Utilities Case Study
Case #5907: Development and Installation of Performance Metrics
One of the largest gas distribution companies in the country was grappling with several difficult transition issues. Within the prior year the Chairman, President, and Chief Administrative Officer had been replaced, while the company attempted to prepare for the challenges of a far more competitive, deregulated future.
Recognizing that deregulation would remove the market protection and earnings assurance from which the company had historically benefited, management wanted complete, accurate cost data upon which to base strategic marketing, financial and operating decisions. Virtually none existed.
Questas consultants were engaged to establish activity-based metrics that would capture the cost data needed on an ongoing basis. In just 36 weeks we documented tasks, compiled unit costs, gathered benchmarks, and devised and implemented a balanced scorecard that linked performance metrics with strategic decisions -- helping the new senior management team to shape the organization into the successfully competitive entity demanded by the emerging marketplace.
Engagement Highlights
- Industry:
- Natural Gas Distribution
- Client:
- A Large, Regional Gas Distribution Company
- +/- 1.2 million Natural Gas Customers
- Assignment:
- Identify All Distribution and Service-related Field Activities
- Create Volume Tracking, Counting and Reporting Systems
- Design Task Tracking System (Test in 3 Service Centers)
- Refine Tracking System and Roll Out to all 20 Service Centers
- Set Task Unit Cost Targets Based on Internal and External Benchmarks
- Design High-level Operations Scorecard Measures
- Link Scorecard Measures to Service Center Strategies and Budgets
- Approach:
- Adapt Activities from Those Proven in Peer Companies
- Gather Comparative Performance Benchmarks
- Tailor Balanced Scorecard to Company Needs
- Design, Install, Test and Refine Data Gathering and Reporting Systems
- Program:
- Redesign Distribution, Service and Meter-reading Tasks
- Create Uniform Task Definitions
- Develop Standard Reporting of Counts
- Gather Additional Benchmarks and Link to Objectives
- Create Scorecard Metrics; Link to Strategies
- Duration:
- 18-Week Design and Testing ; 18-Week Implementation
Results
- A Fully Implemented Measurement System
- Uniform Task Tracking and Reporting
- Objective Performance Ranking of All Service Centers
- Projected Performance Levels Enable Superior Resource Utilization/Capacity Planning
- Scorecard Measures of Individual Performance
- 8 to 1 Return on Consulting Investment