking many projects
- Client team members who became superb contributors to the overall effort and excellent agents for sustained change, including an ability to extend many of the principles to other areas of the business
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What we did:
PIP was brought in with a specific brief to focus on the Project Initiation and Development Process.
We initially undertook an intense two week diagnosis where we:
- Conducted a “Brown Paper” in which the existing steps, forums and behaviours where drawn out and documented for wide discussion and involvement.
- Collected and reviewed all the in-house documentation reflecting how the processes had been designed to work and what actual behaviours were.
- Conducted interviews with a very wide range of staff spanning departments, technical disciplines and organisational stratum.
- Analysed actual project throughput over time and projected that forward to assess the scale of delivery shortfall against the plan committed to with regulators.
- Broke the process down into discrete modules and pin pointed specific problem areas within each.
- Proposed a simple set of throughput and status KPIs, for each area manager involved in the process.
Following the diagnosis phase the client assembled a combined in-house/ PIP team to develop and implement solutions to the identified problems. The focus was on process, accountability, KPI, and management disciplines – not on organisational design or headcount. In this phase we:
- Selected and trained client staff in core data gathering, analysis, issue identification, process mapping, accountability frameworks and other performance improvement disciplines.
- Studied specific capital works substation and transmission line projects, and the history of specific projects to confirm the initial diagnosis, and better understand the underlying nature and causes of failure.
- Widely communicated, refined and confirmed our understanding of where the issues and opportunities lay to support the need for change.
- Developed draft proposals to address the failures identified.
- Trialled these with live projects.
- Sought out and analysed actual historic data for the proposed KPIs, to test their applicability, understand actual process performance, develop a baseline on performance, and test data availability and quality.
- Worked with the client to develop a detailed, scheduled program of work
- Used the new KPI to project throughput and status requirements at critical modules forward several years, thereby creating a means of assessing workload trends and capacity adequacy to meet the program, and to determine if early pipeline performance was sufficient to meet late pipeline projections on contractor resourcing, capital, outage management, and asset availability.
- Redesigned and documented the relevant processes including:
- the introduction of simple criteria to differentiate between project complexity and use a faster, simpler process for the many low complexity projects, rather than making all projects go through all the steps necessary for the more expensive and complex undertakings
- a recognition that many projects had already been addressed sufficiently in the regulatory approval process and need not be reworked
- putting the project financial approval steps first so that tender preparation and contractor preparation work only occur if/once a project has been approved
- Defined clear and minimal RACI (Responsibility, Accountability, Consultation and Inform) obligations for each project step.
- Matched these with simple quantitative performance measures and a standard management discipline for agreeing performance requirements, reporting performance, setting priorities and holding staff to account.
- Undertook extensive coaching and consultation with client middle management. This meant that change documentation and communication was entirely lead by client management and cascaded down through the line. This not only ensured good, practical recommendations, but enabled a small PIP team to achieve rapid and widespread roll out with excellent “buy in” and prospects of sustainability.
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