Today utilities continue to face legacy challenges including aging infrastructure, a complex regulatory environment and an aging workforce. Those challenges have become more complex, however, in light of new technologies and market entrants, as well as evolving regulations.
Utilities are managing an unprecedented number of capital projects between grid modernization efforts and the ongoing need to address aging infrastructure with expensive upgrades and replacements. Capital project expenditures are rising to record levels. Utility infrastructure spending in the U.S. has grown more than 7 percent per year on average since 2006 and total spending is predicted to reach almost $200 billion by 2025.
This upward momentum in capital expenditures is driven by a number of industry forces. For instance, as energy conservation efforts and the growth of alternative energies result in stagnant or declining load growth for many utilities across the country, some utilities are exploring new revenue streams. Renewables help utilities create a portfolio of energy services beyond simply generation, such as energy storage and management services directly to customers. Government incentives and renewable energy portfolio requirements have also spurred utilities to invest in renewables.
In addition, as technologies mature and distributed energy resources approach parity with traditional generation sources, customers are installing rooftop solar systems, electric vehicles and other grid-connected devices that utilities must accommodate. In response, many utilities are investing in grid modernization efforts such as rolling out advanced distribution management systems (ADMS) or energy storage solutions to manage these forces.
The ability to effectively execute these projects is critical, as capital projects represent a large portion of a utility’s annual budget and are key to achieving strategic goals and remaining viable in the future. Yet a study from Accenture showed that fewer than 40 percent of projects deliver within the approved budgets, and fewer than half within the approved schedules. These project cost overruns and delays can result in thousands, or even millions, of dollars wasted, resulting in unhappy customers and often costly litigation.
Research suggests that utility companies could see tremendous savings by improving their upfront planning and execution of capital projects. Furthermore, by consistently delivering efficient projects, utilities will be better positioned to retain investor and consumer confidence in order to secure funding for future initiatives.
So how can utilities improve planning and bridge the gap between planning and execution of capital projects?
Leading utilities across the globe are embracing enterprise project controls software technology, which enables process automation, data integration and greater visibility across organizations. The software addresses a number of inherent challenges utilities face when it comes to effective project delivery.
Integrate Project Data and Gain Enterprise Visibility
One of the key challenges impacting project delivery is a lack of visibility as data volumes increase and are captured in disparate systems across the organization–ranging from scheduling to accounting, finance, HR and many more.
Project controls software is designed to give organizations a tactical view of each of their projects including integrated cost, scope, risk and schedule data. With real-time access to integrated data, project controls analysts can update forecasts based on current and historical trends, reforecast as a project progresses and generate highly accurate “what-if” analysis. This allows early identification of potential performance issues and enables faster, smarter corrective decisions.
Software doesn’t stop at the tactical view of each project, however. As an enterprise solution, it also provides a strategic enterprise-wide view across an organization’s project portfolio. By combining tactical project cost controls with strategic enterprise-wide planning in a single system, organizations can manage individual projects more efficiently and improve project selection to align with corporate strategy, whether it’s a focus on renewables or other strategic initiatives. As a result, utilities can avoid unnecessary costs through the elimination or consolidation of low-value projects and optimize their workforce through better allocation of resources on high-priority projects.
Enabling greater collaboration across different departments is also a big challenge for organizations.
Siloed data and disconnected groups across the organization make it difficult for organizations to respond quickly to changes–for utilities this is particularly troubling as ever-evolving regulations often cause scope changes or put projects on hold leaving the utility needing to shift quickly to new work.
For example, a large municipal utility in the U.S. had a project portfolio budget of almost $1.5 billion dollars. When regulatory delays meant it needed to put certain projects on hold, its staff wasn’t able to respond quickly enough to reallocate those funds and resources to another project because the information didn’t reach the right people within the organization. So due to a lack of visibility and collaboration across the organization, $300 million of the budget was left unspent and resources sat idle rather than being assigned to other important projects in the queue.
Enterprise project controls software helps to avoid these types of issues by providing role-based dashboards and real-time analytics which allow users to drill down into project details so that all project stakeholders truly have real-time project information at their fingertips. This is critical as it enables faster, more informed business decisions and ultimately more efficient project delivery.
Today, enterprise project controls mobile apps are gaining popularity as they continue to help break down barriers to project collaboration. By enabling easy access to real-time information wherever and whenever needed, mobile apps encourage stakeholders outside of just the project team to leverage the project controls solution–whether it’s a contractor raising an issue to the project team, a construction supervisor reviewing and approving that day’s progress, a project controls analyst assessing the impact of a change, or an executive reviewing the status of their project portfolio while traveling.
Enabling the Workforce
The planning and management of capital projects can be a labor-intensive process, requiring multiple steps and repeated data entry. Project controls software enables integrated data and automated reporting which eliminates manual errors and eases the administrative burden on project and cost management professionals, freeing up their time for higher value work.
Similarly, by enforcing best practices, the software helps train new employees by educating them on the proper way to do things. This is an important benefit for utilities that are experiencing a knowledge drain as baby boomers start to retire. By enforcing well formulated approaches to forecasting and change management, enterprise project controls instill best practices across an organization that have been shown to drive better project performance.
As the number and complexity of projects continue to grow, enterprise project controls technology can help utilities free up resources to more effectively manage portfolios and individual projects, increasing efficiency, cutting unnecessary costs and helping to accelerate time to revenue.
About the author: Christen Bergerud co-founded EcoSys, a global firm engaged in enterprise project controls software, and serves as executive vice president of industry strategy. Christen drives global market strategy for EcoSys and works to align project controls software with the needs of customers around the world. Previously, Christen was one of the original designers of the product now known as Oracle Primavera P6. Learn more about EcoSys on our website www.ecosys.net and on Twitter: @EcoSysEPC