A Power Company Gets a Power Boost

Situation

A government-run Caribbean utility recognizes that its operations are not up to speed. Specifically, their availability drops as low as 63% and customers routinely experience daily brown-outs. Faced with impending deregulation—and the competition that will mostly likely follow—the utility brings in a team of consultants, David among them, for a series of concurrent 30-day assignments.

David’s assignment:  Train the Engineering and Operations staff in effective project planning and management. Within 30 days, the utility’s parent company asks David to stay on—indefinitely—with the charter of improving the utility’s overall efficiency and availability.

Diagnosis

The immediate cause of low availability is known. The utility’s five power generation plants require lengthy planned outages for maintenance but, in addition, experience frequent unplanned outages.

David observes key problems rooted in the business culture:

  • Executives focus on full employment for the community, rather than delivering electricity.
  • Managers are not being held accountable for their results
  • Bureaucratic procedures stifle any sense of urgency
  • Departments operate as silos and distrust each other.

Solution

David’s first big challenge requires the practice of patient communication over a period of months. He must persuade the utility’s C-Suite that the Operations function drives the business, and all other functions play supporting roles.

While this dialogue continues in the background, David analyzes existing business functions and creates a realignment plan.

He presents a report outlining his proposed organizational re-design to the utility’s board of directors. The board gives him broad authority to implement improvements which include:

  • Streamlining processes in operations, planning, and maintenance departments
  • A reorganization of key business functions
  • Allowing the power plants to pull supplies as needed rather than having supplies pushed by Procurement.
  • Cutting warehouse inventory levels.

Results

The results of realignment are dramatic and long-lasting:

  • $140 million reduction in annual operating expenses
  • 23% increase in plant availability with shorter outages, leading to increased revenue and additional savings.

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