TXU Electric Delivery Restructure


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  • Good morning. Today, I’d like to take a few minutes to discuss the Oncor Electric Delivery organization alignment. We’ll start at a high, conceptual level and then look in more detail at the functional relationships. Then we’ll spend some time discussing the changes in the Engineering & Construction areas that this organizational set-up is driving.
  • As we look at the entire Electric Delivery organization, we see a business model that include Asset Ownership, Asset Management, & Asset Services. This business model of the AO/AM/AS concept was actually implemented several years ago. Oncor Electric Delivery has been re-fining and restructuring the organization to further align its functions according to this model. The goal is to achieve the best efficiencies of organization & operation.
  • As we take a look at each area, we see that each has its own drivers, goals, and expectations. The key driver for the Asset Owner function is business excellence. It focuses on business strategies, risk management, and revenue metrics. As you can see, the Asset Owner is focuses on return on assets, earnings growth, revenue & cost management, and responsiveness to stakeholders.
  • The key driver for the Asset Manager function is asset excellence. The Asset Manager organization uses core competencies in performance management, economic analysis, and risk management to develop plans and programs for the management of electric delivery assets. The Asset Manager drives asset planning, Capital & O&M spending, performance measurement, and performance accountability.
  • The key driver for the Asset Services function is service excellence. This area is focused on best-in-class implementation and completion of the asset plans developed by the Asset Manager. It is focused on service delivery, customer service, and quality of work. It’s goals are best-in-class performance, effective resource utilization, and customer satisfaction. As you can tell, this is the field level exection of the asset plans developed by the Asset Manager function.
  • This slide shown the high-level conceptual plan for the relationship of the three functions of the business model. The Asset Owners sets & directs the Asset Manager to meet certain asset performance goals. The Asset Manager develops the asset plans and programs for execution by the Asset Services organization to me the Asset Owner’s goals. The Asset Services organization implements the Asset Manager’s plans and programs.
  • As we look at each area, we see that each has its own separate function and key accountabilities and responsibilities. The Asset Owner develops the overall business plans, determines Capital & O&M levels of spend and risk tolerances, and defines the expected level of financial and reliability performance. The Asset Manager develops specific strategies, plans, policies, and standards based on the goals and spend levels set by the Asset Owner. The Asset Manager also sets & prioritizes key performance indicators that monitors performance relative to the plans. More specifically, the asset plans include asset expansion and maintenance programs, material, design & construction standards, and maintenance & operational guidelines. The Asset Services function implements the Asset Manager plans. This include the design and construction of various projects and programs, as well as the day-to-day field operation of the system.
  • What’s required for success? Each area must focus on their unique accountabilities and drivers, and seek process improvement & innovation for performance excellence. Each area must also be successful in its performance of its responsibilities and utilization of performance metrics to drive accountability & responsibility.
  • As we talk about these three areas, let’s take a closer look at the specific functions or groups in these areas as shown on this slide. The Asset Owner includes the governmental affairs, business operations, and finance & accounting function. The Asset manager includes those functions related to the management of ED’s business, including the Asset Management & Engineering organization which we’ll talk about further in a few minutes. The Asset Services organization includes the field organizations responsible for the design, construction, operations, and maintenance of the system.
  • As we mentioned in the previous slide, the Asset Management & Engineering function of part of the Asset Manager organization. This slide shows the specific Asset Management & Engineering groups, and thus essentially shown us the responsibilities of the Asset Manager organization for engineering, construction, operations, and maintenance. For engineering, the Asset Manager sets standards for engineering, construction, and material. Also, the System Planning groups develop the asset expansion & system protection plans. The T&D operations centers are part of the Asset Management & Engineering organization and control the daily operation of the T&D system. The Asset Investment Strategy group establishes funding & monitors costs for the asset expansion plans and maintenance programs. The
  • A quick look at this slide shows the responsibility of the Asset Services groups in engineering, construction, maintenance, & related areas. For engineering, this includes the specific project design & project management including easement & ROW acquisition. For System Operations, it includes storm & trouble response as well as field operations. The construction responsibilities for project & maintenance construction, contractor management, work management, project scheduling, safety & training, fleet management, and materials management are also included.
  • What’s different and what’s not? What’s different is each group’s focus on their area of accountability & responsibility. The Asset Manager group will be more focused on planning, strategy, and policy. The Asset Services group will be more focused on plan execution. What’s not different is the feedback from the field into the Asset Manager processes as well as communication between the two functions.
  • Now, what does all this mean for the engineering & construction organizations? In essence, it means a renewed focus on superior execution of its functions as well as the introduction of some changes to drive efficiencies & accountabilities. The first of these is the field engineering concept. Historically, the design and estimating to serve individual customers was performed in the office after an on-site meeting with the customer. This began an iterative process with multiple estimates to determine an acceptable method of service to the customer. To drive effencies in this process, the field engineering concept was implemented to perform these functions “out of the office”. This includes developing a plan of service, design details, project estimated cost, and calculation of any customer charges during the first visit with the customer. To do this requires the introduction & integration of new tools into a mobile computing framework. Today this includes a non-graphic estimating tool on a PC. In the future, this would include system with mobile connectivity to automatically update databases and issue work requests and service orders while in the field.
  • Another concept, thought it’s not new, is the use of construction unit pricing. This concept involves the use of “unit pricing” for the performance of a specific construction activity. For example, unit pricing would mean a specific price for the replacement of a certain size pole. The integration of this concept involves two items: Integration of these units in the Company estimating system so that the project estimating system provides an output of pricing or billing units for that particular project. Negotiated contracts with contracting resources that includes these units. The goal is to unitize or capture as much work as possible with the units, and its expected that 90% or more of the work will be performed and billed by these units. A benefit to the use of these units and integration of these units in the estimating system is that the estimated project costs are aligned with the actual labor charges.
  • This is an example of a construction unit. It includes the work scope, and enough details to establish the boundaries on the scope of work. In all, there are approximately 200 units for overhead & underground distribution work. Units have also been developed for Transmission & Substation work as well. A side benefit of these units is that it establishes a benchmark for the measuring of the productivity of Company and contractor crews.
  • An item that’s being utilized to drive accountability and responsibility is the use of design and construction audits. This includes an audit of the various design and construction activities to measure performance and quality of work. It includes a full range of design & construction activities, and is utilized on a sampling of projects. The goal of this item is not just an audit function, but also a means to identify items to improve performance through several means. One is the development of training plans to educate field personnel on design & construction standards. A second is to identify the gaps between standards and actual construction practices to insure a match between these two. A third is a “true-up” of the construction units and materials listing from the design & estimating system to actual field requirements .
  • We have slowly moved our maintenance practices from an “individual area or service center” methodology to a centralized program that is managed across the entire distribution area. The maintenance programs are developed to target specific areas and drive improvements in reliability, and the results are measured in the improvements in reliability indices (SAIDI, SAIFI, etc.)
  • A summary listing of the various types of maintenance programs are as shown.
  • Everyone is aware and has used performance metrics in their organizations at one time or another. With the organizational changes providing a focus on individual responsibilities and accountabilities, new performance metrics have been established to drive individual work group accountabilities. These metrics have an identified owner and data source, and are updated and published on the Company intranet for evaluation.
  • TXU Electric Delivery Restructure

    1. 1. Oncor Electric Delivery Restructure An Engineering & Construction Perspective SWEDE Conference May 11, 2007 San Antonio Mark Burt
    2. 2. The Overall Business Strategy <ul><li>The overall strategy and Business Model looks at the business in three major segments: </li></ul><ul><li>Asset Ownership </li></ul><ul><li>Asset Management </li></ul><ul><li>Asset Services/Operations </li></ul>
    3. 3. Asset Owner Function <ul><li>Key Driver is Business Excellence </li></ul><ul><li>Focuses on overall business performance </li></ul><ul><li>Values business strategies that create opportunity & manage risk </li></ul><ul><li>Core competencies in forecasting & managing revenue & costs </li></ul><ul><li>Asset Owner expectations: </li></ul><ul><li>Return on assets </li></ul><ul><li>Earnings Growth </li></ul><ul><li>Management of revenue/costs </li></ul><ul><li>Responsiveness to stakeholders </li></ul>
    4. 4. Asset Manager Function <ul><li>Key Driver is Asset Excellence </li></ul><ul><li>Strong focus on the performance of all Assets (financial, physical, human, etc.) </li></ul><ul><li>Core competencies in performance measurement, analysis, economic lifecycle & managing risk </li></ul><ul><li>Leverages information technology to manage accurate & timely information </li></ul><ul><li>The Asset Manager Drives: </li></ul><ul><li>Strategic asset planning </li></ul><ul><li>Balancing the financial, technical, & sociopolitical components </li></ul><ul><li>Holistic consideration of spending (Capital, O&M) </li></ul><ul><li>Performance accountability </li></ul>
    5. 5. Asset Services Function <ul><li>Key Driver is Service Excellence </li></ul><ul><li>Best-in-Class Implementation of Asset Plan(s) </li></ul><ul><li>Focuses on efficient & responsive service delivery </li></ul><ul><li>Values customer service & the quality of the work </li></ul><ul><li>Core competencies in work management & operating acumen </li></ul><ul><li>Asset Services drives: </li></ul><ul><li>Best in class processes </li></ul><ul><li>Most effective use of resources </li></ul><ul><li>Consumer/Customer Satisfaction </li></ul>
    6. 6. The Business Model Asset Owner sets & directs Asset Manager to meet asset performance goals Asset Manager develops asset plans for implementation by Asset Services Asset Services implements Asset Plans, Policies, and Guidelines
    7. 7. Key Accountabilities Asset Owner <ul><li>Develops overall business plans </li></ul><ul><li>Determines appropriate level of investment & spending for assets (capital & O&M) </li></ul><ul><li>Defines owner’s risk tolerance </li></ul><ul><li>Defines expected level of performance of assets: </li></ul><ul><li>- Financial </li></ul><ul><li>- Technical (Reliability ) </li></ul>Asset Manager <ul><li>Develops strategies, policies, & standards </li></ul><ul><li>Monitors implementation of Asset Plans and key performance indicators </li></ul><ul><li>Asset Plans include: </li></ul><ul><li>- Asset expansion, augmentation and replacement projects & programs. </li></ul><ul><li>- Materials, design, and construction standards </li></ul><ul><li>- Maintenance & operations guidelines </li></ul>Asset Services <ul><li>Implements Asset Plans according to predetermined performance metrics </li></ul><ul><li>Designs & builds asset expansions and replacements per standard </li></ul><ul><li>Maintains and operates assets in accordance with guidelines </li></ul><ul><li>Provides key feedback on asset condition & performance </li></ul>
    8. 8. Keys for Success <ul><li>Focus on accountabilities and key drivers for each business segment </li></ul><ul><li>Continue process improvement and innovation in all aspects of business </li></ul><ul><li>Performance excellence in each area of the enterprise </li></ul><ul><li>Performance metrics to drive accountability & performance </li></ul>
    9. 9. Organizational Alignment <ul><li>Asset Manager </li></ul><ul><li>Regulatory </li></ul><ul><li>Rates </li></ul><ul><li>REP Relations </li></ul><ul><li>Community/Customer Relations </li></ul><ul><li>ERCOT Interface </li></ul><ul><li>Metering and Measurement Services </li></ul><ul><li>Communications </li></ul><ul><li>Investment Strategy and Planning </li></ul><ul><li>Environmental Standards and Policy </li></ul><ul><li>Electric Delivery HR </li></ul><ul><li>Asset Management & Engineering </li></ul><ul><li>Asset Services </li></ul><ul><li>T&D Operations </li></ul><ul><li>T&D Field Engineering </li></ul><ul><li>Storm/Trouble Response </li></ul><ul><li>Construction </li></ul><ul><li>Maintenance </li></ul><ul><li>Transformer Shop </li></ul><ul><li>Supply Chain and Sourcing </li></ul><ul><li>Fleet Management </li></ul><ul><li>Safety & Training </li></ul><ul><li>Work Management </li></ul><ul><li>Distribution Services </li></ul><ul><li>Environmental Lab and Waste Management </li></ul><ul><li>Asset Owner </li></ul><ul><li>Governmental Affairs </li></ul><ul><li>Business Operations </li></ul><ul><li>Economic Development </li></ul><ul><li>Business & Developer Management </li></ul><ul><li>Finance & Accounting </li></ul>
    10. 10. <ul><li>Engineering (T & D) – Engineering & Material Standards, Conceptual Designs, Policies & Procedures, Construction Standards, Performance Management </li></ul><ul><li>System Operations – T&D Operating Centers </li></ul><ul><li>System Planning – T&D Planning, System Expansion, System Protection & Coordination </li></ul><ul><li>Asset Investment Strategy – Budgeting, Program/Project Funding, Plan Management </li></ul><ul><li>Performance Management – T&D System Performance, Metric Analysis, Benchmarking </li></ul><ul><li>Information Management – IT Systems Planning, Systems Applications </li></ul><ul><li>Maintenance Strategy – Maintenance Program Strategy & Development </li></ul>Oncor Electric Delivery Asset Management & Engineering
    11. 11. <ul><li>Engineering (T & D) – Specific Project Design & Project Management, Easement & ROW Acquisition, Construction Coordination </li></ul><ul><li>System Operations – Storm & Trouble Response, T&D Field Operations </li></ul><ul><li>Construction (T&D) – Project & Maintenance Construction, Contractor Management, Work Management & Project Scheduling </li></ul><ul><li>Customer Operations – Customer Outage & Informational Response </li></ul><ul><li>Safety & Training – Safety Program Development & Training </li></ul><ul><li>Fleet Management – Fleet Management Operations </li></ul><ul><li>Materials Management – Supply Chain Operations & Materials Acquisition, Strategic Sourcing </li></ul>Oncor Electric Delivery Asset Services
    12. 12. What’s Different And What’s Not <ul><li>What's different : </li></ul><ul><ul><li>Asset Management will be more focused on planning, strategy, policy </li></ul></ul><ul><ul><li>Asset Services will be more focused on superior Plan execution </li></ul></ul><ul><li>What's not different : </li></ul><ul><ul><li>Asset Services input and feedback on system planning, standards, plan development and other issues is just as critical as it ever has been </li></ul></ul><ul><ul><li>Clear, continuous, straightforward communication between groups is the key to shared success </li></ul></ul>
    13. 13. <ul><li>New concept initiated for the performance of distribution field engineering and customer service activities “out of office” </li></ul><ul><li>Concept based on the criteria to provide plan of service, design specific details, calculation of customer charges, and other project specifics (easement & vegetation management requirements, etc.) while “on location” with customer and potentially during first site visit </li></ul><ul><li>Includes integration of new tools including non-graphic estimating tool and design programs into mobile computer system </li></ul><ul><li>Future enhancements include mobile connectivity to System program to update databases and issue work requests & service orders </li></ul>Engineering & Construction – What Changes? Field Engineering
    14. 14. <ul><li>Construction pricing developed to utilize “unit pricing” for performance of construction specific activities </li></ul><ul><li>Goal is to “unitize” as much work as can effectively be captured with this type of pricing </li></ul><ul><li>Expected that approximately 90% of all construction to be based on unit work </li></ul><ul><li>Construction units are integrated into estimating systems such that system output includes quantity and type of construction units for that specific project (based on estimate by designer) </li></ul>Engineering & Construction – What Changes? Construction Unit Pricing
    15. 15. Engineering & Construction – What Changes? Construction Unit Pricing <ul><li>Example of construction unit is as follows: </li></ul>PRIMARY CABLE, SINGLE PHASE. INCLUDES: SET UP/BREAKDOWN, PULL ROPE, PULL CABLE IN CONDUIT, MAINTAIN MOISTURE SEAL AT CABLE ENDS AND CLEANUP. UNIT OF MEASURE = PER PULL (245' AVG PULL). CB2000 Unit Description Unit #
    16. 16. <ul><li>Audits of design & construction activities have been initiated to provide an “external” look at the quality of work </li></ul><ul><li>Items include full range of design & construction activities </li></ul><ul><li>Actions plans from audits to provide training and educate field personnel on design & construction standards </li></ul><ul><li>Additional activity includes review of Standards of construction and material requirements for “real work” application </li></ul><ul><li>Also includes review & revisions to design estimating units and associated material requirements driven by estimating system </li></ul>Engineering & Construction – What Changes? Design & Construction Audits
    17. 20. <ul><li>Centralized development of maintenance programs to provide efficiencies on performance of work and also consistent approach to maintenance practices </li></ul><ul><li>Maintenance programs developed and targeted to address specific items (facilities) or issues to derive maximum benefit from maintenance dollars </li></ul><ul><li>Maintenance programs developed by Asset Manager organization with review of latest technology and practices available </li></ul><ul><li>Field organizations charged with timely and cost-effective completion of specific maintenance work </li></ul><ul><li>Both organizations judged by improvement in operating performance of distribution system </li></ul>Engineering & Construction – What Changes? Program Development
    18. 21. Engineering & Construction – What Changes? Program Development <ul><ul><li>A summary of the various types of maintenance programs are as follows: </li></ul></ul><ul><ul><li>Visual & infrared inspection of feeders </li></ul></ul><ul><ul><li>Ground line pole inspection, treatment, reinforcement and replacement </li></ul></ul><ul><ul><li>Underground cable testing & diagnostics </li></ul></ul><ul><ul><li>Cable rehabilitation (silicon injection) </li></ul></ul><ul><ul><li>Capital replacement programs (poles, crossarms, cable, etc.) </li></ul></ul><ul><ul><li>Open-wire secondary replacement </li></ul></ul><ul><ul><li>Vegetation management activities </li></ul></ul>
    19. 22. <ul><li>Performance Metrics developed to focus each organization on its specific activities and areas of control </li></ul><ul><li>Metrics developed around design, construction, and operational items at a more “operational” level than before </li></ul><ul><li>Metric owners and also data sources identified to provide ownership responsibility and consistency of data measurement & application </li></ul><ul><li>Electronic “performance dashboard” developed to provide up-to-date picture of performance </li></ul><ul><li>Timely reporting allows timely adjustment to developing trends as well as overall focus on organizational goals </li></ul>Engineering & Construction – What Changes? Performance Metrics
    20. 23. <ul><li>QUESTIONS? </li></ul>