Performance Improvement

A merger or adoption is a serious process for a company. Performance improvement must follow in order to cover the premium paid.  Quintel has contributed in diverse situations with multidisciplinary teams to the integration of company components. In most of the cases overseen we join directly after a merger. But also, we implement important efficiency plans for the coming years after a merger or adoption.

Quintel consultants have a wide experience with projects which have been aimed at cost saving and restructuring for different customers. That experience includes both reduction of overheads and saving on operational costs, and an elimination of loss-making products and company components.

Business Case and Performance Improvement Analysis

California Electric and Water Utility

Quintel provided efficiency advisory services to include performance improvement and performance measurement consulting services.  In completing this assignment, Quintel interviewed staff in power generation, transmission, distribution and engineering; water operations, engineering and construction; customer service, finance and general services areas.  We utilized several unique approaches to capture the information required to study these areas in more detail:

  1. Completed activity survey
    1. Distributed to all employees (e-mail or test sessions)
    2. Documented employee responses
  2. Completed a functional audit of processes
    1. Focus groups with multiple user groups
  3. Captured and analyzed the client’s data and created data as needed :
    1. Reviewed performance metrics, processes, procedures and policies
    2. Data estimated based on employee interview
    3. Data extrapolated based on available information
    4. Prior client experiences and benchmarks incorporated in the generation of workable data for analysis
  4. Conducted best practices and peer group benchmarking analysis

Quintel then crafted into recommendations with the associated business cases.  The total efficiency savings opportunities identified were in the areas of SAP usage, Fleet Management, Water Order Fulfillment, Billing, Customer Service projects and organization design.  These areas amounted to a savings potential of approximately $30 million, or 15% of the current IID operating and capital budget.  The area with the greatest potential for savings ($7 million) was the more efficient use of SAP. In addition to these “hard” savings areas, the area of governance (performance measures, policies and procedures, etc.) was identified as a key area that needed to be addressed in order to achieve the savings.

Finally, detailed implementation plans were developed with critical paths identified in order to assist the client in planning its implementation.

Management of Performance Improvement Programs

Large Eastern Electric and Gas Utility Company

Quintel-MC, Inc. is the overall program manager for the utility’s performance improvement and merger integration efforts. The projects underway include: development of an overall business case, consolidation of IT departments, supply chain integration and strategic sourcing, and implementation of an ERP system.

Quintel-MC acts as an advisor to the Company’s senior executives:

  1. Attends and participates in executive sessions.
  2. Coordinate with ERP team to deliver business case results.
  3. Educate the steering committee on ERP issues.
  4. Attend the steering team meetings.
  5. Provide data and analysis help as needed by finance team
  6. Review idea portfolio to determine which ideas should be implemented.

Supply Chain Restructuring Project

The implementation of the Supply Chain Area included restructuring the supply chain related departements and implementation of a strategic sourcing program. The implementation scope included the execution of realizing the savings that were targeted. Quintel is responsible for creating a Program Management Office (PMO) to oversee and execute the cost reduction and consolidation opportunities. The PMO would include a communications program, assisting with the new organization structure as a new structure is implemented, managing the implementation of system changes for the new sourcing method and new operating procedures, and negotiating with various vendors, as required, etc.

In general, the steps for the implementation programs include:

  1. Establish Program Management Office
  2. Conduct training for the implementation teams
  3. Analysis of each commodity and IT area (for each item we will develop business purpose and need, optimize the area, research and select technologies to apply, engineer or reengineer the commodity or item)
  4. Develop RFPs for vendors and service providers to respond to
  5. Select vendors for implementation
  6. Select tools to use to monitor performance of teams, measure savings and reports to senior management

Quintel will leverage previous assignments and identify “best practices” processes, organizations and performance metrics, where applicable. Quintel will work with the executive committee and key staff to balance the best practices identified in prior analyses with the ability to implement the changes in the current compnay culture. These efforts can commence at some point during the program based on organizational considerations and timing of the savings.

In the implementation of the supply chain area, we will be focusing initially on three areas: procurement, inventory levels and fleet. Once the ERP is implemented, we will revisit the materials management area. In the procurement implementation, the project team will lead commodity teams through the process of developing RFPs, contacting suppliers, initiating and managing the bid process and selecting the most attractive supplier(s). We will provide the tools, coordination, project management, and hands-on expertise to provide rapid attainment of savings in the commodity categories.

Management of Performance Improvement Programs

Southwest Electric Utility Company

Quintel consultants were the overall program manager for the utility’s performance improvement and CIS implementation project. The project included: development of an overall business case which included the CIS implementation project, field operations, supply chain and the back office operations.

In this project we acted as an advisor to the Company’s senior executives:

  1. Attended and participates in executive sessions.
  2. Educate the steering committee on CIS issues.
  3. Attend the steering team meetings.
  4. Provide data and analysis help as needed by finance team.
  5. Review idea portfolio to determine which ideas should be implemented.

Performance Improvement for an Electricity Company

A Major Electricity Distribution Company with 4.6 Million Customers

The company was currently divided into 4 main directories (Commercial, Distribution, Financial and Administrative), each one managed by one of the four shareholders. In the beginning of 2001 the company implemented a major capital restructuring. As a result one of the main shareholders (that was previously managing the financial area) will designated to manage and control the whole company, implementing a new governance model.

In this scenario, this shareholder hired our consultants to do an electric system audit to understand clearly the current asset situation and the key reasons that may affect the electric system assets. Also a recommended actions was requested.

The project methodology involves the comparison between investment analysis, field research and available internal network information.

This eight-week project was divided into five main activities:

  1. Continuously establish the way of communication with the client.
  2. Analyze available information and define priorities.
  3. Evaluate assets situation and future requirements through field research.
  4. Complement evaluations with specific analysis.
  5. Consolidate evaluations and recommend priorities.

As a preliminary result of our work, we identified the critical areas where the network had deteriorated, mainly the sub-transmission, due to investment focused on short-term results and operational expenses focused on emergency and corrective maintenance.

The next step was to develop some specific analysis, like identifying system planning options and measuring critical feeders (charge, phase balance, reactive power consumption), to complement our analysis and then develop our recommendations.

Performance Improvement in Creating a Competitive Growth Platform

Large Midwest Utility

The client was concerned about the pressures that deregulation would put on shareholder value and asked our consultants to analyze the utility’s strengths and weaknesses, relative to other utilities, to develop strategies for improving value.

We developed the metrics to be used in each of the areas that were analyzed including corporate services, generation, product costs, transmission and distribution. Data related to peer group utilities were collected as a basis for gap analysis, resulting in both specific recommendations that would produce a quick-win, and longer-term actions related to efficiency and pricing.

In the generation area, we created a new operational platform. Historically, in a regulated environment, forced outages, maintenance costs and dispatch order were not that critical. However in a competitive environment, each aspect of generation would be important (i.e., fuel procurement, trading, O&M, dispatch, maintenance, asset management). The results from our analysis were used to create the NewCo generation company.

Performance Improvement in the Asset and Maintenance Areas

Large Multi-Utility

In recent years, the “total service” as perceived by the customers of maintenance and repair (i.e. the Generating Stations) had become less than satisfactory. For example, scheduled and forced repairs consistently overrun planned schedule, exceed estimated cost and often require rework. As a first step toward improving the maintenance activities, the client looked to a specialized team, with an independent perspective, to conduct an audit to evaluate the current situation and understand the causes of the maintenance problems.

The audit identified several causes:

  1. The planning committee frequently delayed planned maintenance (often days prior to the job date) because of budget constraints, near term power market opportunities (or lack thereof), unexpected system failures, etc.
  2. The wide variety of internal and external organizations involved in maintenance, overhauls and repairs created a complex work group that lacked cooperation, accountability, supervision and ultimately, effectiveness.
  3. Customers indicated that internal groups (i.e. Field Services) required too much time to complete jobs and often cannot complete the job in the time anticipated. In many cases projects run over schedule by at least 30%.
  4. Internal groups lacked accountability and diligence on the job. Staffing levels were not consistent. Personnel on the job were often dispatched to other locations in the middle of an overhaul.

The team worked with key stakeholders of the field maintenance process to begin the necessary changed required for improvement. The results of this work included:

  1. Maintenance requirements (costs) were better aligned with availability and reliability requirements
  2. Planning, scheduling and repair processes were redesigned using business process reengineering techniques
  3. Changes were made to the organizations involved to promote accountability, authority, and coordination. Management Controls were put in place to support the restructured organization.
  4. Resource requirements were identified: staffing requirements/performance incentives/performance measures and equipment and facilities

Strategic Sourcing: Rapid Assessment of Corporate Spend and the Procurement and Logistics Processes

Large Integrated Utility in the West

The client recently completed an acquisition of a large, vertically integrated investor owned utility operating in six neighboring states within the United States. As part of the acquisition agreement, the client had to deliver a large credit to existing customers. In addition to identifying the cost reductions to fund this credit, the client was committed to improving its customer service. Our consultants were asked to assist in finding these value creation opportunities in the procurement and logistic processes.

In addition, the acquired utility had undergone a large scale SAP implementation within the last twelve months. As a result, procurement data resided in two systems. This increased the effort required to retrieve and clean the data.

The team conducted benchmarking activities, analyzed the last three years of spend information to validate the savings opportunities that could be obtained from developing a sourcing strategy, and analyzed inventory levels and monthly issues to determine potential savings from inventory reduction. The project team conducted site visits, reviewed the existing processes to identify improvement opportunities and made recommendations on staffing skills and staffing levels and on warehouse and service center locations.

We performed a financial analysis to quantify and model the savings under multiple scenarios for a four-year period. In addition, we developed an implementation plan outlining key milestones, resource requirements and budgets.

The project team identified tangible savings opportunities of $25-35 million in spend reduction, strategic sourcing, inventory level reduction and staff reduction. The client’s leadership team accepted all recommendations.

Develop Cost Effective Strategy for Material and Services Procurement

A Major Utilities Company in the Midwest

The client needed to streamline its operations to compete effectively in a fast-evolving environment. Specifically, the client asked us to help it develop a more cost effective and responsive supply chain strategy for material and services procurement. This was a particularly daunting task because of the culture that had evolved at the client over the years – the comforts of a government regulated industry and a captive market had taken their toll on the quest for excellence and continuous improvement in the client’s workforce.

Our consultants were involved in this project in two phases. In Phase I, we completed a diagnostic, which examined different components of the company’s materials and service-related activities. As a result of this effort, we identified key areas to reduce by 10% the total life-cycle costs of the annual $600 Million spend.

Improving the Performance of Unregulated Businesses

A Large U.S. Utility Holding Company

Our client was concerned about the poor and volatile earnings performance of its unregulated subsidiary and asked our consultants to evaluate each of the subsidiary’s business lines and propose new strategies to reduce earnings volatility and improve performance. We began by conducting a diagnosis of the unregulated businesses, focusing on aspects of the industry environment and company operations likely to cause high earnings volatility in each business line.

Following the diagnostic phase of our study, we worked with senior management to develop strategies that would leverage the strengths of each business line, increase potential for value creation, and reduce earnings volatility. As part of this process, we facilitated brainstorming sessions on several key strategic issues; conducted a survey of executives of current and potential suppliers/customers to gain insights into their needs; and analyzed the subsidiary’s competitors utilizing publicly available information. We recommended several organizational changes, including a restructuring of the five business lines into three new business segments, and developed specific strategies for each segment as well as the subsidiary as a whole.

Our client accepted our recommendations and asked us to assist in the implementation program. As a result of our strategic recommendations and organizational changes, the company experienced immediate improvement in earnings performance and a reduction in earnings volatility.

Performance Situation Assessment and Organization Redesign

Large California Municipal Utility

The client asked our consultants to evaluate the current process and make recommendations for improvement. The team first created a fact book that analyzed the organization, and developed and outline of the scope of the reengineering effort.

The following process improvements were identified:

  1. Provided Single Point of Contact (SPOC) to improve customer service
  2. Created broad skill-based jobs to reduce the number of hand-offs and cycle time
  3. Created process teams that provide accountability and ownership of jobs from beginning to end.
  4. Reduced paperwork by electronically entering the necessary data only once in the process
  5. Allowed field personnel to design on-line and perform field meetings to optimize the use of field and design personnel
  6. Allowed dynamic dispatching of field personnel through the Mobile Data System to optimize the use of field personnel by quickly matching the work identified to the nearest available field personnel
  7. Created standard design and construction job packages “cookbooks” to allow parametric design of new jobs to reduce cycle time
  8. Provided on-line access to customer and system information and delivery of job packages through Mobile Data Terminals
  9. Provided flat filling up front (i.e., designer bills and collects construction bill)
  10. Provided fast job costing based on unit costing
  11. Created a priority rule-based integrated scheduling process
  12. Designers can dispatch crews directly on meter and service type work

Senior management accepted these recommendations.

Management of Performance Improvement Programs

Large Eastern Electric and Gas Utility Company

As a result of the Quintel business case findings, the Company established an internal “SAP team” to review, assess and validate the opportunity and potential benefits enabled through implementation of an SAP system. The SAP team consisted of three sub-teams – including:

A “Back-Office team” focused on the financial, supply chain and human resources business processes. A “Customer Care” team focused on the call center operations, billing & remittance and credit and collections processes. An “Operations” team focused on field operations including all work management processes related to T&D operations.

The findings and recommendations of the SAP team were as follows:

The Back-Office team found that SAP met all major business process functionality requirements for each of the six utility operating companies. The team also validated that the potential benefits justified implementation of an SAP across the six operating companies. The back office team’s study and findings concluded that the comapny should move forward with the SAP implementation for all back office business processes.

Quintel-MC developed the overall IT master plan and managed the program implementation. The breadth of the implementation will include:

  • Procure mainframe hardware, upgrades and software procurement,
  • Assist with the Corporate Network Design and Implementation,
  • Assist with the Network Operation Center Design and Implementation,
  • Execute the Data Center Consolidation Planning and Implementation,
  • Execute the Consolidation Print Operations Planning and Implementation, and
  • Enterprise-Wide Security Process Design and Implementation.

The IT project consisted of the tasks listed below.

  1. Complete Data Center Consolidation Plan
  2. Populate Asset Management System
  3. Complete Application Documentation
  4. Procure Mainframe Hardware and Software
  5. Develop Detailed Organizational Design Plan
  6. Develop Enterprise-Wide Security Plan
  7. Develop Print Operations Consolidation Plan
  8. Build Corporate Network
  9. Modify Network Operation Center
  10. Establish Help Desk
  11. Re-configure for Data Center Expansion
  12. Migrate to Re-configured Data Center and NOC
  13. Migrate Mainframes & Applicable Servers
  14. Re-configure for Print and Disaster Recovery
  15. Implement security plan

Advisor for Efficiency Programs related to Business Process Improvements & SAP

Large Western Irrigation District

The efficiency advisory service was divided into three phases in order to focus the study and meet key project management milestones established by Quintel staff and the client:

- Phase 1: Review current operations to identify “high value” focus areas for potential efficiency improvement

- Phase 2: Assess efficiency issues pertaining to each focus area and identify improvement opportunities

- Phase 3: Develop recommendations and associated business cases for implementing the improvement opportunities

In completing this assignment, Quintel staff interviewed staff in Power generation, transmission, distribution and engineering; Water operations, engineering and construction; customer service, finance and general services areas. We utilized several unique approaches to capture the information required to study these areas in more detail:

• Completed activity survey

- Distributed to all employees (e-mail or test sessions)
- Documented employee responses

• Completed a functional audit of all SAP modules

- Functional framework template
- Focus groups with SAP team and user groups
- Employees have embraced the process

• Captured and analyzed the client’s data and created data as needed :

- Data estimated based on employee interviews
- Data extrapolated based on available information
- Prior client experiences incorporated in the generation of workable data for analysis

• Conducted best practices and peer group benchmarking analysis

Once we gathered the data, we prioritized the focus areas and identified improvement opportunities. These opportunities were then crafted into recommendations with the associated business cases. The total efficiency savings opportunities identified were in the areas of SAP usage, Fleet Management, Water Order Fulfillment, Billing, Customer Service projects and organization design. These areas amounted to a savings potential of approximately $30 million, or 15% of the current operating and capital budget. The area with the greatest potential for savings ($7 million) was the more efficient use of SAP. In addition to these “hard” savings areas, the area of governance (performance measures, policies and procedures, etc.) was identified as a key area that needed to be addressed in order to achieve the savings. Finally, detailed implementation plans were developed with critical paths identified in order to assist the client in planning its implementation.

The project team also conducted several workshops for the board, employees and customer groups to review the project findings and to build alignment for the efficiency study results.

The board unanimously accepted by the recommendations. The utility is currently planning for the implementation of the changes.

Performance Improvement in the Generation Company

Large Midwest Utility

The objective of this assignment was to develop a strategic information and performance plan for the newly merged generation units. The plan focused on building a link between the Power Operations business units’ strategies and operations to the IT projects underway and being developed.

Our consultants evaluated the following questions:

- What are the Power Operations units’ strategies, objectives, processes, and information requirements?
- Are the Power Operations and IT areas focused on the right business objectives?
- Are the IT projects justified and are they aligned to the Power Operations units’ strategy and objectives?
- What should be the IT program scope?
- What are the important interdependencies between projects?
- What are the financial implications (i.e., return on investment)?
- What are the appropriate levels of the projects’ functionality? Are there resource contentions, user impacts, and critical path-scheduling issues?

The planning process utilized the Strategic Information Technology Planning (SITP) tool to analyze multiple program scenarios by varying the number of projects included, resources available, and costs and benefits.

The results of the analysis showed that not all ongoing and planned IT projects meet the business requirements for going forward and should either be canceled or delayed, resulting in an annual cost savings of $50 million. The performance plan recommended some consolidations of operations and provided a schedule based on business objectives and cost-benefit analysis.

Performance Improvement IT implementation Planning for a Utility Distribution Company

Large Electric and Gas Utility in the Western U.S.

The IT organization needed an implementation plan that would link business drivers to the overall portfolio of IT projects. In total, the company was facing an investment of more than $700 million in IT-related investments to complete the entire portfolio of projects that was currently being considered. The challenge was to develop a plan that could address the following questions:

  1. What should be the program scope?
  2. Is the portfolio of projects aligned with business objectives?
  3. What are the important interdependencies?
  4. What are the financial implications and schedule?

Within each project area, there was a business case and NPV analysis that summarized the justification for each. However, the analysis was inconsistent and independent of the other projects, leaving management with a sense of discomfort over the pending investment to complete each of the projects in the portfolio.

In response, a five-phase work plan was developed that initially included a review of the prior work that had been completed. Next, we developed the business model for the company based on the defined strategies, business drivers, critical success factors, processes and corresponding information needs. The business model provided a framework for the needs analysis associated with each project (e.g., what information is needed to achieve the company’s strategy?) The third phase included a prioritization of the projects, considering the availability of resources, trade-offs, functionality and regulatory issues. The results were then reviewed with the project leaders and company management to obtain direct feedback and address specific issues associated with the alternative implementation plans. The feedback was finally incorporated into the final Strategic Implementation Plan that specifically outlined the recommended plan and how it was able to achieve the business objectives while minimizing the financial impact on the company.

The recommended Strategic Implementation Plan resulted in savings of more than $400 million through the delay and, in some cases, cancellation of specific projects. Integration and project schedules were significant drivers of the recommendation, resulting in an achievable, less complex plan that provided the required functionality to achieve the overall business objectives.

Customer Care Performance Improvement

Large Electric Utility

In the context of a global assignment for the coordination of customer care initiatives, our consultants assisted the client company in translating the new Customer Service concepts into new business processes, organization and supporting information systems. In particular, the project team managed the deployment of SAP ISU-CCS system to replace or interface with seven main groups of applications.

We inventoried existing customer care initiatives and prioritized them based on customer interest and available resources. The project team designed effective customer care programs in each of the selected area, and monitored each project’s planning, budget, and communication, with specific support to some of them. Those included a central Call Center, an integrated Customer Care Information System and the introduction of Service Guarantees to customers.

As part of the development of the integrated Customer Care Information System, our firm developed and issued an RFP for a SAP ISU-CCS system and assisted in the selection of the preferred service partner.

Our client followed the recommendations and started a first prototype development to ensure user acceptance and reduce implementation risks. Quintel-MC was the program manager of this initiative.

Field Services – Process Redesign

The Client is one of the largest Brazilian electric distribution and energy services companies with 2.5 million consumers and 8 million customers, distributed in 234 cities in an area of 90.000km. The Client also has 3.700 employees with75% involved in Field Services – Disco. Due to the evolution of the Brazilian electric sector into a competitive environment, this client was under strong customer pressure to manage costs more aggressively and to improve productivity. They asked our consultants to redesign its field services (construction, emergency, maintenance, internal job and customer services) and define new technology investments using geo-referred databases.

Working side by side with the client’s team, these processes were redesigned, the organizational structure was revised and resized, GIS technologies were defined and an implementation plan was developed according to the client’s cultural environment, investments availability and return on investments. The project resulted in the identification of the Shareholders Value Added. Simultaneously, short-term activities were developed, by identifying improvements and resources to optimize the planned technology investments. The organization and the processes were redesigned, reducing management levels and improving field teams allocation. The result was greater flexibility in the field services decision making process. In addition, these short term activities resulted in effectiveness improvement (time dedicated to planning, transportation, organization and conclusion of the field services) between 10% -20%, depending on the process.