Project Management Institute

Keeping current

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With more than 3,000 km of pipeline network and an 85 percent economic reach in mainland China, Hong Kong and China Gas Co. supplies gas to over 1.4 million customers. Shown is the Tai Po production plant.

SOURCE: HONG KONG AND CHINA GAS

BY DAVID SOYKA

Utilities must provide service on demand, whenever and in what-ever quantities customers want it, regardless of regulatory, environmental, technical and economic factors. To complicate matters, the industry trend is moving to separate retail distribution from the generation and transmission functions.

Lessons Learned

  • How an “old-time” utility used change management to meet new business challenges
  • How to implement project management principles to be accepted and applied throughout the organization
  • How to avoid attitudes that inhibit successful project management.

There's more to a utility project than getting a department to assemble the pieces; nor is it a matter of “build it, and they will come.” Internal and external factors influence whether the actual deliverable adequately contributes to providing necessary capacity and works efficiently with other systems—some of which may not be under the utility's direct control, says Robin MacLaren, managing director of transmission and distribution of ScottishPower, based in Glasgow, Scotland. Two parallel factors have combined to get utilities to rethink project management as something more complex and transformational: deregulation and new technology.

[We wanted] team players with good analysis skills. We also adopted a cross-discipline approach to gain an outsider's perspective. For example, someone from the financial area might look at customer service processes and vice versa.

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SUNNY LEE,
CHIEF INFORMATION OFFICER, HONG KONG AND CHINA GAS, HONG KO N G, CHINA

PHOTO BY RICHARD JONES/SINOPIX

The focus must be on the company's people and how they work, not simply their tools or end-results. “About 10 years ago I was assigned the project of updating our mish-mash of IT systems,” MacLaren says. But the scope of the problem went beyond incompatible technology. Successful integration had to be based on how people did their work, not how the technology did work for them. “I realized this wasn't about IT, it was about managing basic change and transformation at all levels of the company to properly respond to new business conditions.”

Brave New World

The first gas utility established in the Far East, Hong Kong and China Gas knows the same growing pains. “In 1995, we realized we needed to get ready for more intense competition and to improve our response to customer expectations and demand,” says Sunny Lee, the firm's chief information officer. “This involved more than just extending our pipe network. It meant looking at our business processes and underlying IT systems, and then engaging in a total re-engineering of the company to entirely change the existing mindset.”

The effort proved quite a challenge for a company founded in 1862. The oldest public utility in Hong Kong, the firm recognized the importance of an independent project management team, a knowledgeable, flexible and adaptable work-force, and patient planning and execution.

“We assembled an entirely separate organization that didn't report to anyone, so they were free to challenge anything,” Lee says. “They were to work as if they were starting a new company to compete against Hong Kong and China Gas. How would they define their organization? What would be the business structure? What skills would their employees require?”

In selecting team members, the company didn't consider years of experience or rank. “What was important was their business knowledge and their willingness to think out-of-the box,” Lee explains. “[We wanted] team players with good analysis skills. We also adopted a cross-discipline approach to gain an outsider's perspective. For example, someone from the financial area might look at customer service processes and vice versa.”

Lee believes you should define business processes that enable the company to meet customer needs—don't let software capabilities dictate how you define processes. However, once you've decided business processes and the software that best satisfies them, be flexible. “If you find that you would like to customize too many features, you'd be better off in terms of cost and time to just build the system from scratch,” says Lee.

HELPING HANDS

No matter the breadth and depth of the workforce, some projects require bringing in outside consultants. At Ireland's airtricity, an entrepreneurial company in the emerging European windmill power generation business, using consultants is key to its business plan. “We're now in the stage of engaging various consultants and contractors experienced in offshore oil and gas to build a wind park consisting of 200 turbines,” says Offshore Project Manager Pamela Walsh. “As the project rolls out, we'll build new project teams to manage the contract work required for each phase.”

Consultants also are a good resource for learning the latest best practices at one stage that your own people can take in hand to do the actual implementation. They can save costs and allow your people to further commit to the success of system changes. “We had a consultant come in to help formulate our IT needs assessment,” says Hong Kong and China Gas CIO Sunny Lee. “But when it came time to execute software installation, we felt our local team had acquired the necessary competencies to do the actual implementation.”

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Currently, airtricity is developing the “world's largest offshore wind park,” which will consist of 200 turbines, off the coast of Arklow, Wicklow, Ireland. On 11 January 2002, the Department of the Marine and Natural Resources granted airtricity a foreshore lease for construction of the wind park. The decision followed a formal planning process and public display period.

SOURCE: AIRTRICITY, IRELAND

Executive Suite

Managing enterprisewide change starts at the top. Oregon, USA-based PacifiCorp, a Scottish Power partner, follows a forward-thinking model in which projects are assigned to a steering committee that includes the project sponsor, usually the senior vice president of the business unit where the project originates, as well as other senior-level executives from other units. This ensures that everyone in the company is in the loop about how a particular project will impact a business unit. It's also meant to guarantee “buy-in” for other business units that will supply resources and people as needed to implement or support the project. “The project manager should be viewed throughout the entire organization as the individual empowered to get things done,” says MacLaren, who helped structure PacifiCorp's approach.

In addition to eliminating layers of bureaucracy, project management offers an inherent advantage to new entrepreneurial companies entering market niches opened by deregulation. One example is airtricity, the Irish renewable energy utility that currently is embarking on constructing the largest offshore wind park along the Irish coastline, just south of Dublin. “We have 70 employees,” says Offshore Project Manager Pamela Welsh. “There's certainly a lot more that can get done, and faster, with such a small core of highly motivated people.”

The project manager's skills must be aligned with the project requirements, says Theresa Adams, PacifiCorp director of the project management for major issues program. As a project evolves or its focus shifts, it may be necessary to shift overall responsibility from a project manager with expertise in an area to one with skills that align to current project needs.

Line workers also must be available and committed to project objectives. When an employee is assigned to a project on a part-time basis, the project workload must be balanced with regular job responsibilities. “This is particularly an issue when you've reduced staff by 20 percent, causing increased work-loads,” Adams says.

“The goals of the project should align with the main goals of the company,” says Welsh. “That way, even if you're coordinating people from different departments, the managers of those departments can still base their appraisals on what their people have accomplished to achieve company objectives.”

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The project manager should be viewed throughout the entire organization as the individual empowered to get things done.

ROBIN MACLAREN,
MANAGING DIRECTOR OF TRANSMISSION AND DISTRIBUTION, SCOTTISHPOWER, GLASGOW, SCOTLAND

New Wave

Once the company has looked at other internal processes, implemented and adopted them throughout the organization, the utility may examine its specific approach to project management, depending upon local challenges. At PacifiCorp, which is involved in the still-evolving business of a retail transmission organization and the regulatory response to power shortages and price spikes that hit the western United States earlier this year, projects continue to be worked as conceptual issues, not pure engineering problems.

After its major re-engineering, Hong Kong and China Gas has taken a slightly different approach, though one that continues to stress the basic principles of involvement at all levels of the company. “In some ways we've gone back to more traditional notions of project management,” Lee says. “When we have a project, we form a key management focus (KMF) team that comprises the senior management from the sponsoring department. The senior manager forms a team with members throughout the organization selected on the needs to address specific requirements.”

There currently are nearly 40 KMF teams at the utility. “Now we're looking at how to expand our business and provide better customer service in a more focused way,” says Lee. “The culture we have in place is designed to do this in an experienced and flexible way, with an extensive knowledge base of best practices to adopt to efficient execution.”

Electric Environment

Not every utility is on the fast track to transformational change, particularly if deregulatory pressure and an impending systems change out aren't pressing. Although Hawaiian Electric Co., Honolulu, Hawaii, USA, is in a semi-deregulated environment—there are independent power producers and alternative power providers—politically, deregulation has been put on the back-burner as everyone tries to sort out the lessons to be learned from California's disastrous experience in deregulation, which resulted in price gouging and power shortages.

“We're still working in the traditional organizational framework of operations, engineering and construction, though we've recently separated the project management department out of engineering,” says Ken Morikami, director of project management of Hawaiian Electric Co. “[The department] now reports directly to upper management, which is a good first step.”

Another missing factor is the lack of executive support. “It is kind of interesting to note that I've noticed most people in the Honolulu chapter of PMI are from the IT side, rather than engineering,” Morikami says. “So maybe that's where the push is going to come from.”

Noel Hutson, electrical engineer and project manager for the Bonneville Power Administration, agrees. “We still tend to manage things as small offices. But as an individual project manager, I apply the principles of scope, quality, cost and time—with the underlying goal of customer satisfaction—and try to learn from the body of knowledge out there while, at the same time, sharing my knowledge with others.” PM

David Soyka is a New Jersey-based freelance writer and marketing communications business consultant. He has written for Public Utilities Fortnightly and The New York Times.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK | NOVEMBER 2002 | www.pmi.org
NOVEMBER 2002 | PM NETWORK

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