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Who’s watching out for your Grid Modernization project?

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If you’ve ever taken on a home renovation  or even just watched HGTV, you likely recognize the need for outside expertise to be successful; an architect or designer to create the vision, a general contractor (GC)  to streamline communications and provide the specialty resources to execute the vision and finally,  an inspector to ensure the execution matches the vision and is safe. So why are we talking about home renovations? Because Grid Modernization initiatives are akin to home renovations and can be considered as the ultimate home renovation for utility organizations.

Grid Modernization initiatives are complex projects (or series of projects) that often stretch beyond the current project and program management capabilities within the utility’s organization.  While many utility leaders recognize these issues and look for their own industry ‘GC’ a.k.a. System Integrator (SI) or outsourced Project Management Officer (PMO), they typically overlook the role of the local inspector.  These inspectors are important because research has shown that 58% of projects don’t tightly align with the organization’s strategy and goals[1]. Imagine a kitchen renovation where the end result didn’t align with your spouse’s expectations? That’s costly, but not nearly as costly as similar issues on a Grid Modernization project.

The right partner (inspector) can help avoid these issues by understanding a utility’s business interests as well as their targeted end goals. In addition, these partners know the right checkpoints and execute specific deliverables at the right time to ensure the project’s success.

Unfortunately, for most utilities such a partner remains a gap. This becomes more evident with large, complex programs that are typical of these types of modernization initiatives. The impact of not having a strong Project Management (and PMO) coupled with a lack of oversight introduces a significant amount of risk to the on-time and successful delivery of these programs.  Failure rates of all projects range from 55% to 70%!  Given the regulatory scrutiny typically associated with a Grid Modernization project, utilities can’t afford this type of failure rate.

The symptoms can include:

•             Lack of a common, consistent view of projects across stakeholder groups

•             Cross-departmental project prioritization

•             Lack of objective performance measurement that drives accountability

•             Communication gaps between parties

•             The inability for the organization to embrace change.

So, how can utilities ensure they are reducing this risk and ensuring they deliver on time, meet their capital investment forecasts and deliver a program that meets the stakeholder objectives while realizing the anticipated benefits? Furthermore, how do they ensure the solution is technically sound and establishes the foundation for the long-term strategy and vision?  Below are recommended steps and strategies utilities can follow to ensure higher success rates.

Validate the plans

A quick assessment to see if your program or project is set up for success can seem like an extra step when you really just want to “break-ground.” This can be particularly true if your team has waited a long time for regulatory and/or budget approval to move forward.  A pre-project assessment is an ideal time to revisit the project’s feasibility. Does the architecture still make sense?  Does it support your underlying goals? With changes in technology or process often impacting previous assumptions in your plan, now is the ideal time to address them without risking increased costs or schedule delays. Conversely, skipping this step may result in a costly “retro-fit” down the line.   

Additionally, there are some fundamentals that are needed for every project, because even the best project managers and leaders can forget the basics. These fundamentals include:

  • Ensuring you have an organizational chart with clear roles and responsibilities.
  • Reviewing the processes and procedures the program will need to be successful including: –
    • Do you have a clear process for making decisions?  and
    • Do you know when and how to request budget approval and document a change?

While this initial upfront assessment can take a few weeks, it can often help avoid months of schedule slips, or worse, another failed project. It is a quick and easy indicator for future success. Similar assessments have comparable value throughout the project lifecycle. For example, after the first 6 months, most of the initiation and planning should be completed and an assessment is a good way to ensure the execution phase is set up for success. For large programs, an annual assessment can help ensure recommended actions have been taken and identify continued areas for improvement. 

New technologies, new vendors, new risks

Today’s electric and gas utilities are reported to be spending upwards of $150B on technology projects each year, and those budgets are expected to continue to increase at a steady pace.  It is driven in part by increasing pressure from external stakeholders to improve the reliability and resilience of the grid, provide enhanced options and services to customers as well as transition to cleaner resources all while lowering costs. Internally, there is also pressure to improve performance while decreasing costs and upgrading aging infrastructure.

To meet these demands, utilities find themselves testing and implementing new and emerging technology to support the transformation to a modern grid, often with vendors that are new to the utility space or have a limited perspective. The combination of vendors with limited insight to the utility industry and technology, that in many cases is unproven, can quickly derail a project.  A program assurance plan that objectively drives a broad understanding of the challenges and identifies opportunities for improvement can turn around a struggling program and ensure a successful implementation.

From a Vision to Reality

Flawless execution does not mean the project was successful.  The project can be delivered on-time and on-budget but fall short of delivering the expected benefits and value.  Using  our home renovation analogy, this would be like adding a mud-room without adding a direct entrance. Perhaps it was deleted from the plan to meet the budget or time pressures from the builders, or perhaps it wasn’t even considered in the original design.

Unfortunately, this vision conundrum is a familiar occurrence with utilities.  Have you ever worked on a system implementation only to find out the end users don’t use the technology?  Or, have you ever been on a project team who “descopes” the first release to meet the budget and schedules demands, only to find out the end solution didn’t meet the initial vision and can’t deliver the expected benefits?

One of the first steps of ensuring success is defining what success looks like.  In the case of many Grid Modernization projects, this may be defined in the regulatory filing. Regardless, identifying the objectives and making sure everyone working on the project fully understands these objectives, is your first priority. These objectives should be clearly communicated to the entire project team and serve as a touchstone against which all project decisions are made.   

It is equally important to define metrics for tracking success against these objectives. This can be challenging in the face of testing new approaches and technology, but it is critical to set some targets.  For example, reducing the impact of outages may be your objective.  Reducing the Customer Minutes Interrupted (CMI) from X minutes to Y minutes would be the metric you would track to determine success.  To do this, you may need to deploy distribution automation technology, implement an Advanced Distribution Management Systems (ADMS), etc. Those specific projects all work together to achieve a single objective. But if you deploy those technology projects and don’t reduce the impact of outages, can you really call it a success?

While your technology vendors supporting these implementations will support you throughout the project, and the SI will ensure the technology is deployed effectively, you must have a dedicated team to ensure that you are meeting your initial objectives and visions.

Conclusion

No doubt a Grid Modernization program is much more complex than any home renovation and much more costly.  With a significant amount of money being invested and the exposure associated with it, in the form of regulatory demands and customer expectations, utilities can’t afford ineffective solutions or lengthy and costly delays.  Simply put: utilities can’t afford to fail.  Investing a small amount in a Program Assurance plan that validates project feasibility can help set the program up for success and provide checkpoints along the way to ensure benefits are being realized. The investment will pay dividends and provide the safety net needed to ensure the successful execution of the plan. More importantly, the investment in a qualified partner will ensure the program continues to deliver the value necessary to all stakeholders – utilities, regulators and customers.


[1] Project Management Insitute:Pulse of the Profession: The High Cost of Low Performance

Michelle Fay's picture

Thank Michelle for the Post!

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Discussions

Matt Chester's picture
Matt Chester on May 30, 2019

Love the analogy-- but if homeowners want a contractor they can open up a the yellow pages (or the digital version of that), but where do utility entities go to find these type of program managers to help with grid modernization?

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