Wednesday Apr 27, 2016

Shared Insight: Utilities Power Up with Lifecycle Approach to Capital Projects

By: Mike Sicilia, senior vice president and general manager, Oracle Primavera


Today’s utility executives, along with their colleagues in other asset-intensive industries, face formidable challenges. Growing business and regulatory complexity are constants. Layer on continued economic vulnerability along with an aging infrastructure and workforce retirements, the latter of which utility execs cite as their top two challenges – and enterprises are left at a significant disadvantage when managing capital projects.
In this precarious environment, utilities must ensure that their investments drive enterprise value, while reducing costs and improving operational efficiency. Mismanagement of capital projects can result in high cost overruns, delayed initiatives, and regulatory compliance issues ‒ further compounding present-day business hurdles. The stakes and hurdles are high – but far from impossible to surmount. Utilities that cultivate effective enterprise project portfolio management methodology and consistently embrace proactive strategies that address all stages of an initiative’s lifecycle are well positioned for success. Many of these same strategies apply and can be replicated across a wide spectrum of asset-intensive industries, such as communications, oil and gas, and engineering and construction.

A Challenging Outlook

Utility executives face a perilous balancing act when planning, building, and operating assets. While it’s vital for projects to continuously deliver results, many face an upward battle from the start, well before they become operational. For example, an Accenture report found that only 39 percent of utilities capital projects were completed on budget, and less than half on schedule.

Several factors are at work – each of which underscores the compelling need for careful management and precise execution at every turn:

  • Limited Capital: Limited availability, through either the markets or internal funding, means that capital for major projects is not only scarce, but also costly and requires close management to ensure an acceptable return-on-investment (ROI)
  • Aging Infrastructure: In the United States, the power delivery system – like many other types of national infrastructure ‒ is based on technology developed and installed decades years ago – resulting in an increasing number of power disruptions and heightened vulnerability to cyber attack
  • Regulatory Uncertainty: The regulatory environment continues to grow more complex, causing some utilities to err on the side of caution by stifling potentially innovative capital projects
  • Constrained Workforce: Thirty-two percent of the utility workforce will retire in the next 10 to 15 years, according to the 2014 Aging Utility Workforce report by Interactive Intelligence Group Inc., and many utilities are struggling to recruit new talent to replace these valued resources. The oil and gas as well as communications industries face similar realities. The highly skilled workers exiting the workforce will take 30 to 40 years of institutional and subject matter knowledge and expertise with them. Most of this knowledge has not been captured and operationalized in modern systems ‒ leaving enterprises at risk
  • Costly Raw Materials: As economic, regulatory, and environmental factors exert upward price pressures on many raw materials, utilities find it harder to acquire them at reasonable costs

Embracing All Aspects of the Project Lifecycle to Drive Success

So, how can a utility, and other asset-intensive organizations, overcome these challenges and ensure capital project success?

First, it’s important to consider the complete project lifecycle at the start of an initiative – from planning and execution to operation and maintenance, and ultimately, decommissioning ‒ and involve all key internal and external stakeholders throughout the process. Securing early input from employees, who will be responsible for infrastructure maintenance and ultimately have ownership of the asset, is crucial. Their insight and knowledge can reduce the long-term costs of operating the asset as well as the risk of decommissioning the project down the line.

There is no question that adopting a complete lifecycle approach to capital projects is a complex undertaking. It requires real-time enterprise-wide insight, sophisticated “what-if” modeling, and knowledge capture that traditional spreadsheet-based project management models cannot deliver.

That’s where enterprise project portfolio management (EPPM) methodologies and solutions enter the picture. In addition to automating and operationalizing processes, EPPM solutions equip utility executives to evaluate and prioritize projects across the enterprise. They also provide full visibility into the project lifecycle, enabling organizations to track performance and costs, model and mitigate risks, and manage people and resources across the organization to streamline processes and optimize available assets.

As utilities executives continue to face a vast array of challenges and scenarios, EPPM solutions have a distinct and essential role to contribute at each stage of the project management lifecycle:

  • Planning: Effective planning is particularly important when choosing the capital projects that will deliver the greatest value. A solid portfolio solution uses repeatable governance processes and consistent evaluation metrics – helping to ensure an enterprise is equipped to choose investment proposals, fund strong business cases, perform “what-if” scenarios, and analyze performance progress
  • Execution: EPPM solutions enable staff to review construction progress in various regions and on multiple projects, improving communication between all parties involved on a project, while helping project directors manage incoming demand and prioritize projects and activities based on the organization’s overall objectives. By providing these capabilities, an EPPM solution can successfully link people, teams, and projects – offering complete control of a capital project’s lifecycle
  • Operation and Maintenance: The tools a utility uses in the planning and building stages are just as essential during the project’s ongoing maintenance. A project’s profitability depends largely on scheduling and deploying resources in the most efficient manner across all maintenance activities. When an asset is offline for maintenance, it’s not generating revenue – but an EPPM solution can help a utility to plan, schedule, and manage maintenance to optimize resources, asset value, and uptime
  • Decommissioning: The decommissioning phase of an asset lifecycle is the last thing that a utility project manager wants to consider during the planning, execution, and even early operational stages. This mindset, however, can create additional expense and risk in the future. EPPM solutions can play a vital role in capturing and operationalizing information that is vital to the distant decommissioning phase. When it’s time for decommissioning, EPPM methodologies and tools are essential to a managing on-time and on-budget initiatives, just as they are when bringing a new asset online.

Set the Stage for Success

While EPPM solutions can drive success across the end-to-end project lifecycle, they can also have significant impact on asset optimization during individual phases.

For instance, a large utility in Canada uses EPPM methodology and solutions to manage its resources. In the past, the company filled service orders for construction and maintenance work via multiple manual processes and a series of highly customized and poorly integrated software systems for workforce management. The company, which deployed Oracle’s Primavera solutions, has improved its ability to plot work activities and determine what resources will be required to supplement existing resources. It can now also easily consolidate requirements for the peak project season by specific geographies. The utility has increased efficiency by shifting dispatching of resources to schedules in local offices and has gained the ability to effectively coordinate and manage resources based on local conditions and constraints – yielding greater efficiency and value from assets.
Utilities – as well as other types of asset-intensive enterprises ‒ have witnessed dynamics business transformation in recent years to a much more volatile and competitive marketplace. Now, more than ever, these organizations depend on EPPM solutions to propel capital projects forward through a gauntlet of challenges by improving collaboration and communication, better managing resources to ensure the right people are on the job at the right time, and mitigating and managing project risk.

Wednesday Jan 21, 2015

Is your company ready to successfully execute a business transformation?

Intelligent Utility – January 18, 2015

Author: Guy Barlow, Director of Industry Strategy, Oracle Primavera

For companies that don’t want merely to succeed in the utilities industry but to lead, continual business transformation is a must. It appears, however, that actually achieving this transformation is also one of their most vexing challenges. New research from Oracle Primavera and Forbes, “Making the Change: Planning, Executing and Measuring a Successful Business Transformation,” shows that while the ability to execute transformation is critical to remaining relevant, nearly half of the 534 executives surveyed---from a number of different industries, including utilities---say their organization is only somewhat or not at all ready to successfully execute a business transformation today.

Continual business transformation is crucial for companies to stay ahead of emerging players and maintain a competitive edge. From bringing new offerings to market to embarking on major capital expenditures, business transformation can take countless forms. Many utility companies, however, are struggling with their transformation efforts. Despite strong agreement that business transformation is fundamental to success, 48% of total executives surveyed say their organization is only somewhat or not at all prepared to successfully execute a business transformation today.

Beyond the preparation, it’s the execution of the business transformation initiatives and projects that make or break its success. The most often cited cause for failure in the rollout of a business transformation initiative is inefficient execution (41%), followed by resource and budget constraints (35%). Additionally, top reasons for successful initiatives include support from leadership (51%) and strong, competent execution (48%).

When it comes to tools needed to ensure successful business transformation, respondents from utility companies say that having a summary of all costs associated with transformation initiatives is the single most critical capability (55%). More than half of utility industry respondents (55%) cite inefficient execution as the top reason for transformation failure while noting that the top reason for transformation success is support from leadership (48%). And, those who have successfully implemented transformation initiatives in the last three years say that business transformation met their expectations (47%).

Transformational change in utilities is needed. Given, among other factors, the volatility of commodity pricing, heightened regulatory scrutiny and diminishing talent, boards and executives realize the need for a step-change in their business. And it often depends on the successful planning and execution of strategic initiatives – that is, projects. (…)

Read the complete article here.

Monday Jun 24, 2013

Uralelektrostroy Improves Turnaround Times for Engineering and Construction Projects by Approximately 50% with Better Project Data Management

LLC Uralelektrostroy was established in 1998, to meet the growing demand for reliable energy supply, which included the deployment and operation of a modern power grid system for Russia’s booming economy and industrial sector. To rise to the challenge, the country required a company with a strong reputation and the ability to strategically operate energy production and distribution facilities. As a renowned energy expert, Uralelektrostroy successfully embarked on the mission—focusing on the design, construction, and operation of power grids, transmission lines, and generation facilities. Today, Uralelektrostroy leads the Russian utilities industry with operations across the country, particularly in the Ural, Western Siberia, and Moscow regions.

Challenges:

  • Track work progress through all engineering project development stages with ease—from planning and start-up operations, to onsite construction and quality assurance—to enhance visibility into complex projects, such as power grid and power-transmission-line construction

  • Implement and execute engineering projects faster—for example, designing and building power generation and distribution facilities—by better monitoring numerous local subcontractors

  • Improve alignment of project schedules with project owners’ requirements—awarding federal and regional authorities—to avoid incurring fines for missing deadlines

Solutions:

  • Used Oracle’s Primavera P6 Enterprise Project Portfolio Management 8.1 to streamline communication with customers and subcontractors through better data management and harmonized reporting, reducing construction project implementation and turnaround times by approximately 50%, on average

  • Enabled fast generation of work-in-progress reports that track project schedules, budgets, materials, and staffing—from approval and material procurement, to construction and delivery

  • Reduced the number of construction sites by nearly 30% (from 35 to 25) by identifying unprofitable sites—streamlining operations at the company’s construction site network and increasing profitability

  • Improved project visibility by enabling managers to efficiently track project status, ensuring on-time reporting and punctual project deliveries to federal customers to reduce delay penalties to zero

“Oracle’s Primavera P6 Enterprise Project Portfolio Management 8.1 drastically changed the way we run our business. We’ve reduced the number of redundant assets, streamlined project implementation and execution, and improved collaboration with our customers and contractors. Overall, the Oracle deployment helped to increase our profitability.” – Roman Aleksandrovich Naumenko, Head of Information Technology, LLC Uralelektrostroy

Read the complete customer snapshot here.

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