Partnering:Partnering:

A Success through CII ProductsA Success through CII Products

Bob SeayBob SeayTennessee Valley AuthorityTennessee Valley Authority

Case StudyCase Study

2000 CII Annual Conference2000 CII Annual ConferenceNashville, TennesseeNashville, Tennessee

Results

Best PracticesWork Processes

RelationshipsTeam Behavior

NPS Energy Service

s

G-UB-MK

TVA

Partnering at TVAPartnering at TVAA Case StudyA Case Study

Fossil Power Group (FPG) Partnering

Strategy Manual

FOSSIL POWER GROUPOUTAGE / PROJECT PERFORMANCE

Taking us to the top

IDWork

Level 5

PlanWork

ScheduleWork

PerformWork

EvaluateWork

Level 1

Level 4

Level 3

Level 4

A Process Centered Approach!

Formal Partnering Strategy Formal Partnering Strategy “Married” to Outage/Project “Married” to Outage/Project

Improvement StrategyImprovement Strategy

Fully Fully integrated in integrated in terms ofterms of

•PeoplePeople•Organization Organization

structurestructure•ProcessesProcesses•ExpectationsExpectations

Major Maintenance Partnering ContractsMajor Maintenance Partnering Contracts

• Established in 1991; based on CII Partnering Established in 1991; based on CII Partnering Principles:Principles:

– All seek win-win solutions.All seek win-win solutions.

– Trust and openness are norms.Trust and openness are norms.

– Environment for long-term profitability exists.Environment for long-term profitability exists.

– Overall performance is improved.Overall performance is improved.

Partnering Within the Fossil Power Partnering Within the Fossil Power Group Group

Major Maintenance Partnering Contracts Major Maintenance Partnering Contracts

• Established in 1991; based on CII Partnering Established in 1991; based on CII Partnering Principles:Principles:

– All seek win-win solutions.All seek win-win solutions.

– Trust and openness are norms.Trust and openness are norms.

– Environment for long-term profitability exists.Environment for long-term profitability exists.

– Overall performance is improved.Overall performance is improved.

Key Contract ProvisionsKey Contract Provisions

• Cost reimbursable; award fee based on performance.Cost reimbursable; award fee based on performance.

• All profit is incentive/performance based.All profit is incentive/performance based.

CII Products in UseCII Products in Use

Best PracticesBest Practices

•Pre-Project Pre-Project PlanningPlanning

•AlignmentAlignment

•ConstructabilityConstructability

•Materials Materials ManagementManagement

Best PracticesBest Practices

•Pre-Project Pre-Project PlanningPlanning

•AlignmentAlignment

•ConstructabilityConstructability

•Materials Materials ManagementManagement

•Team BuildingTeam Building

•PartneringPartnering

•Change Change ManagementManagement

•Disputes ResolutionDisputes Resolution

•Zero Accidents Zero Accidents TechniquesTechniques

andand Continuous ImprovementContinuous Improvement

Focus of Our PresentationFocus of Our Presentation

•PartneringPartnering

•Team BuildingTeam Building

•Pre-Project PlanningPre-Project Planning

•Continuous Improvement Continuous Improvement (TQ)(TQ)

Learning ObjectivesLearning Objectives

• Case study feedback on real Case study feedback on real savings.savings.

• Partnering as an ideal Partnering as an ideal environment for CII product environment for CII product application and improvements.application and improvements.

• Share some Do’s and Don’ts from Share some Do’s and Don’ts from a panel of experts.a panel of experts.

Right Piece/Right TimeRight Piece/Right Time

•PartneringPartnering principles principles

•Team BuildingTeam Building — purposeful, innovative, — purposeful, innovative, ongoingongoing

•Pre-Project PlanningPre-Project Planning — joint project teams — joint project teams

•Continuous Improvement Continuous Improvement — “Raising the — “Raising the Bar”Bar”

Managing a Strategy for Managing a Strategy for SuccessSuccess

FPG Partnering InitiativeFPG Partnering Initiative

• Eleven fossil plants, 59 units, seven Eleven fossil plants, 59 units, seven

states states

• $100 to 140 million in labor costs each $100 to 140 million in labor costs each

yearyear

• Two partners with long-term contracts Two partners with long-term contracts

divide workdivide work

• Projects range from $200,000 to $40 Projects range from $200,000 to $40

millionmillion

FPG Partnering InitiativeFPG Partnering Initiative(continued)(continued)

• AllAll assigned work performance-based. assigned work performance-based.

• Either party can “walk away” with 60-Either party can “walk away” with 60-day notice.day notice.

• Progression purposely designed into Progression purposely designed into business plans, implementing business plans, implementing processes, and team relationships.processes, and team relationships.

Team Building:Team Building:Surviving “Nasty Days”Surviving “Nasty Days”

Barriers to Success — What has and has not Barriers to Success — What has and has not worked?worked?

Process-DrivenProcess-Driven

• Formal strategies and expectationsFormal strategies and expectations

• Funding incorporated into Business Planning ProcessFunding incorporated into Business Planning Process

• Functional accountabilities built into implementation Functional accountabilities built into implementation processesprocesses

• Use of outside facilitatorsUse of outside facilitators

Team Building:Team Building:Surviving “Nasty Days”Surviving “Nasty Days”

Barriers to Success — What has and has not Barriers to Success — What has and has not worked?worked?

Documented Team Health ApproachDocumented Team Health Approach

• Address team chemistryAddress team chemistry

• Planned workshops and eventsPlanned workshops and events

• Use of Peer Team groups for consistencyUse of Peer Team groups for consistency

• ““Menu” of options vs. objectivesMenu” of options vs. objectives

• Health thermometer to measure progressHealth thermometer to measure progress

Pre-Planning:Pre-Planning:Using “Joint Project Teams”Using “Joint Project Teams”

Barriers to Success — What has and has Barriers to Success — What has and has not worked?not worked?

Process-DrivenProcess-Driven

• Formal process from project Formal process from project inception through completioninception through completion

• Guidelines on team make-up with Guidelines on team make-up with assigned accountabilitiesassigned accountabilities

Pre-Planning:Pre-Planning:Using “Joint Project Teams”Using “Joint Project Teams”

Barriers to Success — What has and has not Barriers to Success — What has and has not worked?worked?

Accountabilities/ExpectationsAccountabilities/ExpectationsProject Sponsor, Team Leader, Project Sponsor, Team Leader, Team Sponsor, Team MembersTeam Sponsor, Team Members

• Assigned accountabilities: process checkpoints Assigned accountabilities: process checkpoints incorporated into each implementing processincorporated into each implementing process

• Formal process, inception through completionFormal process, inception through completion• Guidelines on team make-up, assigned Guidelines on team make-up, assigned

accountabilitiesaccountabilities

Continuous Improvement:Continuous Improvement:Getting to the Bottom LineGetting to the Bottom Line

Barriers to Success — What has and has not Barriers to Success — What has and has not worked?worked?

Process-DrivenProcess-Driven

• FPG Strategy to be process-driven.FPG Strategy to be process-driven.

• Standard outage and project success criteria.Standard outage and project success criteria.

• Management tools in place, e.g., ORI/PDRI.Management tools in place, e.g., ORI/PDRI.

• PDCA model built into Improvement Action PDCA model built into Improvement Action Plans.Plans.

Continuous Improvement:Continuous Improvement:Getting to the Bottom LineGetting to the Bottom Line

Barriers to Success — What has and has not Barriers to Success — What has and has not worked?worked?

Accountabilities/ExpectationsAccountabilities/Expectations

• Functional accountabilities deployed.Functional accountabilities deployed.

• Multi-year targets for continuously “raising bar.”Multi-year targets for continuously “raising bar.”

• Partner incentives have “line of sight” to Partner incentives have “line of sight” to Business Plan.Business Plan.

• Metrics drive continuous improvement.Metrics drive continuous improvement.

Quantitative ResultsQuantitative Results

(Savings are not (Savings are not

cumulative.)cumulative.)

$23MM Annual Savings$23MM Annual Savings

A 44% improvement in labor utilization since A 44% improvement in labor utilization since 19931993

Work SamplingWork Sampling

72%72%

GoodGood

$6MM Annual Savings$6MM Annual Savings

A 69% decrease since 1991A 69% decrease since 1991

Worker Compensation Worker Compensation

CostsCosts

GoodGood9%9%

3.5%3.5%

$17MM Annual Savings$17MM Annual Savings

A 45% improvement in staff and management A 45% improvement in staff and management costs since 1996costs since 1996

Overhead CostsOverhead Costs

GoodGood

$1.6MM Annual Savings$1.6MM Annual Savings

Reduced 59% since 1994Reduced 59% since 1994

Small Tool CostsSmall Tool Costs

GoodGood

$36MM Annual Savings on repeat projects since 1994$36MM Annual Savings on repeat projects since 1994

An average of 12% improvement for each repeat An average of 12% improvement for each repeat project since 1995project since 1995

Repeat Capital ProjectsRepeat Capital Projects(Baselining)(Baselining)

GoodGood

$1.6MM Annual Savings on repeat O&M packages $1.6MM Annual Savings on repeat O&M packages since 1998since 1998

An average of 13% improvement for repeat O&M An average of 13% improvement for repeat O&M packages since 1998packages since 1998

Repeat O&M CostsRepeat O&M Costs

GoodGood

• Learn do’s and don’ts, including Learn do’s and don’ts, including continuous struggles encountered.continuous struggles encountered.

• Participate in team-building Participate in team-building exercise.exercise.

• Participate in Q&A with panel of Participate in Q&A with panel of experts.experts.

• Begin relationship with our team for Begin relationship with our team for the future.the future.

• Get handouts on do’s and don’ts.Get handouts on do’s and don’ts.

The Implementation The Implementation SessionSession