Associates: Asset Management
Implementing Project Prioritization
Asset management has become popular shorthand for collecting a set of
ideas and methods that are aimed at helping utilities make better short-
and long-term decisions with respect to system performance, maintenance,
and capital spending. Asset management in the T&D area is concerned
with many problems including system infrastructure expansion planning,
maintenance and replacement of existing assets, near-term capital budgeting
and project planning, and longer term financial and cash flow planning.
S. Chapel Associates offers utilities the tools and consulting services
for a broad range of asset management problems. I have been developing
these tools and services over the past dozen years. Several factors
distinguish my approach from those of other firms.
- It is grounded in solid economic fundamentals, rather than the
use of ad-hoc measures that can lead to poor decisions and higher costs.
- It employs state-of-the-art mathematical models that capture the
critical complexities associated with asset management, such as uncertainty
of component failures and linkages between different asset component
- It does not require a utility to embark on an
overly broad and highly expensive asset management program at the outset. Not
only does this reduce utilities’ expenditures on consulting services,
but it allows utility staff to learn and use the programs themselves,
thus maximizing the success and staff “buy-in” to these
Implementing Project Prioritization
I strongly recommend a phased approach for
implementing a Prioritization System at your company. With this
approach, you commit to completing a given phase of the process. At
the end of each phase, you decide whether to proceed further and, if
so, how. This
approach provides you with the flexibility to:
- select consulting
support based on your Company’s needs and capabilities of in-house
engineering, planning, and finance staff; and
- control the speed
and cost of implementation.
Implementing a Project Prioritization System
should not cost hundreds of thousands of dollars. With a phased approach
you control the scope of consulting services so that the project is consistent
with your budget and in-house capabilities. Even with a full implementation
an efficient project should not be expensive.
Full Implementation Program
Full implementation is described here briefly. This is then broken
into phases. We recommend that initially you commit to the first
phase. At the end of that phase you will be in a better position
to decide appropriate subsequent phases and to refine the scope of
Full implementation typically requires three workshops, as well as methodology
and consulting support. The first two workshops occur at the start of
the project and are usually spaced about a month apart. The purpose of
these workshops is to design a value measurement system for your company
and implement that system in spreadsheet software. The third workshop,
whose timing depends on your needs and degree of implementation, provides
practical training for staff who will develop and enter project data
and provide familiarity for staff with forecasting the specific effects
of T&D projects. After the third workshop, the project prioritization
system will have been thoroughly tested and the users will have identified
problems and issues associated with reporting projects and entering data
into the system. In our experience, utility users usually prefer some
help with this phase.
Each of the first two workshops requires two facilitators. Two man-days
are needed for preparation, three man-days for follow-up, and two days
each on site. The third training workshop requires an additional two
days on site and two days preparation. The training workshop, however,
can be led with just one person. The data entry forecasting workshop
uses a non-academic, practical approach (a purely theoretical approach
will not suffice).
Testing and refinement of the system follows the initial two workshops.
Although testing and refinement is the responsibility of the utility,
we are always available to provide software and methodological support
In our experience, software and methodology support generally requires
1 - 2 days on site per month, plus remote support, as needed, via telephone
and email. In our consulting capacity, we provide a key resource for
understanding how to model unique asset management issues that can
arise at a utility like yours. We can then modify the spreadsheet software
as needed. A full implementation typically cannot be done in less than
A description of each of the project phases is below.
Phase 1. Design & Implementation of a Value Measurement System.
Task1: Design: This task will define and specify ways that project
value is measured. The attributes will be defined and the attribute
value measures will be developed. In the workshops we will (a) identify
the relevant attributes for measuring project performance, (b) create
a logical attribute structure, (c) identify appropriate methods to
measure attributes, (d) specify attribute scales and weights, that
determine the importance of changes in attribute levels. This will
be done in two on-site workshops about one month apart.
Task 2: Implementation: The design will be implemented in spreadsheet
Task 3: Training: The person in your company designated to be the system
administrator will be trained to use the prototype value measurement
After the first workshop, we and the administrator will set up the system,
complete the installation of the attributes and scale functions and we
will train the administrator to use the spreadsheet software. After the
second workshop, we will work with the administrator to modify the attribute
structure as needed and to ensure that the attribute weights are input
Phase 2. Prototype System Testing and Refinement
If, at the end of Phase 1, you decide you want to proceed with Phase
2, the specific tasks will be developed jointly by you and the consultants.
In Phase 2, we will refine the prototype system by analyzing 10 to
15 sample projects. We expect this Phase to consist of two distinct
Task 1: System Testing and Refinement. Testing
and refinement of the system follows the initial two workshops. The purpose
of this task is to ensure that the attribute structure and the reporting
capabilities (forecasting and uncertainty specification) are sufficient
to describe projects appropriately. We will refine the attribute specification
in the software as needed in order to respond to the requirements of
project planners at your company. Ultimately, testing and refinement
is your responsibility. (Otherwise, there is insufficient “buy-in” to
the project, which will reduce its success.) Of course, we supply all
of the necessary software and methodology support.
The final attribute specification will be tested on a range of projects
(no more than twenty-five) to ensure that the projects are scored in
a reasonable manner. We will then test the system to ensure that portfolios
of projects that satisfy a sample set of budget constraints can be developed.
We provide a coaching role in this task. In particular, we will aid the
administrator as he develops portfolios that meet company budget constraints.
Task 1 will be considered completed only when the administrator for
the prioritization system is able to develop portfolios with respect
to attributes and budgets.
Task 2: Assessment and Forecasting Workshop. The
purpose of this task is to train users of the system in concepts and
methods that will support reporting the uncertain outcomes of projects.
It is essential to characterize the uncertain consequences of projects
over time in order to measure the risk associated with a project portfolio.
This requires an understanding of both uncertainty analysis and forecasting
Phase 3: Operational Testing of the System: Data Entry and Analysis
If, at the end of Phase 2, you decide to proceed with Phase 3, the specific
tasks will be developed jointly by you and the consultants. In Phase
3, the asset management system is tested and refined by using it to help
create a portfolio of T&D projects. company staff will perform analyses
with the help of the consultants.: Specifically, during Phase 3, company
- Develop a project portfolio using base-case budget
- Examine sensitivities with respect to objective specifications;
- Examine sensitivities with respect to changes in budget
After completing these analyses, the consultants will work with your
System Administrator to brief company executives on the results.
Other Support Options
Optional Module 1 – Software Support
This option provides on-going support beyond Phase 1. Under this
option, we will be available for technical support, modeling support,
software support, and management briefings. If there is management
feedback requiring changes to the existing implementation, we will support
those changes as coaches.
Optional Module 2 – Uncertainty Analysis
One of the unique capabilities of our prioritization systems design
is the ability to measure the risk associated with a portfolio of projects. This
option is a program that will introduce the idea of uncertainty, provide
a two-day on-site workshop where uncertainty methods and analysis are
described, and teach how to use the project prioritization system capabilities
to capture project uncertainties. We will also indicate how to
use the risk analysis capabilities of the project prioritization system
to characterize the risk of a portfolio.
Optional Module 3 – Reporting and Analysis
Our project prioritization system design provides for many reporting
and analysis capabilities. If users would like further instruction
and guidance in how to use the reporting capabilities of the system,
this option may be useful. We present methods, examples, and guidance
in how to assemble final portfolio reports, how to analyze individual
projects, and how to perform and communicate the results of sensitivity
analyses. The Analysis Option Program begins with a two-day workshop
that describes the various analysis capabilities of the project prioritization
system. We then offer software and technical support for one year
that is designed to facilitate analysis and reporting of results.
Optional Module 4 – On-site Workshops
As interest and familiarity with the system increase and develop, we anticipate
the need for special purpose workshops that might include teaching, examples,
further analysis methods, and any other aspects of the system that the
users find of interest. We are available for such workshops. We
expect to define the scope of these workshops as the need arises