Capital Projects & Portfolio Management

Capital Projects & Portfolio Management

June 24-27, 2014

Nashville, TN

2014 Transmission & Distribution BenchmarkingInsights Conference

Agenda

DILBERT

2

◼Portfolio Management◼Project Management◼Outcomes◼Practices

The Capital project process

The capital project and portfolio management process is at the heart of a how a utility conducts business.

• Phase 1: work plan development creates a feasible schedule for the year

• Phase 2: executes the work plan through project and portfolio management

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Role of asset management is described in the individual practice sections

Portfolio Management

T&D Projected Capital Spending

Most companies are forecasting level capital spending

Source: Questions CP125, DF70, TF65, Page 36 5

Note: compare to current year data

2013 Survey results

CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - T&D Mean Quartile

Mean

26 %

#35 Transmission Only. Very large scale increase in spending

Comments

Calculation used

( CP125.1 + CP125.2 + CP125.3 ) / ( DF70.1 + DF70.2 +

TF65.1 + TF65.2 ) * 100 , ( CP125.4 + CP125.5 + CP125.6 ) / (

DF70.1 + DF70.2 + TF65.1 + TF65.2 ) * 100 , ( CP125.7 +

CP125.8 + CP125.9 ) / ( DF70.1 + DF70.2 + TF65.1 + TF65.2 )

* 100

2014 Results

CP p36

CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - DISTRIBUTION

Mean Quartile

Mean

15 %

Comments

Calculation used

( CP125.3 ) / ( DF70.1 ) * 100 , ( CP125.6 ) / ( DF70.1 ) *

100 , ( CP125.9 ) / ( DF70.1 ) * 100

2014 Results

CP p37

CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - SUBSTATION

Mean Quartile

Mean

22 %

#35 Transmission sub only; very large increase projected.

Comments

Calculation used

( CP125.2 ) / ( DF70.2 + TF65.2 ) * 100 , ( CP125.5 ) /

( DF70.2 + TF65.2 ) * 100 , ( CP125.8 ) / ( DF70.2 + TF65.2 ) *

100

2014 Results

CP p39

CAPITAL PROJECT SPENDING PER ASSET NEXT 3 YEARS - TRANSMISSION

Mean Quartile

Mean

40 %

#35 large scale transmission capital spending

Comments

Calculation used

( CP125.1 ) / ( TF65.1 ) * 100 , ( CP125.4 ) / ( TF65.1 ) *

100 , ( CP125.7 ) / ( TF65.1 ) * 100

2014 Results

CP p40

PERCENT OF THE COMPLETED PROJECTS THAT ARE WALKED-IN DURING THE YEAR

“Walked in” is terminology from one of our clients that refers to projects that are not in the original annual budget (usually approved prior to January 1 or sooner), but are added during the year. Usually these rushprojects do not always get the same degree of planning and vetting.

Comments

Calculation used

CP46.4

Mean Quartile

Mean 16.0 %

Quartile 1 10.3 %

Quartile 2: 13.0 %

Quartile 3: 22.5 %

CP p11

Key Success Factors:Portfolio Management

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PM ROLE

Most utilities have PM’S for all unique projects

All projects (5)37 Distribution Projects - 100%

22 Distribution: Major overhead, URD and Street Light have individual

Division managers. Substation: All projects have a project coordinator

35 All capital funded projects have PMs. Serve New > 500KVA, Serve

Existing such as large road widening & system improvement type projects.

26 All projects are assigned a PM.17 PMs are assigned to all capital construction projects regardless of size.

Less complex capital projects may be assigned to engineers, designers

or planners to fill the role of PM

Complex projects (3)38 Complex, cross -functional and/or highly political projects and programs that usually spend >$5M.

32 230 kV and 500kV and UG Transmission Projects; these are outside consultant PMs.

31 345kV transmission line builds

Projects >$1M 34 Projects > $1,000,000 have PMP PM's, Projects <$100,000 do not require PM 's

Projects > $500k39 Projects that have a budget greater than $500,000 and have an engineering component have Engineering PMs. Line construction projects driven by private new business, public agencies,

system integrity and system reinforcement have RMT PMs.

Projects >$100k27 Over $100,000

Survey Results

2010 2011

2012 2013

All Projects 8 9 3 5

Significant Projects

3 1 6 3

>$1MM 3 3 2 1

>$500k 3 0 2 1

>$100k 4 4 2 1

13Source: Question, Page 12

2013 Results

SIZE/TYPES OF PROJECTS HAVE PROJECT MANAGERS

Comments

Calculation used

CP55.1

Responses

Total Participants 19

Number of Respondants 8

ID Response22 Distribution, Transmission, Substation Projects31 Substation: All. Distribution: Major overhead, URD joint trench and Street Lighting have individual

managers23 All capital funded projects have Project Managers. Serve New 500KVA, Serve Existing such as large

road widening & system improvement type projects; Transmission - Projects with accelerated

timelines or unique challenges may have a project manager (typically $3M). All other projects are

managed directly by the engineers and construction managers, and the portfolios are managed

holistically by the program managers.38 Complex, cross - functional and/or highly political projects and programs that usually spend more

than $5M.40 All projects have PM's. Projects $1M have PMP PM's.33 This is based upon our project assessment. All projects are ran through this assessment, if these

project exceeded a certain monetary value they were assigned a manager and were sujected to our

established major project management policy. This has changed effective 2015 projects to a more

risk based approach.27 Line construction projects driven by private new business, public agencies, system integrity and

system reinforcement have RMT Project Managers.35 All transmission projects/programs with the exception of relay test compliance work

2014 Survey

FULL-TIME PROJECT MANAGERS: T, D, & S PER $100M CAPITAL ADDITIONS

#32 reported a very high number of project managers

Comments

Calculation used

( CP60.1 ) / ( (Total T&D Capital FERC) / 100000000 ) , ( CP60.2 ) /

( (Total T&D Capital FERC) / 100000000 ) , ( CP60.3 ) / ( (Total

T&D Capital FERC) / 100000000 ) , ( CP60.4 ) / ( (Total T&D

Capital FERC) / 100000000 )

Mean Quartile

Mean 11.7

Quartile 1 11

Quartile 2: 5

Quartile 3: 5

2014 Results

CP p13

Project Managers per $100M Capital Spent

One measure of workload is the capital budget managed by PMs.

A simple ratio of capital additions to PMs is only a proxy, since not all of the projects have PMs. Another complication is that capital additions is a backward looking measure that only occurs once the project is in service.

Source: Question CP60, page 13

Median2013DRC = 3.5 FTEs/$100M2012 = 5 FTEs/$100M2011 = 3 FTEs/$100M

Note: the inverse is Budget Managed per PM

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2013 Results

Key Success Factors:Project Management

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Key Success Factors:Project Managers

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outcomes

CAPITAL PROJECTS: AVERAGE "ACTUAL AS A % OF ESTIMATE"

Comments

Calculation used

CP46.1

Mean Quartile

Mean 100 %

Quartile 1 94 %

Quartile 2: 100 %

Quartile 3: 105 %

CP p8

PERCENT OF THE PROJECTS THAT ARE TYPICALLY COMPLETED ON TIME

Comments

Calculation used

CP46.2

Mean Quartile

Mean 71.3 %

Quartile 1 0.9

Quartile 2: 0.7

Quartile 3: 0.5

CP p9

PROJECTS THAT ARE TYPICALLY COMPLETED ON OR UNDER BUDGET

Comments

Calculation used

CP46.3

Mean Quartile

Mean 69.6 %

Quartile 1 82.0 %

Quartile 2: 72.0 %

Quartile 3: 62.8 %

CP p10

Practices and initiatives

Issues found: capital projects

Page # Q # Primary Issue Who

CP 36, #35 is Transmission only and should be removed from graph

1QC

CP 38,39 #35 shows a very high forecast capital spending

35

CP 13 #32 shows high number of PM’s 32

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Thank you for your Input and Participation!

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About 1QC

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Debi McLain [email protected]

Tim. [email protected]

Dave [email protected]

Dave [email protected]

Your Presenters

Ken Buckstaff [email protected]

Capital Projects & Portfolio Management

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