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Asset Management

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  • 1. Asset Management How we help our clients: Energy Delivery utilities face increasing and ensure that these investments result capital commitments, driven by the need to in the desired benefits and performance. » Overall focus sustain, repair, or replace aging infrastructure. Asset Management methodologies can be » Performance / Reliability benefits from The Edison Electric Institute estimates that T&D infrastructure investments used to articulate the relationship between Energy Delivery utilities will invest $900 infrastructure investments, improved » Process improvement and billion to $1.1 trillion between 2010 and reliability, and better management of the change management 2030. These dollars are divided between T&D system, as depicted in Figure 1. transmission and distribution facilities, with significant Smart Grid and reliability-related Furthermore, Asset Management is a investments. As a result of these expected precursor to many future technology investments, utilities have been preparing investments – understanding the their regulators for more frequent rate cases performance and capabilities of existing in order to ensure adequate returns assets provides a baseline from which on their capital. utilities can estimate reliability and customer At the same time, due to the lack of satisfaction benefits from future investments liquidity in the financial markets, utilities such as Smart Grid and Advanced Meter have reduced their near-term (2009-2011) Infrastructure (AMI). capital expenditure plans by 10-30%. Given Our Services Energy Delivery utilities’ increasing need Developing robust Asset Management for infrastructure investments, combined capabilities is part of a multi-year, multi-stage with potential financial/market pressures, performance improvement journey for many utilities must adopt clear and compelling Asset utilities, as shown in Figure 2. Management (AM) strategies to optimize the effectiveness of their capital investments. Navigant Consulting’s services span Specifically, utilities need to understand the entire scope of Asset Management Performance Improvement: the lifecycle costs associated with their transmission and distribution (T&D) assets Figure 1 Revenues Technical Life Cost / Condition Benefit System O&M Costs Design System Performance Capital Equipment Costs Status SAIFI Power CAIDI, etc. Quality
  • 2. innovation[s]– solutions for pressing needs Performance Benchmarking » Support for Work and Asset Management systems procurement and implementation » Current state performance assessment » Best practice comparison, including Continuous Improvement gap analysis » Enhancements to capital and O&M prioritization models/tools Strategy / Target Setting » Capital management process improvement » Asset Management philosophy/vision » Asset Management infrastructure development, including alignment with improvements, including evaluations of evolving Smart Grid and AMI capabilities and recommendations to existing programs » Target setting » Change management programs » Business case development » Implementation planning How Navigant Consulting Helps our Clients Implementation Because all utilities have some level of Asset » Development and implementation of Management capabilities, the support we valuation and prioritization models/ provide varies based on each client’s existing tools for capital and operations and maintenance (O&M) allocation capabilities. One constant, though, is our collaborative approach to Asset Management » Development and implementation of capital management budgeting and strategy and implementation. By formalizing planning processes the involvement and leadership of our clients » Change management activities in these activities, we create mechanisms supporting Asset Management for knowledge transfer and ensure client » Development of Asset Management ownership of the decisions being made. infrastructure (condition assessments, Navigant Consulting sees common preventative maintenance, etc.) challenges among our clients related to the » Technical assessments of specific programs development and implementation of Asset » Targeted maintenance and reliability Management strategies, including: improvement programs Figure 2 - Asset Management Performance Improvement Phase 1: Phase 3: Phase 4: Performance Phase 2: Continuous Strategy / Target-Setting Implementation Benchmarking Improvement “Where Are We Now?” “Where Do We Want “How Do We Get There?” “How Do We Stay There, and To Be?” Further Improve?” Key Questions: » What is the current state of » What are the “right” goals » What critical assets need » How will ongoing AM processes, data, and and objectives? to be tracked? improvement be ingrained in decision-making? › Asset data, maintenance » How will asset data (records, our culture? » How does the current practices, design condition) be collected? › Use of data and analyses organization, skills, culture, standards, etc. › Process and » How will new processes etc. support AM? › Asset registry and work/ (preventative maintenance, performance feedback » What are the gaps between maintenance standards) be established? » What infrastructure is needed best practices and current management systems » What budgeting/planning to monitor results? AM policies, processes, › Cost/benefit analyses, processes are needed, and › Process audits capabilities, systems, etc.? project prioritization, and how will they › Performance reports budgeting/planning be implemented? › Supporting systems › Culture, education, and communication » How will the capital/O&M prioritization tool be used » What benefits will be realized and deployed? from the AM implementation? » What major steps are needed to establish an AM capability?
  • 3. solution[s]– moving beyond today’s challenges Overall Focus Performance / Reliability Benefits from By leveraging our depth of Energy Delivery T&D Infrastructure Investments expertise, Navigant Consulting helps our Our team has deep expertise in clients focus on their most critical activities, evaluating reliability improvements, assets, and project opportunities: including performing root cause analyses, » Prioritizing the development and identifying and evaluating project implementation of capabilities (condition opportunities, and performing reliability assessments, preventative maintenance studies that project reliability performance. schedules, systems, budgeting and These analyses typically require a combination planning processes, design standards / of industry and company-specific data, such compatible units, prioritization tools and as estimates of asset condition (based on age, type, manufacturer, historical failure methods, etc.) rates, etc.), for equipment such as cable » Prioritizing the development and and wire, poles, transmission lines and implementation of specific programs (pole circuit breakers. inspection and testing, individual Smart Grid / distribution automation system Additionally, Navigant Consulting has deployment, cable replacement, etc.) developed an industry-leading Energy Delivery capital and O&M prioritization model. » Prioritizing the collection of nameplate, Our model is unique in that we estimate the condition, and cost data for different expected reliability improvement for each types of assets (poles, cable and wire, project (in terms of SAIDI and SAIFI) and substations, etc.) use a value-of-service (VOS) metric to » Evaluating project opportunities using equate a financial value to these reliability a thorough cost-benefit analysis based improvements. Based on a cost-benefit on our methodologies, templates, and analysis, we then produce a funding curve capital/O&M prioritization model that graphically depicts which projects will be funded at different budgeted levels, and a reliability projection of SAIDI/SAIFI at these budgeted levels. Our clients also have the opportunity to add and/or remove Figure 3
  • 4. Contact » Mike Rutkowski 312.583.6880 mrutkowski@navigantconsulting.com Jeff Miller Gene Shlatz 404.602.5017 802.985.5216 jmiller@navigantconsulting.com eshlatz@navigantconsulting.com www.navigantconsulting.com About Navigant Consulting projects from the modeled portfolio, which individual projects as well as the overall results in changes to the funding curve project portfolio. Finally, our team supported Navigant Consulting, Inc. (NYSE: NCI) is the communication and rollout of the model and SAIDI / SAIFI projections. Figure 3 is a an international consulting firm combining and business processes, including gathering graphic depiction of our model outputs. deep industry expertise and integrated feedback and training key stakeholders. solutions to assist companies and their legal Process Improvement and Change Management Integrated Public Power Company counsel in enhancing stakeholder value, improving operations, and addressing the Effective budgeting and planning processes For a municipal electric utility serving over challenges of uncertainty, risk and significant require clearly defined processes, roles, 400,000 customers, Navigant Consulting business model change. Professional and responsibilities, as well as acceptance developed an Asset Management strategy services include dispute, investigative, by all participants. We work closely with and implementation plan to support the operational and business advisory, risk our clients to map process steps as well utility’s vision to deliver exceptional service management and regulatory advisory, as organizational roles/responsibilities, to its customers. We worked with the and transaction advisory solutions. spanning project identification, evaluation, client’s executive team to create an Asset The Company focuses on industries and prioritization; project management Management vision for the utility that undergoing substantial regulatory or (planning, execution and control) and work balanced performance goals with lifecycle structural change, including financial management; and project monitoring investments in its assets. We determined the services, insurance, healthcare and and assessment. implications of achieving this vision relative energy. Navigant Consulting has offices As new processes are implemented and to asset records and condition, preventative in over 40 cities in North America, Europe tools are utilized, the change management maintenance, design standards, IT systems and Asia. supporting these activities often requires and decision tools, performance measures, Navigant Consulting’s support. Based on organizational capabilities, and culture. our experiences in helping clients to achieve Finally, we developed a detailed business the full benefits of Asset Management, we case and implementation plan, including provide recommendations, advice, and a compelling cost/benefit analysis. We are guidance around activities such as currently supporting ongoing organizational design, skills development/ implementation activities. training, and ongoing communications. Mid-size Investor-owned Energy Delivery Utility Representative Engagements For a multi-jurisdictional electric utility Large Multi-Jurisdictional serving 1.6 million customers, Navigant Investor-Owned Energy Delivery Utility Consulting developed comprehensive Our team developed and implemented a Asset Management processes and tools, capital management process to support focused on better managing the utility’s Energy Delivery’s “Accelerated”Asset sub-transmission and distribution assets. Management and budgeting efforts. We We concurrently created the asset created a Capital Prioritization model in management processes required to identify order to prioritize over $700 million in and evaluate projects across different projects across operating companies. We business units, and developed a capital also developed and documented asset project prioritization model that used management and project management lifecycle economic methods to quantify the processes and procedures to ensure successful benefits and costs of all capital projects and evaluation, prioritization, and execution of then rank these projects accordingly. ©2008 Navigant Consulting, Inc. All rights reserved. 08-00895A Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. “NAVIGANT” is a service mark of Navigant International, Inc. Navigant Consulting, Inc. (NCI) is not affiliated, associated, or in any way connected with Navigant International, Inc., and NCI’s use of “NAVIGANT” is made under license from Navigant International, Inc. NCI is a consulting firm and does not act as architect or engineer of record with respect to construction projects.