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Benchmarking PM Practices

Tracking changes in project management roles and outcomes.

As part of an annual electric T&D benchmarking program, First Quartile Consulting (1QC) has surveyed project management practices for several years. In addition, 1QC has conducted consulting projects to help several utilities improve their project management processes. The 2012 1QC benchmarking survey and results from previous years provide insights into the project manager’s (PM) role (including role in construction), staffing benchmarks, outcome measures, and software tools.

PM Role and Results
Most large utilities with significant T&D capital budgets have implemented some form of project management organization. One of the differences among utilities is which projects get assigned a PM. Last year about half the companies assigned a PM to all capital projects (although the process might be simplified for small jobs); this year companies are more likely to have established various cost or complexity thresholds. Utilities continue to find the right trade-off between PM overheads and the resulting benefits of better-managed projects. (See Figure 1.)

PMs generally work in a matrix organization, and their authority can be described as limited, strong, or balanced. In a strong matrix the PM has more ability to control the functional resources assigned to the project, including more direct day-to-day control. Companies are more likely to report PM authority as “balanced” or “limited” now than in the past – which isn’t surprising given the functional orientation of most utilities. (See Figure 2.)

PM Staffing Benchmarks
Staffing ratios reported in the survey over the last few years have remained fairly constant. The average annual budget managed per PM is $28 million, with a median value of $19 million (vs. $25 million and $16 million in 2011), although there’s a fairly significant range between companies and between project managers, depending on the mix of projects and other factors. Support staff (cost and schedule analysts) has been roughly equal to the number of PMs, although the number is influenced by the complexity of the supporting project management scheduling and cost software.

Outcome Measures
The argument for formal project management is that it achieves better outcomes than informal processes. We have no definitive answer to prove or disprove this argument, although most utilities act as if they believe it’s true. The traditional outcome measures for projects are on-time, on-budget, and to-specifications. Unfortunately, the measures are hard to benchmark.

Time: Most survey respondents report that more than 80 percent of projects are completed on the scheduled date – but there’s no agreement on when to freeze the due date.

Cost: Similarly most companies create cost estimates at various stages in the process: 1) conceptual; 2) after preliminary engineering; and 3) after final design and release to construction. We’ve surveyed companies on accuracy goals at each project phase and received relatively consistent results, as shown in Figure 3. We’re still somewhat surprised, however, when we ask for actual performance against goals by phase; most utilities don’t measure performance against the estimate at each phase.

Spec: Measuring the “to-specification” performance is also difficult to benchmark; a likely metric would be number of change orders, but the discipline in managing change orders