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[Whitepaper] 4 Factors to Consider During Your Capital Program Organizational Transition

May 9, 2017 at 8:05 AM / by Wood Mackenzie Supply Chain

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. 

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While many considerations for executing a utility Capital Program organizational transition differ based on specific circumstance, there are four critical areas of focus that help in avoiding transition difficulties: knowledge retention, strategic workforce planning, performance culture, and maintaining operational focus.  

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Knowledge Retention

In executing an organizational transition, adjustments to existing procedures, data management systems, and organizational structures are often required. Altering existing operating systems and tools, however, may increase potential for critical knowledge gaps to arise, whereby the organization does not possess the requisite knowledge to execute a certain function after a third party has exited.

To mitigate potential knowledge gaps, an important step for an organization undergoing transition is to identify critical knowledge areas currently in place and develop plans to retain key knowledge. Well before a transition occurs, an important first step in avoiding knowledge gaps is to perform a ‘Knowledge Audit’ of current internal capabilities of different functions for potential transition effects. Knowledge Audit findings may then serve as a foundation for developing knowledge retention plans which are focused on addressing current knowledge gaps and tailored to an organization’s needs.

Strategic Workforce Planning

Making workforce adjustments is a highly sensitive, and often necessary, activity associated with executing an organizational transition. When staff reductions are mismanaged, this process can weaken employee morale, cause unwanted attrition, and deteriorate an organization’s reputation. Conversely, when an organization expands without the proper planning and foresight, this process can cause confusion around the changing of roles and responsibilities, frustration on the part of both new and existing personnel, and productivity loss as employees adjust to their new roles. Establishing a proactive plan to manage workforce adjustments can be critical to avoiding many of these negative effects.

Performance Culture

Organizational structure is strongly tied to corporate strategy. In some transition scenarios, a change in an organization’s strategic direction may be the impetus for an organizational transition, while in others, altering an organization’s structure will lead to a re-evaluation of long-term strategy. Whatever the circumstance, changes to organizational structure will often be accompanied by changes in strategic direction. To ensure that employees are aligned with any new strategic goals, it is important to create a robust plan to manage performance culture to facilitate this shift in strategic mindset.

Maintaining Operational Focus

During an organizational transition, it is common for involved parties to shift focus away from their current responsibilities as existing working systems and 3rd-party relationships evolve. To avoid post-transition difficulties, organizations have found it helpful to place extra attention to maintaining continuity in operations, project close-out, and post-project completion activities to ensure no requirements are lost.

Embarking on the transition process early and gradually can help the organization to adapt at a reasonable pace and avoid typical pitfalls that arise from a forced or a rapid transition. When organizations are forced to change at a more rapid pace, the four tenants above become even more critical to long-term success. Establishing a dedicated transition team to implement these areas of focus, along with tracking data, processes, and progress, can further help facilitate a more smooth and effective transition.

For additional insight into optimizing a Delivery Model, read our whitepaper Capital Program Structure and Delivery Approach for Utilities. This paper lays out a three-tiered structure for identifying opportunities within a Capital Project Organization, reviews a strategy for successfully implementing that transition process, and discusses several industrywide best practices for executing an organizational transition.

 This is third in our series of posts on Capital Projects lead by PowerAdvocate's team of Capital Project consultants. Read the first two posts How to Approach Utility Capital Project Delivery Model Optimization and How a Utility Portfolio Spend Profile Influences Capital Project Value.


About Our Capital Projects Consulting Team 

PowerAdvocate's Capital Projects consulting practice helps energy clients plan, source, and execute large, complex capital portfolios and projects across a wide range of industries. From helping design organizational approaches, leveraging market data to estimate and forecast project costs, procuring and negotiating large contracts, and implementing sophisticated risk-reward programs, the practice has added value to our clients' projects across North America, Europe, and the Middle East.

Read our Capital Projects blog posts: www.costinsights.com/topic/capital-projects 

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