S.Chapel 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 groups. 
  • 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 new methods.

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:

  1. select consulting support based on your Company’s needs and capabilities of in-house engineering, planning, and finance staff; and
  2. 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 the phases.

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 as required.

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 six months.
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 software.

Task 3: Training: The person in your company designated to be the system administrator will be trained to use the prototype value measurement system.

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 accurately.

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 tasks:

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 staff will:

  • Develop a project portfolio using base-case budget assumptions;
  • Examine sensitivities with respect to objective specifications; and
  • 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