How Frank La Rocca Created an Enterprise PMO at Consolidated Edison to driver greater ROI. Presented May 13, 2014 via Projects at Work webinar. For the full presentation, please visit http://bit.ly/1h0uesU.

1. Changing the PMO Status Quo:
Learn how Frank La Rocca Created an
Enterprise PMO at Con Edison to Drive
Greater ROI
Frank La Rocca
Director of Business Improvement Services
Con Edison
Email: LAROCCAFR@coned.com

2. • Director of Business Improvement Services at Con Edison
• Responsible for Investment Optimization and the EPMO
• Prior to Con Edison Frank was VP of IT and CIO at Keyspan
Introducing Frank La Rocca

3. Agenda & Takeaways
• Con Edison Introduction
• Challenges that Led to the Creation of
EPMO
• Financial Intelligence is Key
• Optimization (Annual Planning) process
• Management (Agile / Dynamic
planning)
• Measuring Business Value
• Phased Approach to Financial
Intelligence
• Questions & Answers
Takeaways:
1. Building an Enterprise PMO requires
you to view project’s as business
investments and focus on financials
and value creation
2. Relying solely on Annual Planning can
result in significant loss in planned
business value
3. Dynamic Planning (aka Sweep) helps
optimize spend and maximize business
value

4. Consolidated Edison
Introduction
One of the nation's largest investor-owned energy companies, with
approximately $12 billion in annual revenues and $41 billion in assets
Provides a wide range of energy-related products; including electric,
gas, and steam service in New York City and Westchester County
Consolidated Edison:
Serves 3.3m customers throughout a 604-square-mile territory
Operates one of the most complex electric power systems in the
world, with the highest level of reliability in the world.
Distributes natural gas to 1.1 million customers
Operates the largest district-energy steam system in the U.S.,
providing service to approximately 1,800 customers

5. Consolidated Edison
Corporate Landscape
• Increased Cost Control
• Maintain our infrastructure/service at or below inflation
• Stabilize our rates
• Maximize our investments
• Enhance External Relationships
• Enhance regulatory relationship

6. Challenging Questions…
Led to the creation of our Enterprise PMO
How much are
we spending on
projects /
programs?
Are our
investments
inline with
corporate
strategy?
What is the
Strategic Value
of the
Portfolio?
Are we getting
the appropriate
ROI & Value
from the
portfolio?
Do we have
effective metrics
to gauge financial
performance?
Are we utilizing
our discretionary
budget in the
best way?
Pressure to
“Do More
with Less”

7. Select the question below that your
PMO struggles to answer
Poll 1

8. The Statistics Are Alarming
Traditional PPM is Failing to Deliver Anticipated Results
33%
of projects fail to
get completed or
implemented
of completed
projects experience
cost overruns
46%
Unrealized
Business
Value
Realized
Business Value
43%
of all projects are
delivered late or
over budget
Standish Group
Standish Group PMI
33%
of projects do not
meet their goals or
business intent
Gartner
18%
UMT360

9. Promote Standardization through Defined Processes, Workflow, and Templates
 Standardize business
case
 Determine Strategic
Value
 High Level Cost/benefit
Estimating
 Contingency Estimating
 Risk Impact
 Strategic Alignment
 Cost Optimizations
 Resource Capacity
Planning
 Selected Portfolio
 Schedule Mgmt.
 Resource
Assignments
 Detailed
Cost/benefit
Estimating
 Funding Approval
 Variance/metric
Reporting
 Re-Investment “Sweep”
Process
 Scope & Schedule
Delivery
 Budget Utilization
 Health Status Reporting
 Year-End Review
 Cost Benefits
Realization
Analysis
 Scope Realization
Analysis
 Lessons Learned
Building the Enterprise PMO
Investment Optimization & Management
Optimization Management

10. What is Portfolio Management?
A question I have struggled with over the years!
Aggregate reporting across one or more portfolios?
Alignment of spend with strategic priorities?
Portfolio Management gives you the …
Ability to have timely financial insights into all your
portfolios to make informed business decisions to
increase the overall ROI.
.
Is It…

11. Common Annual Planning Challenges
… Driving Need for Portfolio Optimization
• Disparate methods of receiving projects
• Non standard business case
• Disparate financial models and calculations
• Disparate cost estimating methodologies
• Disparate method of linking benefit of strategic
value
• Disparate methods of classifying projects
• Mandated
• Operationally Required
• Strategic
• Projects are chosen based upon who
submits and how fancy the “slide ware” is
vs. the financial merit and strategic value
• Small business units often lose
• Impossible to compare financial value
from one project to the next (apples to
oranges)
• Either cost over-runs or under-runs
• Unable to distinguish between “lights on”
and discretionary
Common Challenges Typical Results

12. Portfolio Optimization Process
A well documented best practice
Business Driver
Definition
Business
Driver
Prioritization
Consolidate
Project
Requests
Develop
Business
Case
Prioritize
Projects
Against
Drivers
Run
Constraint
Analysis
Portfolio
Review &
Approval
Detailed
Planning /
Business Case
Create SelectStrategy Plan
SeniorVice
PresidentLevel
VicePresident
Level

13. How many of you have implemented
a similar optimization approach?
Poll 2

14. Regulatory Mandated
Operationally Required
Strategic - with Cost Savings
Strategic - with Cost Avoidance
Strategic - Other
In Flight
Building Our Portfolios
Classifying & Categorizing Projects; do you have this data?

15. # Project Name
Original
Project
Budget
SAC
Sanctioned
Releases
SAC
Sanctioned
Redirects
SAC
Sanctioned
Budget
YTD Actual
YTD Budget
(Original)
Variance
Variance
%
YTD Actual
YTD
Forecast (Q3
Revision)
Variance
Variance
%
Organization 1
1 Project A $11,850,009 ($9,100,000) $0 $2,750,009 $1,372,189 $11,850,009 ($10,477,820) -88% $1,372,189 $2,750,009 ($1,377,820) -50% 3
2 Project B $1,815,007 ($130,000) $0 $1,685,007 $1,674,614 $1,815,007 ($140,392) -8% $1,674,614 $1,685,007 ($10,392) -1% 1
3 Project C $1,357,005 $0 $0 $1,357,005 $1,543,006 $1,357,005 $186,001 14% $1,543,006 $1,357,005 $186,001 14% 2
4 Project D $1,144,000 $0 $0 $1,144,000 $1,091,251 $1,144,000 ($52,749) -5% $1,091,251 $1,144,000 ($52,749) -5% 1
5 Project E $991,015 $0 $0 $991,015 $955,915 $991,015 ($35,100) -4% $955,915 $991,015 ($35,100) -4% 1
6 Project F $920,022 $0 $0 $920,022 $824,115 $920,022 ($95,907) -10% $824,115 $920,022 ($95,907) -10% 2
Project Organization,
Portfolio & Name
SAC Sanctioned Information YTD Variance Analysis vs. Original Budget YTD Variance Analysis vs. Q3 Rev. Forecast
Project
Status
The Usual…
RAG Reporting & Variance Analysis

16. 244
211
180 188
200 194
175 170
82%
92%
97%
90%
70%
75%
80%
85%
90%
95%
100%
50
100
150
200
250
300
350
400
2009 2010 2011 2012
Total Project Portfolio –Budget Utilization
Original Budget
Actual Spend
Original Budget
Utilization %
Millions
*
Budget Utilization & Trends
Better Utilization & Value

17. What was your budget
utilization last year?
Poll 3

18. Poor estimating
erodes planned
business value
Original cash flow
does not reflect
new/recent
information
Often PMs did not
create the original
estimate and felt
“hostage” to the
approximation
No standard
method of creating
estimates and no
formal contingency
estimating
Limited formal
estimating or
Project
Management
training
The static nature
of the annual
planning
process, thwarts
their efforts
Culturally, it is
better to
dramatically
under-run than
over-run slightly;
generally leads to
inflated cost
estimates
Feedback from Project Managers…
Driving the need for Agile or Dynamic Planning

19. Dynamic Reallocation (Sweep) In Action
Agile Reallocation of Funds to Maximize Portfolio Value
Release New Redirect
Quarter2 $188,096,540 ($17,813,000) $8,278,491 $7,853,662 ($1,680,847)
Quarter3 $186,415,693 ($8,655,000) $3,104,000 $2,804,000 ($4,427,847)
Quarter4 $183,668,693 ($9,099,260) $6,167,318 $4,359,839 ($2,999,950)
($35,567,260) $17,549,809 $15,017,501
-19% 9% 8%
(Surplus)/Deficit
TotalSweepfor
theyear
QuarterStart
Budget
2012Common
Portfolio
SweepProcess • 23 new projects were
funded due to timely
releasing of funds; this
traditionally would
have been “left on the
table”
• “Not a spend it or lose
it” mentality. Sweeps
need to be strategic

20. Annual Budget Planning – Optimized Portfolio
EPMO: Monthly Summary Portfolio Report
Monthly
Dynamic Re-allocation Sanction Process
(Bi-monthly)
Senior Officer Committee
Organization X
Pre-Sanction meeting
EPMO, Cost Managers, and
Project Managers
•Monthly sanctioning process
• Releases – every month
• Re-directs – every month
• New – every month
• Re-forecasting – quarterly
•Annual ‘proposal’ to selection and
optimization budget process
•Monthly Project Deep Dive:
•Project Status review
•Red, amber, green reporting
•Variance reporting
•Scope review
•Governance review
•Senior officer update
Organization Z
Pre-Sanction meeting
EPMO, Cost Managers, and
Project Managers
Organization Y
Pre-Sanction meeting
EPMO, Cost Managers , and
Project Managers
Where does the “Sweep” Process fit?

21. “Sweep” Governance Process
Releases
New
Requests
Sanction
Process
Re-directs
New
Revised SAC
Sanctioned
Budget
Any remaining funds not allocated to projects go back to the “pot” for next month’s strategic reinvestment
Releases
always
Approved
Re-Directs
Yes
No
Approved?

22. 244
211
180 188
178
200 194
175 170
179
82%
92%
97%
90%
101%
0%
20%
40%
60%
80%
100%
120%
50
100
150
200
250
300
350
400
2009 2010 2011 2012 2013
Total Project Portfolio –Budget Utilization
Original Budget
Actual Spend
Original Budget
Utilization %
Millions
*
• Our budget
utilization rates
have
significantly
increased over
the years
• In 2013, this
portfolio “gave
back” $33m, to
the Corporation
and came in at
full budget
utilization
Budget Utilization & Trends
So how did we do?

23. $9
$15
$25
$39
$52
$66
$74
$85
$103
$80
$98
$122
$138
$168
$191
$7
$15
$24
$35
$49
$66
$76
$89
$103
$118
$137
$173
$212
($10)
$40
$90
$140
$190
$240
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 Actual YTD Spend 2013 Projected YTD Spend 2011 & 2012 Average YTD Spend 2013 Original Budget
Qtr 1
revision
Qtr 2
revision
Qtr 3
revision
The EPMO in Action
Trend Analysis; using data to Better Predict the Future

24. 2013 Forecasting Accuracy
An Art and a Science!
$8.8
$15.1
$25.3
$39.3
$52.2
$65.7
$73.5
$85.7
$103.4
$127.7
$143.6
$179.1
$7
$15
$24
$35
$49
$66
$76
$89
$103
$118
$137
$173
$212
($10)
$40
$90
$140
$190
$240
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 Actual YTD Spend 2011 & 2012 Average YTD Spend 2013 Original Budget
•Original Budget was
$212M
•Through the dynamic
reallocation process we
‘gave back’ $33m
•The YE Actual Charges
were $179.1M, slightly
above the 2 year
trend, but very close to
the November year-end
projection of 179.6M

25. Producing Metrics is Key to the success
of your EPMO
Organization
2013
Requested
2013
Approved
2013
Actual
Charges
2013
Original
Budget
Actual vs. Budget
November
Forecast
Actual vs.
Forecast
Organization 1 $27,404 $22,442 $14,869 $22,442 ($7,574) -34% $15,991 ($1,122) -7%
Organization 2 $73,851 $62,864 $50,236 $62,864 ($12,628) -20% $48,050 $2,186 5%
Organization 3 $0 $0 $197 $0 $197 - $195 $2 1%
Organization 4 $11,105 $5,987 $3,650 $5,987 ($2,337) -39% $3,683 ($33) -1%

26. Developing Trends & Metrics
Forecasting Accuracy by Project

27. Developing Trends & Metrics
Forecasting Accuracy By Organization
Organization 2011 2012 2013
Information Resources 18% 19% 12%
Facilities 41% 33% 27%
Organization A 23% 19% 12%
Organization B 26% 16% 26%
Organization C 23% 25% 8%
Organization D 43% 33% 40%
Organization E - 79% 3%
Organization F 55% 13% 3%
Organization G 64% 21% 28%
Organization H - 31% 61%
Total 38% 27% 26%

28. Dynamic Reallocation In Action
Reasons for Releases by Organization

29. How to Measure Business Value
Assess Throughout the PPM Lifecycle
• Prioritization/
Optimization
• Strategic Value
• Risk Reduction
• Cost Benefit
• Cost Avoidance
Execution – Calendar Year
• Value assessment
• Year-end metrics
• Budget utilization
• Estimating accuracy
• Forecasting accuracy
• Degree of churn
• Scope delivery
• Financial savings
• Identify Continuous
Improvement
Opportunities
Annual Budget Planning Post Year-End Review
• Strategy change
• Financial change
• Scope changes
• Resource changes
• Dynamic Re-allocation -
Sweep
OutputInput
CHURN

30. Developing Trends & Metrics
Portfolio Churn Analysis
ReinvestmentTotal Over spendTotal Under spend
Original Optimized Portfolio
Give Backs
Q1 Q2 Q3
Approved
Increases
Over-Runs New ProjectsUnder-Runs
Actual Portfolio =
Original Portfolio – Give Backs – Under-Runs + Approved Increases + Over-Runs + New
Projects
% Portfolio Churn = 1- (Original Portfolio – Give Backs – Under-Runs) / Original Portfolio
$188M
$18 $9 $9 $14
$51M
27%
$15 $0
$15M
8%
$17.5M
9%
$17.5

31. Developing Trends & Metrics
Portfolio Churn Analysis
ReinvestmentTotal Over spendTotal Under spend
Original Optimized Portfolio
Give Backs
Q1 Q2 Q3
Approved
Increases
Over-Runs New ProjectsUnder-Runs
Actual Portfolio = $170M
73% of Original Portfolio spent; 27% of Original Portfolio churned
$188M
$18 $9 $9 $14
$51M
27%
$15 $0
$15M
8%
$17.5M
9%
$17.5

32. Integrate with LoB
Systems & Automate
Reports
Implement the Sweep
Process
Establish Benefits
Realization Framework
Phase 1 Phase 2 Phase 3 Phase 4
PortfolioROIImprovement(0to20%)
IncreaseFinancialMaturityLevel(1to5)
20% -
15% -
10% -
5% -
- Level 5
- Level 4
- Level 3
- Level 2
A Phased Approach Yields Results
Integrated Project & Portfolio Financial Controls

33. Building A Credible Enterprise PMO
Focus on Financials & Business Value
Where we were
•Difficult to find a roster of all in-flight projects
•Hard to track down the project managers
•No formal tracking of start dates/end dates
•No formal benefit estimating and limited follow up (except for large projects)
•Limited project status reporting, no portfolio level reporting
•No dynamic re-allocation process
•No Project Management Society
•No portfolio analytics/year-end reporting
• Budget utilization
• Estimating accuracy
•Silo’ d budgeting vs. shared budgeting
•Informal project manager training
While it may be hard to
measure the power of the
PMO, each of these line items
have increased the value we
are getting from our portfolio
• Delivered value
• Churn analysis

34. Thank You
visit www.UMT360.com to
learn more.
Frank La Rocca
Director of Business Improvement Services
Con Edison
Email: LAROCCAFR@coned.com