Enterprise Management: Taking a wider view of asset management.
Mark Hoffman is a Principal (Houston office) and Jagoron (“Jag”) Mukherjee is a Director (Washington, DC office) of Strategy&, the strategy consulting team at PwC. Hoffman focuses in operations improvement for utilities, including asset management and productivity of transmission and distribution. Mukherjee has experience in the utility sector in project finance, operational improvement, and risk management.
Utility executives today see few choices if they wish to achieve growth. With annual electricity demand in the U.S. expected to increase at less than 1 percent, the traditional answer of simply adding to the rate base won't suffice - and not just for growth, but even for simply maintaining current performance. Compounding the challenge, regulators increasingly are scrutinizing requests for rate increases, even as the equity returns (ROEs) they allow are declining in the current environment of low interest rates. For these reasons, utilities have fallen under pressure to try to boost earnings by reducing O&M. But there remains one strategy to growth that typically goes untapped. That strategy seeks to increase field force productivity in the transmission and distribution business.
Our research has shown that better planning and scheduling of work improves field force productivity dramatically, offering the potential for growth. Yet it is not sufficient simply to focus narrowly on work execution in the field. Benefits instead are determined by the entire end-to-end work management process. And this process must begin work identification and prioritization that is driven initially by the utility's overall focus on planning and managing assets, and then is followed up by tracking and monitoring through a comprehensive system of performance management.