Managing large projects - Do you need a piece of paper or an integrated system?
‘What is the project budget?’, ‘Who approved this capital investment?’, ‘who is monitoring the budget overruns?’, ‘who is tracking the project performance in terms of cost, quality, time and effort?’ and finally ‘Where are we in terms of planned Vs Actuals?’ – These are common questions one will come across, if they have spent some time in utility industries. Utility industry is one of the very few industries that manage their operations as projects. Everything they do is managed in their systems as an outcome of a project or a group of projects. Given this challenge, what does one need to manage these projects? Will there be the organization’s ace project manager available to manage all your projects efficiently? – Probably not. !
Consider this – Your organization deals with approximately 20,000 active projects at any time in electricity business and 50,000 active projects in gas business. Of this at least 20% of the projects are classified as high value and 2-3% projects are very high value. This is a typical scenario that exists in today’s leaders in utility industry; the scale of operations being the only difference. You are more likely to have capital projects that are the outcome of your strategic investment decisions and add to your assets, maintenance projects that keep your existing assets running and re-chargeable projects that you do on contracting basis to your end customers. Your organization’s key strength is to manage such projects effectively and deliver what you promise to your stake holders.
In such cases, you are up against the challenge to support your operations that include business processes of project creation based on field service or customer service requirement, emergency project creation based on outage, capital project creation based on investment decisions, Regulatory obligations to manage and maintain existing assets, Budget creation, approval and tracking for the projects, procurement process to support projects, logistics and inventory processes to support projects, HR and payroll processes to support projects and end to end financial reconciliation and reporting of those projects. All these point to a single direction – The need for an integrated system to support your project-centric operations. Based on our experience over years in dealing with Utilities, the most common business imperatives that we came across are as follows.
- Streamlined Budget creation, Authorization and control process
- Need for standardized project management and accounting process.
- Visibility of Cash flow and view of investments for Capital projects
- Seamless Integration of procurement, Warehouse and logistics processes with Projects
- Ease of Financial consolidation and reporting
- Stringent Data security & Access control.
- Need to Manage of Asset Hierarchies
- Need to Management of project groups (Programs)
Over a series of blogs, I’m planning to highlight our point of view to such a need and how a solution can be deployed in Utilities using out of the box Oracle eBusiness Suite.
Before we get onto the actual business imperatives and how Oracle eBusiness Suite can be used to deploy a solution, let us look at the KPIs one such organization had and achieved with such a solution. This will give a fair idea of the size of operations, the business imperatives and the efficiencies one such integrated solution can bring in.
KPI | Current Metrics | Expected change |
| Purchase requisition for project | 3 days | -80% (should be automated) |
| Stock requests / Move order requests between Warehouses | 1 day | -20% (Should be automated) |
| Financial consolidation and reporting from period closure | 7 days | -5 days |
| Budget creation to approval | 3 days | 1 day |
| % of Capital projects running over budget | 8% | 0% |
| Number of vendor sites | 20,000 | 16,000 |
| Number of stock coded items | 12,000 | 10,000 |
Standardising project budgeting and approval process
One of the biggest challenges in such a typical organization is to institutionalize the project management process for various jobs in the organization. The challenge is to streamline and automate the budget creation and approval process for different kind of jobs, where the process and approval hierarchy is different for different types of jobs. With Oracle eBusiness suite, the approval workflow process could be extended and used to suit this specific requirement. With this, the budget creation and approval hierarchy can be automated. Along with the budget approval requests, the necessary documents can be attached to the budget, which gives visibility to the relevant documentation required by the approver. This automated process envisages bringing in efficiencies in budgeting process. The same process can be used for budgets that come in for re-approval.
We will look at the rest of the imperatives in subsequent blogs.
Comments
This is a very relevant topic for utility companies.
Energy utility companies for instance, face challenges with integrating their multiple applications for billing, metering, asset management etc.
Managing operations of such project-centric organizations is a big challenge - if most of the operational aspects can be streamlined and re-used, it will lead to significant reduction in time and cost.
In your subsequent blogs, can you also cover how the Oracle-Lodestar solution for the utilities sector can be used to achieve this integration.
Posted by: Samir Das | November 13, 2008 06:18 PM