At the start of 2020, operations and capital programs were flowing along; gaining momentum to meet critical schedules and asset management goals, achieve operational metrics, and match cash flow projections.
The COVID-19 pandemic has required many local governments and utility organizations to change course and shift focus from business as usual to avoiding staff cuts, keeping core functions running, and preserving as much of their capital programs as possible. Many targets and goals are now on the back burner. As we adjust to remote work and online meetings, utilities and local governments must look at how to adjust their operations and capital programs to answer tough questions:
Even without the obstacles posed by the pandemic, both utilities and other units of local governments are challenged with developing defensible capital programs and delivering them on time and on budget. Capital programs are commonly the product of deliberations between senior decision makers, based on historical practices and the juxtaposition of priorities and engineering master plans. Capital program delivery is difficult, and an inability to get projects finished on time may impact future plans and cash flow. Declining consumption and revenue, as well as the specter of other impacts is forcing service providers to make difficult choices. Organizations must adjust programs to meet cash flow changes, while salvaging important capital programs that are critical to ensuring community safety, meeting level of service expectations, conforming to regulatory requirements and maintaining quality of life.
One solution to the challenges is to make capital and operations programs more defensible, efficient, and centered on quantifiable benefits to ratepayers and/or taxpayers. The best way to do this is by defining capital and operations priorities and improving delivery efficiency. This means outreach to stakeholders to better define priorities, as well as internal changes to improve processes, and clearly defining quantifiable ratepayer and constituent benefits. Process changes can include new performance metrics and targets, adjustments to project scopes and schedules, new tools, and new ways of doing business.
Capital programs must clearly reflect the priorities of the organization, its customers, and stakeholder to be defensible. Key questions we often hear utilities and local governments asking are:
Capital & Operations Execution
Procedure & Process Improvements – Can We do More with Less?
Understanding how to address these key questions and defining a set of weighted priorities is necessary to make decisions about what capital efforts are funded and when. Raftelis can work with your organization to develop or refine your prioritization framework and methodology for capital programs. This will generate a highly defensible decision-making framework.
Having developed a clear prioritization methodology focused on addressing priorities and goals, attention can be focused on improving and refining the capital planning and delivery processes to meet them. In this step, waste or inefficiencies in existing processes are identified, as are cases where processes are not meeting evolving needs. Examples might include: delays in procurement and lack of cash flow tracking for projects on a monthly basis. Staff are interviewed, projects are reviewed, and current processes are documented. The steps to refine the capital planning process are:
In this step, our team works with clients to identify opportunities to reduce their operations budget. Major operations expenditures will be discussed and reviewed with staff to understand details, confidence in budgets, are risks identified, and if expenditures will achieve the required outcomes. Working closely with staff the following are identified:
Finally, changes to the program and processes must be implemented. Improvements must be implemented in a logical, stepwise, rapid manner. A clear implementation plan, accompanied by a strategy to communicate effectively within the organization, to elected officials, and to outside stakeholders is developed and implemented to meet priorities and goals.
Rather than writing a report with recommendations and leaving it to clients to find time to implement, Raftelis provides the necessary staff and skillsets to help them quickly and efficiently implement the recommendations.
Raftelis can help you identify your new obstacles, change your course, and find your new normal. Water finds a way – and so do we. Together.
To learn more, see how we helped our clients with their capital and operations programs.