Making any change to an organization requires proactive management to ensure a smooth transition. There are many potential pitfalls that can arise if all affected stakeholders are not aligned and actively engaged in the process.
The foundation for an optimal utility capital project delivery model is built on a thorough understanding of the expected portfolio of work that the organization needs to accomplish. Portfolio spend profile analysis provides capital program organizations with the insight needed to determine the appropriate resourcing and risk mitigation strategies to employ in its delivery model.
Maintaining profitability in a rapidly fluctuating market environment is a challenge for any firm. For utilities, structuring a Capital Program Office to meet the specific needs of projected workload is a key success factor. Achieving the optimal Delivery Model requires considering a wide range of factors – and a significant investment of time and resources. Before refining an existing or transitioning to a new Delivery Model, it pays to first understand the transitional costs, value, and ongoing savings opportunities.
The scatterplot results from our previous blog post reveal two findings around utility gas distribution replacement rates that surprised us. First, our analysis shows that at the current rate of replacement, the majority of the industry will require at least 25 years to complete their programs. Second, we find capable, prominent companies plotted on the bottom of the y-axis – near a zero percent Replacement Rate. There are two metrics that help shed some light on what’s behind these findings.
Gas distribution replacement programs are big, complex, and critical capital initiatives to manage. Natural gas utilities spend $22 billion and modernize 30,000 miles of distribution pipeline annually to ensure safety and to enhance system reliability and integrity. From our experience providing technology and consulting to 14 of the top 50 U.S. gas utilities and helping them manage some $2.6 billion in annual gas infrastructure spend, we’ve seen utilities across the country ramp up their efforts to meet the challenge.