Insights

How PMOs Help Utilities Improve Capital Projects

Project manager at utilities gas rig under starry skies

The U.S. federal government plans to decarbonize the nation’s electric grid in less than 15 years, while states like New York and California have rolled out ambitious goals of their own. In response, electric utilities across the country are rolling out new solar, wind and energy storage projects, while adding transmission lines to accommodate an expected surge in renewable power.

Gas utilities are busy as well as state and federal regulators push for modernization of pipelines and other infrastructure. Utilities traditionally relied on engineers to oversee capital projects alongside their other responsibilities, but the sheer volume of new projects is making the old way of doing things increasingly untenable. Faced with managing multiple construction projects, power companies are hiring project management consultants and launching project management offices, or PMOs to improve capital projects.

An Increased Interest in PMOs in the Utilities Sector

Many utilities across the country are expressing interest in standardizing their project management processes. Implementing a PMO can help a utility really own the project management process. The PMO can help determine which projects should be done at what time and which specific functions should be carried out to get it done.

We are currently working with a utility in the south that was looking for project management support after its annual portfolio of capital projects more than quadrupled to $450 million. The utility is in the middle of 50+ transmission and substation projects, as well as transmission line overhauls and overall system upgrades. They already had a team in place to do some of this work, but because their capital budget grew so quickly, PFES was assigned a chunk of that portfolio and we are now managing it for the client.

By having a team that is dedicated to keeping track of all the processes related to the portfolio of projects, the team is also better able to focus on the efficient utilization of resources and the utilities’ corporate strategy. The PMO group structure maintains standards for project management and is responsible for guidance, metrics, and documentation regarding project execution.

Key Drivers

There has been a real increase in the number of capital projects being executed by utilities, especially renewable projects. In the past, a team of engineers might have overseen a few of these projects along with other more traditional transmission and distribution projects. As the overall volume of projects has escalated, engineers can sometimes be left wearing too many hats. In working with both electric and gas utilities, establishing a PMO standardizes the project management process and drives the execution of the project portfolio to improve capital projects.

In addition, having this process in place can help to free up time so project managers and project teams can concentrate on executing more projects and engineers can focus on more traditional engineering functions.

Furthermore, the PMO structure can increase project efficiency and quality while reducing project risk as there is transparency of data, including resource capacity, to ensure the right projects are implemented within the constraints of the capital budget. This provides greater transparency into overall project status and project health, and helps utilities leadership gain a better understanding of how projects are progressing, especially in the crucial areas of cost and schedule.

Stage-Gate Process Benefits

With the aforementioned utility client in the south, we are using the stage-gate process - a multi-phased project planning process that starts with defining the scope, schedule, and cost of a project. The utility has benefited from this process and is using some of the methods within their organization. As part of the stage-gate planning process, we are using Oracle’s Primavera P6 platform, which PFES has selected as the enterprise project scheduling system of choice. We typically create templates for project scheduling that can be used across a utility’s entire capital program. This provides consistency in individual project schedules across the board.

We can help implement the P6 platform if a utility does not already have it or help the company transition from another system. We can also create dashboards that help teams track projects through the various stage gates. But our work with this utility is not all high-tech – sometimes it can be something as simple as developing more effective internal communications on projects. We stress the significance of ongoing project discussion, of asking questions and getting updates in real time as opposed to waiting until a periodic scheduled meeting.

Why Not Just Let Engineers Handle Project Management?

Simply expecting engineers to handle project management creates significant risk. If you can parse out the non-engineering responsibilities to a project manager, it gives the engineer more time to focus on their essential functions. It also gives that organization a much better ability to keep a close eye on projects and spot issues before it’s too late to avert a budget overrun or scheduling issue. The project manager is often supported by a team of project controllers and construction managers, working to keep work rolling on time and on budget. Overall, the PMO structure promotes communication, progress monitoring, and standardization of project management processes and procedures.

Bring in Project Management Expertise Early

The most important time to save money and make sure a project stays on schedule is during the planning and initiation process. When you are already into construction, it is much harder to improve capital projects because the capital is largely committed already.

For example, PFES works with a gas utility in the Midwest that is a few years into a 20-year gas main replacement program. Customer complaints jumped 25% in a short time, resulting mainly from street, sidewalk, and parkway disruptions due to extended durations of construction projects. That was a real concern given the highly regulated environment utilities operate in.

PFES worked with this utility to evaluate their construction quality assurance plan. We began with a thorough review of their procedures, construction management processes and key performance indicators.

We deployed a field inspection team and provided recommendations to develop a more robust quality assurance program, stressing better communication with all stakeholders including customers and regulators.

If a utility is dealing with multiple projects without a PMO structure in place, sometimes they are likely to be tempted to move on from multiple projects simultaneously to keep projects rolling, without taking time to review lessons learned from completed projects. It’s important to take the lessons learned from each project and to have a center of excellence to recommend continual improvements in project execution. In this way, the utility can learn from past mistakes and have a library of information on how to handle projects and where they can improve performance.

To help improve reporting and accountability, PFES also recommends creating a central repository for all communications with regulators, customers, and contractors.

The Perfect PMO Consulting Partner

Our team consists of industry heavyweights that bring substantial expertise to the table for our clients. We partner with you to reduce risk and uncertainty in your capital projects, delivering initiatives on time with significant cost savings while meeting industry and safety standards. Contact us today to find out how we can help.

by Amyra Treiber, Director of Business Development, PFES

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Date
June 11, 2024
Category
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