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How Renewables are Transforming Capital Project Management for Utilities

The energy industry is rapidly transforming. Traditional power-generating utilities are shifting away from their reliance on coal, gas, and nuclear resources and tapping into the vast potential of renewables.

In fact, the International Energy Agency (IEA) notes that the energy industry is doubling its investment in renewables per annum compared with nuclear, gas, and coal.

The IEA estimates that the industry will have invested $7.2 trillion in power generation alone between 2016 and 2025—almost $1.0 trillion more than the previous decade—with renewables comprising a staggering 56% of the net new capacity.

Renewables projects—often smaller and more easily managed compared with their traditional, more complex predecessors—are rapidly becoming the more commonly used approach to generating power.

As this shift continues, utilities also need to change how they approach the management of such projects to ensure they can maximize resources and tap the full potential of renewables.

Shifting from single project management to portfolio management

The increasing number of renewable assets generating Mw/Hrs equivalent to coal, gas, and nuclear are impacting how projects are managed overall. The industry is transitioning from managing single large projects with a dedicated team to a team managing a portfolio of smaller projects.

Utilities tend to follow an operating model that supports one-off larger projects instead of adopting a portfolio-based structure. This outdated model results in greater inefficiencies connected to renewable assets, including missed schedules and over-extended budgets.

Utilities’ hurdles to managing portfolios

A recent IDC Insights survey confirmed that E&C professionals’ top two preferred key performance indicators for projects remain “on time” and on budget.” However, the leading KPIs for portfolio management are resources and capital prioritization, in addition to increased visibility into a project’s performance and change management.

The survey reveals that, while utilities aim to achieve these portfolio management guidelines, they surprisingly aren’t there yet. A significant number of hurdles are impacting projects/assets and how they have traditionally supported utilities, including:

  • Financing availability
  • Cost overruns
  • Change management
  • Missed schedules
  • A lack of resources

The industry must radically shift for utilities to overcome these obstacles and deliver solid project outcomes.

Four portfolio management guidelines for utilities

  1. Because capital is at a premium, selecting the right projects/assets to deliver the most value is a critical component of portfolio management. E&C project teams must build business cases that can be evaluated and scored objectively against the overall funds available. They must also account for other metrics, including benefits, CO2 reductions, etc.
  1. Utilities are constrained not only by budgets, but by dwindling resources as well. Significant reductions in utilities’ staffing over the years has impacted the availability of project managers, project engineers, planners, cost engineers, etc. Utilities must adapt to successfully managing multiple projects/assets with fewer staff.
  1. Portfolio project management also requires greater flexibility and mobility to accommodate globally dispersed projects teams, including ensuring accessibility to data from any location in near real time. These global roles often lack dedicated resources to manage every aspect of a project. Due to limited staff, it’s crucial that both the process and solution (i.e., portfolio management tool) are simple and easy to use.
  1. In addition, the supply chain supporting these projects and delivering the product are generally Tier 2/3 organizations. Lower-tier organizations often provide better value than Tier 1 organizations due to their significantly lower overhead. Utilities must adapt to utilizing solutions that enable these organizations to full engage.

Providing collaborative cloud-based solutions to the supply chain will:

  • Include an easy-to-use application 
  • Increase stakeholder engagement
  • Ensure standardization and overall governance of the process

Increasing efficiency in renewables

Renewable energy projects are easily replicated, meaning that processes and solutions should also be: repeatable, easy to amend, value optimized, and current. In addition to streamlining projects with processes and solutions, there’s also a huge opportunity to use benchmarking and analytics to improve project intelligence.

Managing projects with the same criteria helps professionals quickly grasp key takeaways of what worked in addition to monitoring efficiency gains. To make these changes, a project management structure must follow consistent criteria, whether that’s coding structures, KPIs, processes, etc.

Using a simple template-driven model ensures that all projects will launch using the same guidelines.

Providing visibility to project stakeholders

Dollars and scarce resources can be easily wasted without visibility across the entire stakeholder community. For example, a project may be proposed by certain team members while the operations team knows that the asset is end of life.

Tracking project benefits helps stakeholders confirm if their proposals have been delivered, whether productivity has increased, cycle times reduced, etc. Tracking projects and assets in one solution helps easily monitor these benefits, quickly ensuring future projects are well-positioned for success.

Heighten project portfolio performance

IDC clearly states that a project and portfolio management (PPM) solution is crucial for managing a portfolio of capital projects. An enterprise PPM tool unites all stakeholders onto a single platform, empowering organizations to closely monitor change management.

Organizations can also start tracking existing projects and their historical performance with an enterprise solution.

Utilities can overcome one key function they often miss—benchmarking and forecasting—by deploying Oracle’s Primavera cloud-based PPM solution for renewables, paving the way for a possible “Center of Excellence for Portfolio Management” within their organization.

As portfolio management becomes the standard, utilities will see significantly better project performance.

Learn how your organization can scale project management to manage larger portfolios with Oracle’s Primavera P6 Enterprise Project Portfolio Management.

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