Utility Vegetation Management (UVM) industry cost and reliability performance must be substantially improved to meet increased stakeholder performance expectations. This is driven by a number of factors including inappropriate and fluctuating spending levels, federal, state and local barriers to perform proper maintenance and traditional obsolescence of management and operations work practices. It is important for utility executives to understand that they must change the current UVM industry business practices and environment to meet future performance requirements and stakeholder expectations.
The required changes will not come about merely through increased spending, establishment of performance standards or even performance based regulation. These changes must be driven by utility executives and targeted to fundamentally change the way that the UVM industry is managed in addition to overhauling operational work practices. This change must look and feel like the radical changes that occurred in the nuclear industry in the 1990s. During this period, utilities recognized gross traditional obsolesce and proactively chose to make massive management and operations work practice changes within the nuclear industry. This is what drove best in class cost, scope, schedule, quality and safety performance for the nuclear industry, and a similar approach can transform the UVM industry.
Why Standards and Performance-Based Regulation are Not Enough
UVM standards and Performance-Based Regulation (PBR) will not be the catalyst that drives UVM cost and reliability performance in the future. It will only serve as an enabler. To further examine the perceived performance pretense that standards and PBR will provide the UVM industry, we first need to explore a few important UVM industry performance standards and areas.
1. Substantial UVM Orders, Rules and Regulations within the State of California including General Order 95, Rule 35 which requires that minimal vegetation-conductor clearances must be adhered to at all times.
• Result: Many UVM program budgets nearly tripled. This continues to be driven by complex organization structures and sourcing practices; and redundant work practices utilizing hundreds of third party supplemental contractors
2. Following the August 14, 2003 Blackout, the U.S. – Canada Power System Outage Task Force determined tree trimming to be one of the four primary root causes of the outage.
• Result: North American Electric Reliability Council (NERC) adopted the FAC-003-1 - Transmission Vegetation Management Program standard requiring minimum conductor-vegetation clearances. Utilities are currently assessing increased funding requirements to meet this standard.
3.On April 19, 2004, shortly following the release of the Final Blackout Report, the Federal Energy Regulatory Commission (FERC) issued the UVM order requiring all entities that own, control or operate designated electric transmission facilities in the lower 48 states to provide information on their UVM practices.
• Result: Forty-one electric utility transmission system owners or 29% of the respondents did not perform all the identified vegetation management remediation by the June 14, 2004 reporting date.
4. The NERC third quarter 2005 Vegetation Management Report demonstrated poor vegetation outage performance
• Results: Fifteen vegetation-related outages were reported for 200 kV and higher transmission lines during the third quarter of 2005. (Fourth quarter 2005 reporting is not available at the time of this writing)
5. In January 2005, the Edison Electric Institute (EEI) commissioned Davies Consulting, Inc. (DCI) to conduct The State of Reliability Regulation in the United States study detailing reliability regulation in the United States.
• Results: DCI determined that thirty-nine states and the District of Columbia have at least reliability reporting as a minimum requirement.
6. Due to the recent severe weather trend impacting many of the Eastern states, utility commissions such as the State of Florida are aggressively pursuing hardening of utility infrastructure that includes shorter recommended UVM distribution maintenance cycles.
• Results: While results of commission efforts to date have not been determined, utilities within the State of Florida must be very careful that the past results of the UVM industry in California and elsewhere do not dramatically change the UVM industry landscape in Florida.
Standards and performance based regulation impacting the UVM industry are here to stay. Federal and state regulators have been forced to develop these standards in an attempt to mitigate the poor historical performance of the UVM industry. It would be a mistake to believe that current or emerging UVM standards or PBR alone will drive UVM industry performance to improve. The regulators have established a new reliability performance bar, now it is up to the utility executives to radically change the traditional obsolescence of UVM management processes and operations work practices to perform to these new levels. Only then will breakthrough performance be achieved within the UVM industry such as demonstrated by the nuclear industry during the 1990s.
The Current State of UVM:
Today many UVM programs are attempting to develop annual and five-year business plans but fail to establish appropriate long-term executive support and sponsorship required for successful execution. So often, utilities utilize historical funding levels to drive today’s budget preparation often failing to acknowledge the actual work scope requirements. At the UVM program execution point there is often a lack of centralized decision making critical to drive consistency and deliver results. UVM operational and management oversight are traditionally led by Utility Arborists who have sound UVM technical capabilities but often lack the project management expertise and core competency to successfully deliver higher performance.
The Emergence of Project Management within the UVM Industry
Project Management has become a discipline pursued by most industries to manage change. It is disciplined approach that uses schedules, scope estimates and quality requirements to clearly establish performance expectations. It is used to minimize costs, drive productivity and deliver quality products by managing risk using procurement processes that drive accountability. These processes are managed using competent trained personnel that keep all stakeholders informed as necessary and drive performance. Organizations are dedicating resources to increase their organizational project management maturity by centralizing the oversight of project management people, processes, and tools under the auspices of a Project Management Office (PMO).
Project management is defined by the Project Management Institute (PMI®) as “the application of knowledge, skills, tools and techniques to meet project objectives. Project Management is accomplished through application and integration of the project management processes of initiating, planning, executing, monitoring and controlling, and closing”. PMI’s Guide to the Project Management Body of Knowledge (PMBOK® Guide) states that managing a project includes:
• Identifying requirements
• Achieving clear and achievable objectives
• Balancing the competing demands for quality, scope, time and cost
• Adapting the specifications, plans and approach to the different concerns and expectations of the various stakeholders
The New UVM Industry Paradigm
The UVM industry must proactively embrace and successfully implement project management concepts and principles as the catalyst to drive massive operational and management change to improve system reliability, reduce costs, and maximize productivity.
There are many ways to compare this new way of thinking against the current UVM industry operational and management paradigm. Upon comparison, it is very clear how these successful strategies and elements utilized by high performing industries found outside of the UVM industry can radically change UVM industry performance. Figure 1: Traditional and New UVM Paradigm Comparison provides an overview of many key UVM industry performance improvement opportunities.
-----------------------------
Traditional Paradigm
• Solutions occur at the operational level and are tactical in nature. The results yield problem reoccurrence that leads to higher overhead costs, stagnated effectiveness and erosion of executive management confidence.
• Many UVM programs today lack clear and specific executive management sponsorship. This yields poor organizational accountability and strategic direction that fosters reactive change.
• Years of traditional solutions have lead to overstaffed and highly complex UVM organizational structures. This has created tremendous operational overhead, weak accountability and inconsistent work practices.
• A de-centralized UVM operating structure continues to be a predominant theme found throughout the industry. This results in redundant operations that yields higher overhead costs, inconsistent implementation and often sends mixed messages to key stakeholders.
• Many UVM programs today are stereotypically referred to as the “Forestry Group”; “Line Clearance Department”; “Trees” or “Tree Trimming Department”. This over-simplistic generalization has created a stakeholder perception of low value and creates negative “green” image that minimizes the organizations strategic importance to the corporation.
• The traditional “three bids and a buy” supply management purchasing methodology has significantly contributed and often times stimulated the evolving contractor apathy within the industry. Many contractors have no strategic incentive to perform any better than the level that the utility has outlined. The result is higher long-term costs, reactive responses to emerging problems and a continued lack of performance innovation.
• Today, many programs consider business planning as a foreign concept. They operate from a tactical level and have no incentive for strategic thinking due to the reactive nature of the industry. This results in significant fluctuations in funding levels, poor reliability performance and a spiraling work scope that lacks disciplined schedule adherence.
• Key Stakeholders both inside and outside the utility have an individualistic attitude and relationship towards each other. They often operate independent of one another. This results in lower customer satisfaction and creates redundant operational applications that ultimately increase the scope of work and operational costs. These conflicting priorities stimulate the reactive nature of the industry.
• Due to the complex and evolving nature of UVM industry. There is an enormous risk exposure to all of the key stakeholders in the form of liability, reliability performance and customer satisfaction. Fluctuating funding levels, lack of schedule adherence and ignored work scope represent the root cause of this exposure. The resulting risk mitigation is highly reactive and often creates higher costs.
• Traditional UVM personnel and the operating infrastructures, processes and procedures and performance they have created over time have not evolved or adapted to the changing needs and increased expectations of corporate executive management. Many programs continue to operate in a vacuum continuously churning out substandard results.
• Information technology has seemingly passed by many of today’s UVM programs. This supports the fact that many programs continue to operate by traditional means. The lack of strategic vision specific to the implementation of advanced information systems has created a performance improvement void that results in reactive decision making and missed operational management enhancement opportunities.
-----------------------------
New UVM Paradigm
• Solutions must occur at the executive management level and are strategic based. They must rely on focused return on investment (ROI) decisions that leverage calculated cost benefit analyses.
• Executive management must assume a proactive sponsorship role in coaching and mentoring their programs. This highly interactive and supportive leadership linkage is critical to creating a dynamic synergy throughout the organization.
• Lean and highly structured UVM organizations that focus on single point of accountability will drive total value optimization. This will maximize the business orientation; create strategic vision and problem solving from a root cause perspective.
• Lean centralized UVM organizations will rapidly implement business strategies in a highly efficient and consist fashion. This will result in greater executive management confidence, lower operating costs and focused and specific performance enhancement solutions.
• Stakeholders will view the organizations of the future as dynamic and business driven Utility Vegetation Management Programs that are led by a team of progressive and highly skilled professionals. They will represent the model that other departments will strive to match. The image will emulate business savvy leadership of the highest competence.
• Top quartile organizations will leverage and develop dynamic strategic partnerships with their key vendors. This powerful synergy will catapult both organizations into a mutually beneficial relationship that will ultimately reduce long-term costs and optimize performance through innovation, continuous improvement and consistent operations execution.
• Leading organizations will utilize a comprehensive business plans as their primary foundational cornerstone. This plan will be the strategic platform for all business planning decisions. It will contain historical and future performance data, funding levels and strategic and tactical initiatives that will be used to ensure corporate and department goal and objective linkage. It will be the document that executive management utilizes to ensure that the corporate return on investment (ROI) is optimized.
• Synergistic cooperation among key stakeholders including utilities, municipalities, railroads and the State Department of Transportation will reduce work scope, maximize the return on investment (ROI) and improve customer satisfaction. The formation of these strategic relationships is paramount to significant performance improvement breakthrough opportunities.
• Calculated and quantifiable risk management strategies that proactively recognize, rapidly assess and strategically execute corrective actions will be the key to minimizing the risk exposure. This will ensure safety and improved reliability and customer satisfaction.
• Executive management must demand and expect a consistent high level of performance that is focused on strategic business planning and disciplined project management execution that leverages non-traditional perspectives to innovative solutions. These programs must be capable of rapidly adapting to corporate strategy changes associated with mergers and acquisitions.
• Top quartile UVM programs will proactively assess their opportunities and applications and rapidly capitalize on the installation of the latest information technology and systems integration tools. Advancements in Internet, Geographic Information Systems (GIS) and data management systems that spatially represent information will provide quantum levels of improvement in operational areas such as work scope management, information management and communications.
-----------------------------
Identifying Requirements
The new paradigm focused on project management will require that corporate strategic plans fully support the UVM annual and five-year business plans. The UVM work scope within the annual plan is estimated against actual work scope and is fully supported by the corporate budget. All work scope plans and budgets are placed under a formal change control process. Formal and documented processes are established to estimate the work, develop credible schedules and contract the work. The annual and five-year UVM plan will meet regulatory and system reliability performance objectives.
A UVM PMO will establish and enforce project management processes and procedures. Utilities information technology will support the development of credible estimates and schedules. This technology can monitor cost and schedule performance. Appropriate software tools will be utilized to establish work scope prioritization in order to obtain the highest degree of system reliability for the UVM budget. The work scope specifications and objectives will be clearly defined. The vendor(s) will know exactly what is expected. Estimating tools will be based on actual work scope and not on historical parametric estimating factors. Simple estimating tools are developed using GPS technology to capture the scope and estimate of the work on a common data base.
Other industries have found that the only way to consistently improve performance is to measure performance against benchmarks or standards. The construction industry has established reliable productivity benchmarks which are used to accurately estimate a known scope of work. This allows the owner to decide if the venture fits into the annual budget constraints. It provides the basis for making adjustments to the work scope prior to initiating the activities. Similar benchmarks (estimating standards) can be developed by UVM to allow the right decisions to be made in developing the annual plan and five year plans. These estimates of desired work scope along with reliability modeling software will help the utility identify the right requirements for UVM. The UVM requirements will be tied directly to reliability along with an accurate reflection of the budget required to meet the reliability objectives.
Achieving Clear and Achievable Objectives:
A significant relationship and operational gap exists between utilities and vendors resulting in substantially lower performance, redundant work practices and much higher costs. The bottom line is that Utility Arborists don’t trust vendors and vendors only perform to the degree requested or required by the utility. This “parent-child” relationship gap must be eliminated for the industry to mature to higher performance levels. UVM vendors possess over 50% of the cost, productivity, reliability performance enhancement solutions and are rarely provided uninhibited opportunity to add greater value. It is very clear that Utility Arborists seek to obtain operational and management dominance over vendors primarily to justify their positions or because of some past incidents that have occurred. This long running issue has been a primary driver in the erratic performance of vendors and the shrinking vendor base.
Finally, many utilities are utilizing “cycles” as the basis for establishing a Preventive Maintenance plan. Overlooking an asset management based optimization process to develop annual and long-term plans supports the fact that the UVM industry has many obsolete work practices. In the new project management paradigm, it will be critical that utilities eliminate the costly and unnecessary operational work practice that requires sometimes hundreds of third party quality control or work planners to support UVM programs. A few questions remain regarding this subject:
1. What is the total process cost to utilize third party contractors as UVM program supplemental labor?
2. What is the total value of this traditional practice?
3. Why can’t vendors provide first time quality and appropriate work planning?
4. To what degree do Utility Arborists justify their positions with respect to quality and work planning management or oversight?
5. How can major construction projects, nuclear power plant outages and car manufacturing projects constantly deliver first time quality and on cost and schedule performance without utilizing a complex structure such as found within the UVM industry?
The new project management paradigm will require that all UVM Preventive and Corrective Maintenance work scope support the utilities system reliability and cost goals and objectives. The work will be performed cost effectively by empowered vendors. Cost effective performance and productivity is enhanced by eliminating duplication of effort and making the appropriate UVM operational stakeholders accountable. Thus eliminating the redundant work practices and high cost associated with over functioning UVM staff.
Reliability modeling software will be used to identify the highest priority Preventive Maintenance work. The work scope is captured in manageable size work packages aligned with the UVM Annual Plan detailing work scope. These work packages provide the work scope specifications, resource requirements, schedule requirements, assumptions and quality standards. System reliability and regulatory compliance requirements will drive the scope of work.
The work packages would be estimated by actual utility personnel utilizing a valid estimating process supported by the vendors. These work packages would be placed under contract with a VM vendor using an incentive and penalty structure contracting structure. The UVM program will establish long-term collaborative partnerships with vendors to minimize duplication of effort. Changes to the work package will be under documented change control processes. Impacts for changes will be assessed prior to approval. Approved changes are negotiated and the contract changed accordingly. In addition, schedules and budgets will be systematically changed to reflect the impact of approved scope change.
The vendors will schedule the resources required to perform the work package and status of the work performed is reported to the UVM department. The vendors are 100% accountable to deliver first time quality with the utility performing minimal but appropriate statistical quality control validation. Any work that does not meet the quality requirements in the work package must be reworked prior to acceptance of the work package for payment.
Contract management has been found as a critical element when deciding to buy services. Clearly defined contractual requirements, a well defined scope of work, well understood and enforceable specifications, vendors having a common vision of success, and competent oversight provides an environment to successfully manage a contract. Construction and IT industries have found that many contracts have failed to deliver the desired results when these elements are not present.
Balancing the Competing Demands for Quality, Scope, Time and Cost
The fatal flaw within the UVM industry today which strongly supports obsolesce of traditional approaches is the inability of the Utility Arborist and vendors to appropriately assign and manage the demands associated with quality, scope, time and cost. Instead of serving as effective Project Managers, Utility Arborists feel compelled to often manage vendor’s quality, scope, time and cost processes. This is also known to occur in highly inconsistent bases fostering further UVM program operational and management performance sub-optimization. In the future, Utility Arborists must serve as highly efficient Project Managers and vendors must act as high performing partners proactively manage quality, scope, time and cost parameters.
This new project management paradigm will require that the UVM five-year and annual plan are based on getting maximum system reliability for the budgets allotted. The work packages established by the utility clearly define the scope and that quality specifications dictate acceptance requirement for the work performed. The requirements drive system reliability based on type of vegetation, clearances and removals that are required. Federal, state and local barriers are collaboratively, proactively and aggressively resolved by all key stakeholders.
The vendors will be rewarded for meeting or exceeding cost, schedule and quality requirements. They have documented quality programs that assure that quality and specifications are met the first time, on schedule under budget. The vendors assume day to day resource and work scope scheduling accountability based on the UVM program annual plan. Deviations to the contract and work package are handled through a systematic change control process. Project management software tools will be used to status work packages and help identify performance issues.
The construction industry has found that establishing partnerships with their vendors often helps improve quality and reduces costs. Vendors that become part of the solution instead of blindly following direction from the owner have paid significant dividends. No one understands how to improve performance better than the people performing the work. Doing the work right the first time simplifies work acceptance and always saves money even if rework is part of the contract.
Adapting to the Different Concerns and Expectations of the Various Stakeholders
The performance challenges surrounding the UVM industry are not new. One of the reasons for the obsolesce of traditional UVM practices is the fact that the industry has not been successful in consistently adapting annual plans, approaches and operations to the emerging expectations of key stakeholders. Significant and recurring historic key stakeholder challenges exist with the UVM industry. These challenges include:
UVM Personnel
• Continued use of high cost and obsolete operational and management business practices
• Inappropriate business literacy and project management skill set
• Use of third party supplemental resource driving complexity and higher costs
Utility Executive Management
• Inconsistent and inappropriate long-term UVM program funding
• Hands-off day-to-day UVM program sponsorship
• Inappropriate IT systems and tools support
• Inconsistent customer, agency and municipal interactions
Regulators
• Believing the UVM program standards will drive increased performance
• Historically inconsistent UVM reliability performance expectations
• Inability to effectively support utilities against inappropriate federal, state and local barriers
Vendors
• Lack of proactive operational innovation and continuous improvement
• Shrinking vendor base
• Inconsistent use of long-term collaborative partnership procurement strategy
• Lack of motivating and delivering on contract incentives
Governmental Agencies
• Practices often support barriers to performing required UVM work
• Lack collaborative partnerships with the UVM industry
The solution to these challenges lies in the ability of all five key stakeholder groups to collectively eliminate each barrier in which they can influence. The most effective way to accomplish this is through project management techniques and processes. Within the new project management paradigm, competing priorities will be mitigated by developing a common vision and set off objectives for all key UVM stakeholders. An efficient and comprehensive risk management process will drive this mitigation effort. Impacts to the annual and five-year UVM plans will be analyzed prior to approval for impacts on schedule, cost and quality.
Conclusion
In a recent study by the Center for Business Practices (2006), 364 organizations reported that improving their project management practices resulted in an average performance improvement of more than 37%. Project management will likewise help the UVM industry to drive efficiency and effectiveness, improve its ability to measure and report progress, and provide faster identification of failing work packages and contracts. Electric utility executives must make a conscious decision to fundamentally change the way their UVM programs are being managed, and leverage project management practices to improve performance. Only then will the benefits derived from project management been realized by the UVM industry. As an executive ask your self – What is the unrealized value found within your UVM program worth to the corporation? In the future, enhanced UVM industry cost and reliability performance rests squarely on the shoulders of utility executive leadership. Utility leadership must challenge and radically change traditional and obsolete UVM operational and management practices in order to achieve the performance results found outside of the UVM industry.
About the Authors
Rick Hollenbaugh is the founder and President of Everest Management Consultants, Inc., an organization specializing in progressive business-driven electric Utility Vegetation Management solutions.
http://www.everestmci.com, email : rick.hollenbaugh@everestmci.com
Jerry Ostrander PMP has 26 years project management experience and is a Managing Consultant with Project Management Solutions. Project Management Solutions is a management consulting firm dedicated to helping clients optimize performance and execute business strategies through effective project management practices.
http://www.pmsolutions.com, email : gostrander@pmsolutions.com
“PMI” and “PMBOK” are registered trademarks of the Project Management Institute, Inc.
The required changes will not come about merely through increased spending, establishment of performance standards or even performance based regulation. These changes must be driven by utility executives and targeted to fundamentally change the way that the UVM industry is managed in addition to overhauling operational work practices. This change must look and feel like the radical changes that occurred in the nuclear industry in the 1990s. During this period, utilities recognized gross traditional obsolesce and proactively chose to make massive management and operations work practice changes within the nuclear industry. This is what drove best in class cost, scope, schedule, quality and safety performance for the nuclear industry, and a similar approach can transform the UVM industry.
Why Standards and Performance-Based Regulation are Not Enough
UVM standards and Performance-Based Regulation (PBR) will not be the catalyst that drives UVM cost and reliability performance in the future. It will only serve as an enabler. To further examine the perceived performance pretense that standards and PBR will provide the UVM industry, we first need to explore a few important UVM industry performance standards and areas.
1. Substantial UVM Orders, Rules and Regulations within the State of California including General Order 95, Rule 35 which requires that minimal vegetation-conductor clearances must be adhered to at all times.
• Result: Many UVM program budgets nearly tripled. This continues to be driven by complex organization structures and sourcing practices; and redundant work practices utilizing hundreds of third party supplemental contractors
2. Following the August 14, 2003 Blackout, the U.S. – Canada Power System Outage Task Force determined tree trimming to be one of the four primary root causes of the outage.
• Result: North American Electric Reliability Council (NERC) adopted the FAC-003-1 - Transmission Vegetation Management Program standard requiring minimum conductor-vegetation clearances. Utilities are currently assessing increased funding requirements to meet this standard.
3.On April 19, 2004, shortly following the release of the Final Blackout Report, the Federal Energy Regulatory Commission (FERC) issued the UVM order requiring all entities that own, control or operate designated electric transmission facilities in the lower 48 states to provide information on their UVM practices.
• Result: Forty-one electric utility transmission system owners or 29% of the respondents did not perform all the identified vegetation management remediation by the June 14, 2004 reporting date.
4. The NERC third quarter 2005 Vegetation Management Report demonstrated poor vegetation outage performance
• Results: Fifteen vegetation-related outages were reported for 200 kV and higher transmission lines during the third quarter of 2005. (Fourth quarter 2005 reporting is not available at the time of this writing)
5. In January 2005, the Edison Electric Institute (EEI) commissioned Davies Consulting, Inc. (DCI) to conduct The State of Reliability Regulation in the United States study detailing reliability regulation in the United States.
• Results: DCI determined that thirty-nine states and the District of Columbia have at least reliability reporting as a minimum requirement.
6. Due to the recent severe weather trend impacting many of the Eastern states, utility commissions such as the State of Florida are aggressively pursuing hardening of utility infrastructure that includes shorter recommended UVM distribution maintenance cycles.
• Results: While results of commission efforts to date have not been determined, utilities within the State of Florida must be very careful that the past results of the UVM industry in California and elsewhere do not dramatically change the UVM industry landscape in Florida.
Standards and performance based regulation impacting the UVM industry are here to stay. Federal and state regulators have been forced to develop these standards in an attempt to mitigate the poor historical performance of the UVM industry. It would be a mistake to believe that current or emerging UVM standards or PBR alone will drive UVM industry performance to improve. The regulators have established a new reliability performance bar, now it is up to the utility executives to radically change the traditional obsolescence of UVM management processes and operations work practices to perform to these new levels. Only then will breakthrough performance be achieved within the UVM industry such as demonstrated by the nuclear industry during the 1990s.
The Current State of UVM:
Today many UVM programs are attempting to develop annual and five-year business plans but fail to establish appropriate long-term executive support and sponsorship required for successful execution. So often, utilities utilize historical funding levels to drive today’s budget preparation often failing to acknowledge the actual work scope requirements. At the UVM program execution point there is often a lack of centralized decision making critical to drive consistency and deliver results. UVM operational and management oversight are traditionally led by Utility Arborists who have sound UVM technical capabilities but often lack the project management expertise and core competency to successfully deliver higher performance.
The Emergence of Project Management within the UVM Industry
Project Management has become a discipline pursued by most industries to manage change. It is disciplined approach that uses schedules, scope estimates and quality requirements to clearly establish performance expectations. It is used to minimize costs, drive productivity and deliver quality products by managing risk using procurement processes that drive accountability. These processes are managed using competent trained personnel that keep all stakeholders informed as necessary and drive performance. Organizations are dedicating resources to increase their organizational project management maturity by centralizing the oversight of project management people, processes, and tools under the auspices of a Project Management Office (PMO).
Project management is defined by the Project Management Institute (PMI®) as “the application of knowledge, skills, tools and techniques to meet project objectives. Project Management is accomplished through application and integration of the project management processes of initiating, planning, executing, monitoring and controlling, and closing”. PMI’s Guide to the Project Management Body of Knowledge (PMBOK® Guide) states that managing a project includes:
• Identifying requirements
• Achieving clear and achievable objectives
• Balancing the competing demands for quality, scope, time and cost
• Adapting the specifications, plans and approach to the different concerns and expectations of the various stakeholders
The New UVM Industry Paradigm
The UVM industry must proactively embrace and successfully implement project management concepts and principles as the catalyst to drive massive operational and management change to improve system reliability, reduce costs, and maximize productivity.
There are many ways to compare this new way of thinking against the current UVM industry operational and management paradigm. Upon comparison, it is very clear how these successful strategies and elements utilized by high performing industries found outside of the UVM industry can radically change UVM industry performance. Figure 1: Traditional and New UVM Paradigm Comparison provides an overview of many key UVM industry performance improvement opportunities.
-----------------------------
Traditional Paradigm
• Solutions occur at the operational level and are tactical in nature. The results yield problem reoccurrence that leads to higher overhead costs, stagnated effectiveness and erosion of executive management confidence.
• Many UVM programs today lack clear and specific executive management sponsorship. This yields poor organizational accountability and strategic direction that fosters reactive change.
• Years of traditional solutions have lead to overstaffed and highly complex UVM organizational structures. This has created tremendous operational overhead, weak accountability and inconsistent work practices.
• A de-centralized UVM operating structure continues to be a predominant theme found throughout the industry. This results in redundant operations that yields higher overhead costs, inconsistent implementation and often sends mixed messages to key stakeholders.
• Many UVM programs today are stereotypically referred to as the “Forestry Group”; “Line Clearance Department”; “Trees” or “Tree Trimming Department”. This over-simplistic generalization has created a stakeholder perception of low value and creates negative “green” image that minimizes the organizations strategic importance to the corporation.
• The traditional “three bids and a buy” supply management purchasing methodology has significantly contributed and often times stimulated the evolving contractor apathy within the industry. Many contractors have no strategic incentive to perform any better than the level that the utility has outlined. The result is higher long-term costs, reactive responses to emerging problems and a continued lack of performance innovation.
• Today, many programs consider business planning as a foreign concept. They operate from a tactical level and have no incentive for strategic thinking due to the reactive nature of the industry. This results in significant fluctuations in funding levels, poor reliability performance and a spiraling work scope that lacks disciplined schedule adherence.
• Key Stakeholders both inside and outside the utility have an individualistic attitude and relationship towards each other. They often operate independent of one another. This results in lower customer satisfaction and creates redundant operational applications that ultimately increase the scope of work and operational costs. These conflicting priorities stimulate the reactive nature of the industry.
• Due to the complex and evolving nature of UVM industry. There is an enormous risk exposure to all of the key stakeholders in the form of liability, reliability performance and customer satisfaction. Fluctuating funding levels, lack of schedule adherence and ignored work scope represent the root cause of this exposure. The resulting risk mitigation is highly reactive and often creates higher costs.
• Traditional UVM personnel and the operating infrastructures, processes and procedures and performance they have created over time have not evolved or adapted to the changing needs and increased expectations of corporate executive management. Many programs continue to operate in a vacuum continuously churning out substandard results.
• Information technology has seemingly passed by many of today’s UVM programs. This supports the fact that many programs continue to operate by traditional means. The lack of strategic vision specific to the implementation of advanced information systems has created a performance improvement void that results in reactive decision making and missed operational management enhancement opportunities.
-----------------------------
New UVM Paradigm
• Solutions must occur at the executive management level and are strategic based. They must rely on focused return on investment (ROI) decisions that leverage calculated cost benefit analyses.
• Executive management must assume a proactive sponsorship role in coaching and mentoring their programs. This highly interactive and supportive leadership linkage is critical to creating a dynamic synergy throughout the organization.
• Lean and highly structured UVM organizations that focus on single point of accountability will drive total value optimization. This will maximize the business orientation; create strategic vision and problem solving from a root cause perspective.
• Lean centralized UVM organizations will rapidly implement business strategies in a highly efficient and consist fashion. This will result in greater executive management confidence, lower operating costs and focused and specific performance enhancement solutions.
• Stakeholders will view the organizations of the future as dynamic and business driven Utility Vegetation Management Programs that are led by a team of progressive and highly skilled professionals. They will represent the model that other departments will strive to match. The image will emulate business savvy leadership of the highest competence.
• Top quartile organizations will leverage and develop dynamic strategic partnerships with their key vendors. This powerful synergy will catapult both organizations into a mutually beneficial relationship that will ultimately reduce long-term costs and optimize performance through innovation, continuous improvement and consistent operations execution.
• Leading organizations will utilize a comprehensive business plans as their primary foundational cornerstone. This plan will be the strategic platform for all business planning decisions. It will contain historical and future performance data, funding levels and strategic and tactical initiatives that will be used to ensure corporate and department goal and objective linkage. It will be the document that executive management utilizes to ensure that the corporate return on investment (ROI) is optimized.
• Synergistic cooperation among key stakeholders including utilities, municipalities, railroads and the State Department of Transportation will reduce work scope, maximize the return on investment (ROI) and improve customer satisfaction. The formation of these strategic relationships is paramount to significant performance improvement breakthrough opportunities.
• Calculated and quantifiable risk management strategies that proactively recognize, rapidly assess and strategically execute corrective actions will be the key to minimizing the risk exposure. This will ensure safety and improved reliability and customer satisfaction.
• Executive management must demand and expect a consistent high level of performance that is focused on strategic business planning and disciplined project management execution that leverages non-traditional perspectives to innovative solutions. These programs must be capable of rapidly adapting to corporate strategy changes associated with mergers and acquisitions.
• Top quartile UVM programs will proactively assess their opportunities and applications and rapidly capitalize on the installation of the latest information technology and systems integration tools. Advancements in Internet, Geographic Information Systems (GIS) and data management systems that spatially represent information will provide quantum levels of improvement in operational areas such as work scope management, information management and communications.
-----------------------------
Identifying Requirements
The new paradigm focused on project management will require that corporate strategic plans fully support the UVM annual and five-year business plans. The UVM work scope within the annual plan is estimated against actual work scope and is fully supported by the corporate budget. All work scope plans and budgets are placed under a formal change control process. Formal and documented processes are established to estimate the work, develop credible schedules and contract the work. The annual and five-year UVM plan will meet regulatory and system reliability performance objectives.
A UVM PMO will establish and enforce project management processes and procedures. Utilities information technology will support the development of credible estimates and schedules. This technology can monitor cost and schedule performance. Appropriate software tools will be utilized to establish work scope prioritization in order to obtain the highest degree of system reliability for the UVM budget. The work scope specifications and objectives will be clearly defined. The vendor(s) will know exactly what is expected. Estimating tools will be based on actual work scope and not on historical parametric estimating factors. Simple estimating tools are developed using GPS technology to capture the scope and estimate of the work on a common data base.
Other industries have found that the only way to consistently improve performance is to measure performance against benchmarks or standards. The construction industry has established reliable productivity benchmarks which are used to accurately estimate a known scope of work. This allows the owner to decide if the venture fits into the annual budget constraints. It provides the basis for making adjustments to the work scope prior to initiating the activities. Similar benchmarks (estimating standards) can be developed by UVM to allow the right decisions to be made in developing the annual plan and five year plans. These estimates of desired work scope along with reliability modeling software will help the utility identify the right requirements for UVM. The UVM requirements will be tied directly to reliability along with an accurate reflection of the budget required to meet the reliability objectives.
Achieving Clear and Achievable Objectives:
A significant relationship and operational gap exists between utilities and vendors resulting in substantially lower performance, redundant work practices and much higher costs. The bottom line is that Utility Arborists don’t trust vendors and vendors only perform to the degree requested or required by the utility. This “parent-child” relationship gap must be eliminated for the industry to mature to higher performance levels. UVM vendors possess over 50% of the cost, productivity, reliability performance enhancement solutions and are rarely provided uninhibited opportunity to add greater value. It is very clear that Utility Arborists seek to obtain operational and management dominance over vendors primarily to justify their positions or because of some past incidents that have occurred. This long running issue has been a primary driver in the erratic performance of vendors and the shrinking vendor base.
Finally, many utilities are utilizing “cycles” as the basis for establishing a Preventive Maintenance plan. Overlooking an asset management based optimization process to develop annual and long-term plans supports the fact that the UVM industry has many obsolete work practices. In the new project management paradigm, it will be critical that utilities eliminate the costly and unnecessary operational work practice that requires sometimes hundreds of third party quality control or work planners to support UVM programs. A few questions remain regarding this subject:
1. What is the total process cost to utilize third party contractors as UVM program supplemental labor?
2. What is the total value of this traditional practice?
3. Why can’t vendors provide first time quality and appropriate work planning?
4. To what degree do Utility Arborists justify their positions with respect to quality and work planning management or oversight?
5. How can major construction projects, nuclear power plant outages and car manufacturing projects constantly deliver first time quality and on cost and schedule performance without utilizing a complex structure such as found within the UVM industry?
The new project management paradigm will require that all UVM Preventive and Corrective Maintenance work scope support the utilities system reliability and cost goals and objectives. The work will be performed cost effectively by empowered vendors. Cost effective performance and productivity is enhanced by eliminating duplication of effort and making the appropriate UVM operational stakeholders accountable. Thus eliminating the redundant work practices and high cost associated with over functioning UVM staff.
Reliability modeling software will be used to identify the highest priority Preventive Maintenance work. The work scope is captured in manageable size work packages aligned with the UVM Annual Plan detailing work scope. These work packages provide the work scope specifications, resource requirements, schedule requirements, assumptions and quality standards. System reliability and regulatory compliance requirements will drive the scope of work.
The work packages would be estimated by actual utility personnel utilizing a valid estimating process supported by the vendors. These work packages would be placed under contract with a VM vendor using an incentive and penalty structure contracting structure. The UVM program will establish long-term collaborative partnerships with vendors to minimize duplication of effort. Changes to the work package will be under documented change control processes. Impacts for changes will be assessed prior to approval. Approved changes are negotiated and the contract changed accordingly. In addition, schedules and budgets will be systematically changed to reflect the impact of approved scope change.
The vendors will schedule the resources required to perform the work package and status of the work performed is reported to the UVM department. The vendors are 100% accountable to deliver first time quality with the utility performing minimal but appropriate statistical quality control validation. Any work that does not meet the quality requirements in the work package must be reworked prior to acceptance of the work package for payment.
Contract management has been found as a critical element when deciding to buy services. Clearly defined contractual requirements, a well defined scope of work, well understood and enforceable specifications, vendors having a common vision of success, and competent oversight provides an environment to successfully manage a contract. Construction and IT industries have found that many contracts have failed to deliver the desired results when these elements are not present.
Balancing the Competing Demands for Quality, Scope, Time and Cost
The fatal flaw within the UVM industry today which strongly supports obsolesce of traditional approaches is the inability of the Utility Arborist and vendors to appropriately assign and manage the demands associated with quality, scope, time and cost. Instead of serving as effective Project Managers, Utility Arborists feel compelled to often manage vendor’s quality, scope, time and cost processes. This is also known to occur in highly inconsistent bases fostering further UVM program operational and management performance sub-optimization. In the future, Utility Arborists must serve as highly efficient Project Managers and vendors must act as high performing partners proactively manage quality, scope, time and cost parameters.
This new project management paradigm will require that the UVM five-year and annual plan are based on getting maximum system reliability for the budgets allotted. The work packages established by the utility clearly define the scope and that quality specifications dictate acceptance requirement for the work performed. The requirements drive system reliability based on type of vegetation, clearances and removals that are required. Federal, state and local barriers are collaboratively, proactively and aggressively resolved by all key stakeholders.
The vendors will be rewarded for meeting or exceeding cost, schedule and quality requirements. They have documented quality programs that assure that quality and specifications are met the first time, on schedule under budget. The vendors assume day to day resource and work scope scheduling accountability based on the UVM program annual plan. Deviations to the contract and work package are handled through a systematic change control process. Project management software tools will be used to status work packages and help identify performance issues.
The construction industry has found that establishing partnerships with their vendors often helps improve quality and reduces costs. Vendors that become part of the solution instead of blindly following direction from the owner have paid significant dividends. No one understands how to improve performance better than the people performing the work. Doing the work right the first time simplifies work acceptance and always saves money even if rework is part of the contract.
Adapting to the Different Concerns and Expectations of the Various Stakeholders
The performance challenges surrounding the UVM industry are not new. One of the reasons for the obsolesce of traditional UVM practices is the fact that the industry has not been successful in consistently adapting annual plans, approaches and operations to the emerging expectations of key stakeholders. Significant and recurring historic key stakeholder challenges exist with the UVM industry. These challenges include:
UVM Personnel
• Continued use of high cost and obsolete operational and management business practices
• Inappropriate business literacy and project management skill set
• Use of third party supplemental resource driving complexity and higher costs
Utility Executive Management
• Inconsistent and inappropriate long-term UVM program funding
• Hands-off day-to-day UVM program sponsorship
• Inappropriate IT systems and tools support
• Inconsistent customer, agency and municipal interactions
Regulators
• Believing the UVM program standards will drive increased performance
• Historically inconsistent UVM reliability performance expectations
• Inability to effectively support utilities against inappropriate federal, state and local barriers
Vendors
• Lack of proactive operational innovation and continuous improvement
• Shrinking vendor base
• Inconsistent use of long-term collaborative partnership procurement strategy
• Lack of motivating and delivering on contract incentives
Governmental Agencies
• Practices often support barriers to performing required UVM work
• Lack collaborative partnerships with the UVM industry
The solution to these challenges lies in the ability of all five key stakeholder groups to collectively eliminate each barrier in which they can influence. The most effective way to accomplish this is through project management techniques and processes. Within the new project management paradigm, competing priorities will be mitigated by developing a common vision and set off objectives for all key UVM stakeholders. An efficient and comprehensive risk management process will drive this mitigation effort. Impacts to the annual and five-year UVM plans will be analyzed prior to approval for impacts on schedule, cost and quality.
Conclusion
In a recent study by the Center for Business Practices (2006), 364 organizations reported that improving their project management practices resulted in an average performance improvement of more than 37%. Project management will likewise help the UVM industry to drive efficiency and effectiveness, improve its ability to measure and report progress, and provide faster identification of failing work packages and contracts. Electric utility executives must make a conscious decision to fundamentally change the way their UVM programs are being managed, and leverage project management practices to improve performance. Only then will the benefits derived from project management been realized by the UVM industry. As an executive ask your self – What is the unrealized value found within your UVM program worth to the corporation? In the future, enhanced UVM industry cost and reliability performance rests squarely on the shoulders of utility executive leadership. Utility leadership must challenge and radically change traditional and obsolete UVM operational and management practices in order to achieve the performance results found outside of the UVM industry.
About the Authors
Rick Hollenbaugh is the founder and President of Everest Management Consultants, Inc., an organization specializing in progressive business-driven electric Utility Vegetation Management solutions.
http://www.everestmci.com, email : rick.hollenbaugh@everestmci.com
Jerry Ostrander PMP has 26 years project management experience and is a Managing Consultant with Project Management Solutions. Project Management Solutions is a management consulting firm dedicated to helping clients optimize performance and execute business strategies through effective project management practices.
http://www.pmsolutions.com, email : gostrander@pmsolutions.com
“PMI” and “PMBOK” are registered trademarks of the Project Management Institute, Inc.
