Program Management Office “PMO”
Steve Wallace
January 22, 2003
Page 1
Components of ERCOT Spending – Summary
Discretionary:
Discretionary
Spend
“CREATING NEW VALUE”
This portion of spending is determined by market participants
(as recommended by the TAC). The participants and ERCOT
must decide how much “discretionary” spending is needed
each year. Therefore the budget for this area is set by the
participants and ERCOT, then managed by ERCOT.
These costs are variable in the short-run, but add to future nondiscretionary spending to provide ongoing support for these
efforts.
Examples include new development and enhancements to
existing systems or assets.
Total
ERCOT
Spend
Non-Discretionary:
NonDiscretionary
Spend
“KEEPING THINGS RUNNING”
This portion of spending is determined and managed by ERCOT.
ERCOT is accountable for creating efficiencies and productivity
improvements in this area.
These costs are relatively fixed in the short-run.
Examples include maintenance to existing systems or assets as
well as keeping the current operations running.
ERCOT Focus Areas: “ESTABILISHING PREDICTABILITY”
Manager and business unit accountability
Separation of baseline from investment spending
Technology management and coordination for compliance
Page 2
Program, Technology and Risk Management
•The PMO acts as the central control and communications point for coordinating
Business and Technology initiatives as well as managing and mitigating risks. It is
essential that all of the elements critical to success be considered at the beginning
of a project. The six tightly connected elements noted below are key to developing
and launching new initiatives and sustaining ongoing initiatives.
People need to have incentives
to adopt new ways of working
based on KPI’s
People need to know how they
are expected to behave and
become proactive vs. reactive
Performance
Organization
Measures
Structure
Program
Office
Culture
People need to understand what they
are working toward and how they will
achieve it together: e.g. ERCOT 2005
and ROI/ROA and Risk Management
Internal & External people
Communication need to know what is
going on, vertically and
horizontally
Leadership
Training &
& Vision
Development
Page 3
The organizational structure needs
to be aligned with the process and
technology architecture
The enterprise needs to be
equipped with relevant skills
and to recruit and retain the
best staff
Investment Implementation Process
Idea Generation & Value Identification
(High Level Analysis & Estimating)
PUCT
Requests
TAC
Approved
Requests
ERCOT
Requests
Board
Approval
(Budget)
ERCOT Operating Committee
Program Management Office
On-going
Project &
Resource
Management
Page 4
Program Management
& Reporting
High Level View of the PMO Functions
The Strategize process establishes tactical and strategic
ERCOT Business strategies and plans, accepts input from
TAC, Board, etc. aligns to the organization’s business goals
and objectives and manages and mitigates risks.
PMO Service Delivery Model
In the Consult and Advise process, PMO partners with the
various groups and participants to provide expertise and
knowledge to help identify solutions to business problems
Strategize
Plan
Consult
and Advise
The Plan process develops cost estimates, resource
requirements and timelines for executing the ERCOT
business strategy, which is coordinated with and
approved by executive management and participants.
The Manage Program oversees and reports on the projects
identified and defined in the Strategize, Plan and Consult and
Advise processes and reports to the operating committee.
Manage Program
The Manage Project process oversees the delivery of
individual projects, according to specification, budget
and schedule and is conducted by and is conducted by the
business units, operations and IT groups at ERCOT.
Manage Projects
The Develop and Implement process
builds/configures, tests and deploys quality application
and infrastructure solutions and is conducted by the
business, operations and IT groups at ERCOT.
Develop and Implement
The Operate and Maintain process runs, monitors,
maintains, and supports live systems and is conducted by
the business, operations and IT groups at ERCOT
Operate and Maintain
Page 5
Active PMO Project Management for critical and large projects
Projects that will be managed by the PMO and Operating Committee will be
identified according to two primary criteria:
• Projected impact of the project on the ERCOT organization and its ability to meet
strategic objectives
• Complexity and size of the project
High Impact
Low Complexity
and Few Resources
Required
Independent
Project
Team* or
Outsource*
Decline
PMO
Managed
Project
Independent
Project
Team* or
Outsource*
Highly Complex
or Requires Extensive
Resources
*Oversight, Financial and Contract
Management by PMO
Low Impact
Page 6
Program & Project Management - Backup
• “Toll-gate” and milestone style of project approvals
• Simple deliverable matrix
• Project monitoring by phase & key milestone deliverables
• Development and adherence to technology and development standards
• Consistent reporting, coordination, control and financial management
• Automated, web based toolset where economically feasible, including metadata,
business rules/processes and technology architectures
Financial Health:
Will be over-budget
Might be over-budget
Will be under/on-budget
Staffing Health:
Need additional staff/skills to complete
Might need additional staff/skills to complete
Will complete with existing staff/skills
Technical Health :
Will miss delivery/next toll-gate date
Might miss delivery/next toll-gate date
Will make delivery/next toll-gate date
Schedule Health :
Business is not devoting needed time
Business may not devote needed time
Business is devoting needed time
Business Health :
Investment fails business requirements
Investment may not meet requirements
Investment meets business requirements
Project-to-Date Spend:
Cash spent up to now on this project
Total Estimated Spend: Total forecasted project cash spending
Current Phase:
The project management or lifecycle phase of the project
Next Business Review:
Next formal review with project executive sponsor
Estimated Finish Date:
Estimated date the project will be complete
Page 7
2002 vs. 2003 System Administration Fee - Backup
$ / MWH
$0.50
$0.40
Proposed
$0.33/MWH
$0.30
0.05
$0.20
Equity Portion of Capital Investments
Baseline Operations
0.03
0.28
$0.10
0.19
$0.00
2002 Fee
2003 Fee
Page 8
Project & Technology Management Guiding Principles
Backup
•
Define and utilize a standard set of project management phases and
deliverables.
•
Track projects based on the defined phases & key deliverables
•
Have regular meetings with the project sponsors and executive
committee.
•
Institute a “toll-gate” approval process for projects. Projects are only
approved to proceed to the next phase.
•
The Program and Technology office’s main focus areas are to:
• develop the project & investment methodology & deliverables
• monitor compliance
• recruit, retain, train & assist project managers
• high-level resource planning
• financial management and control
• technology architecture coordination, selection and compliance
Page 9
Governance Desired Outputs Backup
 Consistent Program, Project and Technology processes:
 Financial management
 Project initiation, prioritization & rationalization
 Project Management “toll-gates”
 Overall Technology “Architecture” coordination & control
 Scheduled Reviews
 Standard reporting package for major projects, programs and technology:
 Expense & capital update & variance
 Approved project list with red-yellow-green health check
 Labor breakdown between maintenance and project work
 Defined documents to support the processes:
 Template to allocate staff time
 Database to track investment ideas & approved projects
 Project health template & definitions
Page 10
Investment Rationalization Guiding Principles
Backup
•
Ensure business unit ownership of ERCOT investments and alignment
with ERCOT short and long term business plans and strategy
•
Establish a cross-functional review/approval (enterprise-wide) process to
ensure the business units are involved in the rationalization and
prioritization of investments. Require that investments are aligned with
the business and technology plans for short and long term strategy
•
Ensure only investments with the greatest business value are funded
•
Provide timely approval of project investments
•
Identify opportunities to leverage investments across the firm
•
Ensure costs, benefits & risks are adequately captured
•
Ensure business units, Operations & IT are held accountable for
delivering agreed efforts
•
Common investment summary and project request forms
•
Consistent, enterprise-wide rationalization process
•
Systems and Software Architecture Coordination and Standards
Page 11