This is a guest contribution from Engerati, Europe’s largest community of utilities and power sector professionals.
In the age of digitization, it is imperative that utilities optimize their spending across the organization. Engerati finds that Enterprise Project Portfolio Management (PPM) is key to improving decision making and investment planning processes enterprise-wide.
In this Engerati webinar on PPM for utilities, Nathaniel Williams, Managing Director of Smart Grid Services at Accenture, and Stefan Sadnicki, Managing Director of Europe at Copperleaf®, discuss the impact of new technologies on the energy industry and how utilities have many more projects and assets to contend with, requiring a transformation of PPM processes to help them select the optimal portfolio of projects to execute.
Nathaniel Williams explains why it’s essential for utilities to learn how to optimize investments into their assets and effectively manage the associated projects:
The average utility will have over £100m relying on the quality of decision making and investment spend, and those decisions are now going to need to take into account many more factors, variables, constraints and outputs.
Stefan Sadnicki outlines five keys to success for asset-intensive organizations:
- Develop a value framework: a common definition of value is needed across the organization. Value can be tangible or intangible, financial or non-financial, but it should be determined by the organization and its stakeholders in alignment with strategic objectives.
- Model asset lifecycles: it is essential to understand asset lifecycles and the impact of time in asset decisions.
- Develop portfolio constraints: incorporating constraints into investment planning upfront and making sure a collective plan is deliverable is critical to success.
- Optimize instead of prioritize: optimization factors in multiple dimensions or objectives and can achieve 7% to 20% greater portfolio value compared to traditional prioritization methods.
- Keep the plan up to date: in the real world things change, and optimal decisions made at the beginning of a budget cycle might not be the best as things progress. It is important to have the ability to re-optimize the plan at different points in time to ensure continuous steering of investments toward the best possible result.
The benefits of Enterprise Portfolio Management are significant and include eliminating negative value investments (estimated at 2% to 5% of capital spend), generating 7% to 20% more value from your portfolios by optimizing rather than prioritizing investments, achieving improved regulatory settlements, and getting greater stability and transparency of your investment plans. Williams adds:
The traditional asset management plan is no longer going to be enough to deliver the profitability. [Transforming PPM processes] is about getting more for less, which is what our customers and regulators are starting to expect from us as an industry.
Read the full article on the Engerati website.
The Copperleaf product suite provides Enterprise Portfolio Management specifically suited to the needs of organizations managing large numbers of physical assets. To learn more about Enterprise PPM and how it helps organizations evaluate trade-off decisions between diverse investments, check out our white paper or watch our webinar PPM For Utilities: How Enterprise Portfolio Management Optimizes Investment.