Key requirements for energy project management
By Jim Fairchild, Managing Director, Fortior Global
When it comes to managing projects in the energy industry, the issues that companies have to deal with are universal. There is often a back-log of projects and works orders that need to be dealt with, and the key to success is to ensure that they are dealt with in order of priority. It also essential to make sure they are also managed by location. That means if one project is close to another, one work crew can be assigned to both, saving time and resources.
By prioritising and localising projects, companies can achieve higher levels of efficiency and ensure resources are maximised.
Companies in the energy industry typically have systems in place to manage the financial side of the business and work order planning but do not usually look at work planning and resources in enough detail. This can result in the many thousands of details required to effectively manage projects not being captured and cause time slips and project delays. By overlaying advanced project management systems onto existing work flow systems, feedback can be delivered directly to financial systems, which ensures greater visibility for project metrics.
A great example of a company dealing with these issues well is Ausgrid, formerly Energy Australia. This NSW state-owned corporation distributes power to 1.6 million homes and businesses throughout Sydney, the Hunter and Central Coast.
Ausgrid’s network is made up of more than 200 large electricity substations, 500,000 power poles, 30,000 small distribution substations and almost 50,000 km of below- and above-ground electricity cables.
The company is currently delivering one of Australia’s largest infrastructure programs – an $8 billion upgrade of the electricity network including 50 new major substations and hundreds of kilometres of new electricity cables.
Ausgrid has two key areas requiring advanced project management support, capital works and field management.
With capital works it replaced its system of spreadsheets in 2003 by implementing an advanced project management software solution resulting in a substantial increase in project efficiency. Having proven the concept, the company then moved to enterprise-wide implementation in 2004.
To do this Ausgrid turned to long-term solutions partner Fortior Global to provide expert scope, design and implementation services to support its migration to the new system and support the company’s business requirements and IT framework.
Ausgrid’s capital works division has been ramping up since 2004, deploying AUD$250 million projects during that year. The company is now spending AUD$1.8 billion per year, and has gained improved visibility over its capital expenditure and program of works.
Ausgrid’s field services division also faced challenges managing its resource optimisation for maintenance of equipment and responding to customer service requests. Previously, limited resource optimisation led to inefficiency in scheduling of maintenance resources.
Field services required a system to deliver work templates to provide repeatable best practices and work-packs and optimise resource and equipment allocation. After the implementation of a project management suite across the six different locations of the field services departments, there were substantial improvements experienced in resource utilisation.
The field services division now has more than 450 templates with activities for each maintenance and service request, providing repeatable best practices for its team. This has reduced overtime payments by 25 per cent in the first 12 months, and improved resource efficiency. Efficiencies have also been gained by capturing and reporting on varying skill sets and deploying appropriate field resources accordingly.
Ausgrid’s executive teams now have a consolidated view, which includes management dashboards and business intelligent reporting. Project managers and senior managers can make better decisions based on these reports, such as highlighting critical resources in demand and/or moving projects forwards or backwards.
What Fortior Global has learnt from its own experience and from working with companies like Ausgrid is that the key requirements for the energy industry are:
• visibility of projects in relation to existing plans;
• the ability to maximise resources, making them more efficient and using them effectively;
• repeatability, making sure that learnings are captured, applied and reused;
• ongoing work management, each project has to be treated a learning experience; and
• combining information in a meaningful way that can help deliver a better overview and drive quality outcomes.
Jim Fairchild has more than 25 years’ experience in the project management industry, holding project management positions in organisations such as BHP Billiton and NZ Forestry Products Ltd. Mr Fairchild is an avid proponent of risk management, a passion that he continues to pursue through speaking regularly at public engagements. Jim is a member of the Project Management Institute, the Australian Institute of Project Management and founder of the WA Oracle | Primavera User Group.
Driving effective investment through business alignment and integration
Logica enterprise asset management business consultant, Troy Jarvis takes a look at asset management as an integrated process. He describes how a business-process framework aligned to PAS 55 can be used to help distribution businesses address current challenges and alignment issues and prepare for the increasing regulatory focus on capital efficiency.
Regulatory focus on capital efficiency
The Australian Energy Regulator (AER) is increasing the demand for energy distributors to provide greater justification and assurance that their investment plans efficiently allocate capital in accordance with the recently announced rule change proposal relating to efficient cost. Through performance-based regulation, distributors must demonstrate their performance in delivering against their five-yearly regulatory plans as part of the annual performance reporting cycle.
This increased focus brings with it a likelihood that in the next few years, greater emphasis will be placed on compliance to the British Standards Institute’s PAS 55 guidelines and its evolution into the emerging ISO55000 standard, similar to the utilities experience with the UK regulator Ofgem.
Currently, distributors need to demonstrate that their investment planning, risk and performance processes are aligned to regulatory outcomes through performance-based regulation. Proposed changes to the regulatory framework will increase focus on cost efficiency and will place greater emphasis on how distributors deliver outcomes across the asset lifecycle within each the regulatory, performance, budget and program and project cycles.
Current challenges and alignment issues
The increased level of investment required to supply safe, reliable electricity to end-use customers is being driven by ageing assets, increased frequency of extreme weather events, the rollout of smart meters, increased technical requirements to manage change to embedded generation and bi-directional electricity flow.
This need for greater investment, combined with rising energy prices is adding pressure to do more with less. Delivering capital and maintenance programs more efficiently requires a finely tuned approach to balance risk, performance and cost to ensure that performance outcomes are achieved at minimal cost without comprising safety.
Leveraging new technology and smart networks
New technology and the transition to a smart network will exponentially increase the level of data available to distributors. In the same way that real-time data from smart meters and remote telemetered devices can be used to dynamically adjust transformer ratings at the low- voltage (LV) network level, this data can be used to provide insight into asset condition and performance.
While distributors are currently working out how this data can provide insight into asset performance, its eventual use will require more tightly integrated processes to translate raw data into knowledge that can feed into asset strategy and plans.
Applying a business
A business process framework for a distribution utility aligned to PAS 55, leading to ISO55000, provides the appropriate context to assess process alignment and make the changes to deliver these business and regulatory outcomes.
A business process framework contextualises the information needed to manage the asset lifecycle and articulates how this information is used to develop regulatory submissions for the five-yearly price reset process and report on performance.
A business process framework aligned to PAS 55 builds on a distributor’s ability to balance risk, performance and cost by providing tighter process integration. For example, more tightly coupled risk and program delivery processes will allow asset managers to simultaneously understand not only the risk rating associated with an asset, but see a clear link between the risk rating, its risk assessment and the risk controls that are in place.
A smart network will provide extensive data relating to asset performance.
A business process framework helps transform this data into knowledge about an assets performance as input into the asset strategy and plans.
In addition to providing the context for how business processes share information and are connected, the business process framework also aligns information systems to these outcomes.
Information systems play a key role in asset management. Over the past decade the progression towards enterprise asset management (EAM) systems has assisted in providing visibility and transparency across organisational functions. However, it does not ensure process integration and alignment between the corporate strategy, asset management strategy and asset management plans, or in other words, alignment to business outcomes.
More tightly integrated processes will see the role of information systems transitioning from support systems that enable the asset management process, to information systems that enable development of the asset strategy and plans and drive investment and maintenance programs.