Capital Projects & Portfolio Management June 24-27, 2014 Nashville, TN 2014 Transmission & Distribution Benchmarking Insights Conference.
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Capital Projects & Portfolio Management
June 24-27, 2014
Nashville, TN
2014 Transmission & Distribution BenchmarkingInsights Conference
Agenda
DILBERT
2
◼Portfolio Management◼Project Management◼Outcomes◼Practices
The Capital project process
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
3
Role of asset management is described in the individual practice sections
Portfolio Management
T&D Projected Capital Spending
Most companies are forecasting level capital spending
Source: Questions CP125, DF70, TF65, Page 36 5
Note: compare to current year data
2013 Survey results
CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - T&D Mean Quartile
Mean
26 %
#35 Transmission Only. Very large scale increase in spending
Comments
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
Page 6
2014 Results
CP p36
CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - DISTRIBUTION
Mean Quartile
Mean
15 %
Comments
Calculation used
( CP125.3 ) / ( DF70.1 ) * 100 , ( CP125.6 ) / ( DF70.1 ) *
100 , ( CP125.9 ) / ( DF70.1 ) * 100
Page 7
2014 Results
CP p37
CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - SUBSTATION
Mean Quartile
Mean
22 %
#35 Transmission sub only; very large increase projected.
Comments
Calculation used
( CP125.2 ) / ( DF70.2 + TF65.2 ) * 100 , ( CP125.5 ) /
( DF70.2 + TF65.2 ) * 100 , ( CP125.8 ) / ( DF70.2 + TF65.2 ) *
100
Page 8
2014 Results
CP p39
CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - TRANSMISSION
Mean Quartile
Mean
40 %
#35 large scale transmission capital spending
Comments
Calculation used
( CP125.1 ) / ( TF65.1 ) * 100 , ( CP125.4 ) / ( TF65.1 ) *
100 , ( CP125.7 ) / ( TF65.1 ) * 100
Page 9
2014 Results
CP p40
PERCENT OF THE COMPLETED PROJECTS THAT ARE WALKED-IN DURING THE YEAR
“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 rushprojects do not always get the same degree of planning and vetting.
Comments
Calculation used
CP46.4
Page 10
Mean Quartile
Mean 16.0 %
Quartile 1 10.3 %
Quartile 2: 13.0 %
Quartile 3: 22.5 %
CP p11
Key Success Factors:Portfolio Management
11
PM ROLE
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 > $500k39 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 >$100k27 Over $100,000
Survey Results
2010 2011
2012 2013
All Projects 8 9 3 5
Significant Projects
3 1 6 3
>$1MM 3 3 2 1
>$500k 3 0 2 1
>$100k 4 4 2 1
13Source: Question, Page 12
2013 Results
SIZE/TYPES OF PROJECTS HAVE PROJECT MANAGERS
Comments
Calculation used
CP55.1
Page 14
Responses
Total Participants 19
Number of Respondants 8
ID Response22 Distribution, Transmission, Substation Projects31 Substation: All. Distribution: Major overhead, URD joint trench and Street Lighting have individual
managers23 All capital funded projects have Project Managers. Serve New 500KVA, Serve Existing such as large
road widening & system improvement type projects; Transmission - Projects with accelerated
timelines or unique challenges may have a project manager (typically $3M). All other projects are
managed directly by the engineers and construction managers, and the portfolios are managed
holistically by the program managers.38 Complex, cross - functional and/or highly political projects and programs that usually spend more
than $5M.40 All projects have PM's. Projects $1M have PMP PM's.33 This is based upon our project assessment. All projects are ran through this assessment, if these
project exceeded a certain monetary value they were assigned a manager and were sujected to our
established major project management policy. This has changed effective 2015 projects to a more
risk based approach.27 Line construction projects driven by private new business, public agencies, system integrity and
system reinforcement have RMT Project Managers.35 All transmission projects/programs with the exception of relay test compliance work
2014 Survey
FULL-TIME PROJECT MANAGERS: T, D, & S PER $100M CAPITAL ADDITIONS
#32 reported a very high number of project managers
Comments
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 )
Page 15
Mean Quartile
Mean 11.7
Quartile 1 11
Quartile 2: 5
Quartile 3: 5
2014 Results
CP p13
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.
Source: Question CP60, page 13
Median2013DRC = 3.5 FTEs/$100M2012 = 5 FTEs/$100M2011 = 3 FTEs/$100M
Note: the inverse is Budget Managed per PM
16
2013 Results
Key Success Factors:Project Management
17
Key Success Factors:Project Managers
18
outcomes
CAPITAL PROJECTS: AVERAGE "ACTUAL AS A % OF ESTIMATE"
Comments
Calculation used
CP46.1
Page 20
Mean Quartile
Mean 100 %
Quartile 1 94 %
Quartile 2: 100 %
Quartile 3: 105 %
CP p8
PERCENT OF THE PROJECTS THAT ARE TYPICALLY COMPLETED ON TIME
Comments
Calculation used
CP46.2
Page 21
Mean Quartile
Mean 71.3 %
Quartile 1 0.9
Quartile 2: 0.7
Quartile 3: 0.5
CP p9
PROJECTS THAT ARE TYPICALLY COMPLETED ON OR UNDER BUDGET
Comments
Calculation used
CP46.3
Page 22
Mean Quartile
Mean 69.6 %
Quartile 1 82.0 %
Quartile 2: 72.0 %
Quartile 3: 62.8 %
CP p10
Practices and initiatives
Issues found: capital projects
Page # Q # Primary Issue Who
CP 36, #35 is Transmission only and should be removed from graph
1QC
CP 38,39 #35 shows a very high forecast capital spending
35
CP 13 #32 shows high number of PM’s 32
24
Thank you for your Input and Participation!
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