Project Management Institute

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It's a new world for utilities companies. In addition to mergers and acquisitions, restructuring, security, poor economic conditions and persistent demand, public service providers have a new concern: competition. Market expectations have increased, prompted by open access, deregulation and the accompanying explosion of sophisticated products and services. Yet, according to a global survey by Andersen Consulting, Chicago, Ill., USA, utilities are vulnerable to newer companies, mainly because they don't adequately address customer expectations.

Customers want convenience, whether through the Web, auto-pay, automated interactive phone systems or walk-in offices. Yet, Andersen reports utilities to be lax on customer service; for example, only 27 percent of utility companies responded to e-mail messages within 24 hours, 34 percent of utilities failed to respond to e-mails at all and 11 percent of utility e-mail systems malfunctioned.

Today's customers also expect higher service quality and reliability—more than just keeping pace with demand, they want their utilities to anticipate their needs and adapt. Three utilities describe how project management helps them exceed customer expectations.


Purpose: The customer information system (CIS) usability improvement project resolves system design issues that contributed to lengthy call center task times.

Budget: $180,000

Owner: Contact center operations manager

Key Stakeholders: Customer, contact center operations, billing and collections, distribution services.

Schedule: May to October 2004

ROI: CIS improvements decreased call processing times for the most common contact center transactions by approximately one minute. Direct customer benefits include increased accessibility (shorter phone hold times), faster call processing and improved service levels.

Today: The sponsor and users are happy with the results. The contact center manager has requested another project to further improvement in 2005.

With 2,700 employees, Portland General Electric, Portland, Ore., USA, provides electric service to approximately 1.5 million people across a 3,150-square-mile service area in northwestern Oregon. With so much diverse territory to cover and so many customers to keep happy, PGE found its customer information system to be lacking.


To address the problem, in February 2004 an internal expert conducted a usability assessment to identify the top issues related to lengthy CIS task times. “We've done significantly more customer segmentation research in the past couple years to better understand the needs of our various customers groups and how they want to do business with us,” says Jana Quinlan, manager of Operations Results & Improvement, PGE Customer Service. “We had installed our main CIS in 2002, but we realized that we had some usability problems. With longer call times, people were on hold longer waiting to get [in touch with] their utilities. We needed to add more people to do the same job.”

CIS operators had trouble accessing and using computer-based customer notes while on service calls. Because there were so many access and organization points in the software, the information system was too time-consuming. In addition, it took many key strokes to get multiple tasks done—even basic tasks meant visiting multiple screens.

To solve the problem, the project team decided to modify the existing system by moving information into data fields and migrating key customer data to the home page. In addition, they wanted to eliminate reentry of data that should automatically prepopulate when moving from screen to screen. Because CIS is a licensed software application (SCT Banner), the vendor was responsible for any modification, including changing code. Vendor staff performed the changes, while PGE performed testing and acceptance.

PGE used a small empowered team of end users, technologists, a human factors specialist, a trainer, a process specialist, an analyst (vendor representative) and a facilitator to drive out requirements. “During the analysis phase, we drove out the requirements and obtained initial vendor cost quotes,” Ms. Quinlan says. “This resulted in further scope reduction—some changes were too expensive to implement. We also received some technical push back that certain things could not be done.”

The project team included screen mock-ups in the requirements document and used prototyping to ensure the changes would meet our usability objectives. Although good, this method was a shift for the development and test teams, shortening the project life cycle, but adding labor costs. “Overall, I‘m glad we mocked up screens,” Ms. Quinlan says. “If we had relied solely on written specifications, it would have caused problems. And the vendor business analyst, who was willing to think outside the box, had been around the system long enough that he knew where to push the development group. This is where not taking ‘no’ for an answer paid off.”

Once in the design phase, the team learned that certain system interface changes and data cleanup tasks were not figured into the initial budget and had to be added. “We had planned to complete the project in early August because September traditionally is a busy month at the Contact Center,” Ms. Quinlan says. “Because of the added work for interfaces and data clean-up, and some testing delays, we missed the original date. We implemented in late September and completed project close-out in early October.”

Even after delivery, simply making system improvements and training the users was not enough—old habits die hard, so management set new performance expectations and coaches helped users achieve them. “Had we just declared project victory following implementation, we would not have achieved the anticipated benefits,” Ms. Quinlan says. “Follow-up performance measurement and corrective action allowed us to ultimately claim success.”

PGE bases success on the degree to which a project meets its objectives and anticipated business benefits. “In our organization, we center the focus on customer value— as measured by customer satisfaction surveys—and business benefit,” Ms. Quinlan says. “You can have a perfectly executed project in terms of meeting project budget, schedule and scope objectives, but if it does not provide a significant degree of the expected business value, then it was not a success. Expected benefits are described in our project charters and measured following project completion where possible.”

By reducing call times by one minute based on annual call volumes for these types of transactions, the contact center operations manager avoided costs of nearly $350,000 annually. In addition, several other departments benefited from improved usability with the system.


Purpose: Renovate 350 km of iron pipe to improve water quality.

Budget: £18.5 million

Owner: Mid Kent Water, Kent, U.K.

Key Stakeholders: Residents of Kent, U.K., Mid Kent Water and Halcrow Water Services.

Schedule: 1995 to 2005

ROI: Modernized pipe system delivered at cost and on time and satisfied customers.

Today: The AMP3 renovation program successfully has produced a guaranteed clean water supply.

Discolored water is a pretty severe public relations problem for a water utility. In the United Kingdom, because most cast iron water mains were installed in the 19th and first part of the 20th century, corrosion was causing discoloration of the water supply, especially during peak demand periods.

Under the asset management plan (AMP) 1, 2 and 3 Capital programs, Mid Kent Water (MKW), Kent, U.K., and other water companies began dealing with the problem. Since 1995, consultancy Halcrow Water Services Ltd. (HWS) worked with the Drinking Water Inspectorate (DWI) and MKW to renovate mains. HWS set up the project, including strategy, administration, customer services and operational liaison.


Project management means satisfied customers, both inside and out. Just look at Terasen Gas Inc.’s Tilbury liquid natural gas (LNG) plant renovation, a CN$800,000 project to repair a leak in the plant's cold-box and upgrade the tanker loading facility.

The customers in this case, the key stakeholders, were the plant manager and transmission operation manager, says Art Kanzaki, manager, engineering services, Terasen Gas Inc., Surrey, B.C., Canada.

In May 2004, after 32 years of operation, the coldbox, which converts natural gas to LNG, was leaking. An engineering assessment and metallurgical analysis determined that the leak was isolated, so the least-cost solution would be to decommission the leaking tubes, because net capacity was not adversely affected. “We conducted a long-term assessment of that facility in terms of reliability, integrity and serviceability and determined that it was indeed prudent to decommission a few of the tubes rather than replace the entire coldbox,” Mr. Kanzaki says.

At the same time, management separately wanted to ensure that the LNG tanker truck loading facility was up to date and code-compliant in terms of containment of LNG vapor clouds that would occur in the event of a spill during the loading operation.

The solution was upgrading from a single-bay loading facility to a dual loading facility, with integrated cryogenic vapor impoundment features. “Two bays allows us to keep a standby LNG tanker ready to go for standby emergency needs, and the active side allows you to ship to a satellite facility several times per week,” Mr. Kanzaki says.

One project manager handled both projects, which involved a long planning phase, construction strategy and detailed engineering and construction phases. Through consultation with the internal client, the project manager was able to detail must-haves vs. optional changes. For example, the original scope called for full paving of the loading area, but due to cost restraints, the project manager determined that a partial paving and gravel strategy would meet expectations and help minimize budget issues.

“It was convenient to use the same project manager for both projects—I only needed to send one project manager to site,” Mr. Kanzaki says. “And he had a holistic overview of both efforts, so he was able to capitalize on resource efficiencies between the projects. Using a common project manager also addressed our internal customer needs and expectations more fully.”

An integrated project office was set up to accommodate the project team, comprising the contractor Balfour Beatty Utilities Ltd., client and consultant staff. “The benefits of this were immediately apparent in terms of communication, effective planning and direct information for the customer service hotline, also located within the project team,” says Justin Southwell, project manager, HWS. “The team had to be set up without delay as the first DWI ‘milestone’ was approaching. This meant investigation and design had to be carried out to a very tight timescale to keep ahead of the renovation gangs.”

Because funding is limited, not all mains can be treated. HWS studied water quality archives and customer complaint data, followed by a focused water quality survey that included sampling to determine the necessary renovations. Customer interviews were completed at each sample location, allowing the team to identify intermittent problems not reported during the surveys. “HWS carried out rigorous statistical analysis to ensure water quality improvements could be demonstrated to the degree of significance required by the DWI,” Mr. Southwell says.

Customers were surveyed about water quality. In addition, the program identified mains that would benefit from replacement based on whole-life costing. Mr. Southwell says the majority of the mains received a cost-effective epoxy lining, but unserviceable mains were replaced with polyethylene pipe. “For operationally sensitive mains, rapid-cure polymeric lining was used to allow return to service the same day,” he says.


For utilities, project management has been applied at varying levels to engineering and construction (power plants, transmission and distribution infrastructure), information technology and business process projects. “Pacific Gas and Electric has been doing engineering and construction projects for more than 100 years,” says Jana Quinlan. “Information technology and other business areas in this industry have tremendous opportunity for developing project management maturity.”


Emerging concerns include gaining management support, developing project management capability, demonstrating the value of project management and organizational change management. “Utility organizations are slower to change than other industries,” Ms. Quinlan says. “So those working to roll out utility project management initiatives have pace-of-change concerns. Are we going too fast or too slow?”

Each functional area may independently kick off a major top-priority project. A company can end up with three top priority projects all competing for the same resources. “Something has to give, often the cost, schedule or scope of all three projects,” Ms. Quinlan says. “Some utilities are beginning to overcome these issues through the establishment of a PMO.”

In the past, cost control was not as much a priority as it is today, according to Bill Manery, former project director the Southern Crossing Project, Terasen Gas, Surrey, B.C., Canada. “Hence, project management was focused more on managing a large workload, whereas today it is focused on efficient cost and schedule delivery,” he says. “As well, as projects become more complex, and hence increase in risk, project management needs to further mature in its use in the utility as one tool to assist in the mitigation of those risks.” Terasen’s Art Kanzaki advocates integration of an annual program work breakdown from the corporate goals all the way down to the task level for sub-$5 million projects. “A major project over $5 million can more easily focus on the project management issues,” he says.

Up to seven lining and replacement gangs worked at any one time in a relatively small geographic area. To minimize disruption to customers, temporary supplies and back feeds kept network downtime as short as possible. The project team issued customer notices and information leaflets, visited parish councils and updated the MKW customer service group daily on the whereabouts of renovation gangs.

The latest phase of renovations called for 350 km to be replaced by 2005. In spite of challenging deadlines, the key DWI ‘milestone’ to complete in this phase—the first 104 km of renovation—was reached five weeks ahead of schedule with very positive feedback from MKW customer service managers, Mr. Southwell says. “The project is by far MKW’s largest involving customer contact, and an audit carried out during the work resulted in MKW achieving the highest possible ranking for customer service.”


Purpose: To lower the elevation of a raw water treatment plant's intake pipe.

Budget: $6.5 million.

Owner: Southern Nevada Water Authority (SNWA)

Key Stakeholders: SNWA and water purveyors (Boulder City, Las Vegas Valley Water District, City of Henderson and City of North Las Vegas, Nellis Airforce Base)

Schedule: January 2004 to July 2004

ROI: Improved water quality.

Today: Staff at the treatment plant noticed an improvement of raw water quality coming into the plant within hours of project completion. The system continues to supply the plant with better quality water, even in drought conditions.

Since January 2000, a severe draught in the Southwestern United States has resulted in decreased flow in the Colorado River, lowering the levels of Lake Mead, Nev., USA. As a result, algae-coated or otherwise contaminated water could enter the area water supply. To avoid costly changes in the local water treatment plant, the Southern Nevada Water Authority (SNWA) undertook an emergency project to lower the water intake. “Because the project would require plant shutdowns, we really wanted to do this work before the high-demand season,” says Chuck George, program design manager, Parsons Water and Infrastructure, Las Vegas, Nev., USA.



Workers prepare to install the new extension to the Southern Nevada Water Authority intake in Lake Mead.


The project called for installation of a 180-foot-long, 12-foot-diameter pipe to extend from the existing intake tunnel opening, lowering the elevation of the intake 50 feet below the surface of the lake. Pre-welded pipe would be floated by barge to the connection point, where underwater divers would seal the extension to the existing tunnel. “This was the fastest way to accomplish the project without a major environmental impact,” says Erika Moonin, project manager, Southern Nevada Water Authority, Las Vegas, Nev., USA.

SNWA’s project teams were comprised of representatives from each of the stakeholder groups who work together to scope the effort, review the design and provide input along the entire project timeline. To ensure problems would not emerge, the project team spent much of the six-month schedule on in-depth planning, hashing out details with all major stakeholders to avoid misunderstandings. “We partner on all larger projects,” Ms. Moonin says. “That helps to resolve problems before they can stop work.”

As the consulting engineer (Parsons) worked on the project design, due to the fast-track schedule, the project team immediately advertised two contracts for bid, one for the purchase of pipe and one for the installation. As a result, the pipe was delivered on time, just as work was to begin.

The contractor's office was on site, and regular meetings kept everyone—including upper management—up to speed. In addition, an SNWA internally developed software suite added visibility to all project parameters and status for everyone involved. “There was constant communication and coordination among everyone,” Ms. Moonin says. “Program review meetings occurred every two weeks, and everyone reviewed schedule status, outstanding issues and change orders. Upper management asked a lot of questions, holding everyone accountable.”


Network meter reading, already installed at many utilities, is the technology that is likely to provide significant benefits from improving customer service to improving business efficiencies. A few of those benefiting the customer include: more accurate bills, fewer estimated bills, more efficient final bill processing, and faster outage identification and restoration.

Sustainable energy resources to meet increasing demand, such as hydrogen fuel cells, wind, solar, geot-hermal or tidal, along with the supply and delivery of natural gas, will influence research and development over the coming years. In addition, many utilities are working to develop a portfolio of resources, diversifying their energy or water supply, including solar power or desalination technologies.

During the installation, the work team experienced a setback—the original product used to connect the new pipe to the intake tunnel failed. Because everyone was aware of the problem, the team was able to meet quickly to develop a workaround. “We could use grout to achieve the same purpose, but it wouldn't be easy to get the grout to work underwater,” Ms. Moonin says. “The contractor designed a chandelier rebar framing system, and the underwater divers grouted the first section using the apparatus to get the grout to set. As one section was done, they poured the rest. Everyone worked together to ensure plant was shut down for the shortest amount of time to do the work.”

The project was delivered $600,000 under budget, but more importantly, on time. “If we hadn't finished by July, we probably would have had to make major treatment plant adjustments.” PM

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