By Sean Lawrie, ScottMadden, Inc.
The nuclear industry has long understood the value of standardizing practices across a fleet of generating assets; however, effective implementation of this practice is difficult.
This article presents a case study of one leading utility’s experience in driving fleet standardization and alignment in the maintenance area. It addresses the issues faced, gaps that had to be closed and actions taken to close them. The article also provides insights and lessons learned for other functional area managers looking to standardize performance across their fleets.
For one corporate maintenance manager who worked to standardize a nuclear fleet’s maintenance department, the assignment was straightforward. The implementation was another story.
Moving toward Standardization
Over the past 10 years, many North American fleet operators have adopted a strategy to improve fleet performance through standardization and the sharing of best practices across their fleet. To drive this change, they have implemented a strong corporate governance model designed to leverage best practices and improve operational performance. This model involves creating a position at the central office that is responsible for governing and overseeing all aspects of a particular functional area, such as maintenance or engineering. Since the introduction of this model, many nuclear fleets have seen dramatically improved safety performance, increased capacity factors, decreased operating costs and improved planned outage performance.
Making this model work is not an easy transition for organizations steeped in site independence. Often there are ingrained cultural barriers: central groups viewed as “support when needed” and sites viewed as their own fiefdoms. Successful implementation starts with defining clear accountabilities and a structured assignment to build the fleet standards for the function.
The Governance Structure
Making the model work starts with establishing the right governance structure. This structure includes a strong central functional leader combined with active, involved site functional leadership. Let’s look at what this means in terms of the maintenance function.
First, the role of a corporate maintenance manager (CMM) must be established. This manager is charged with setting the performance standards across the fleet and providing governance and oversight to ensure those standards are adhered to in the field. He or she is responsible for leading all site maintenance managers in the pursuit of functional excellence.
Next, a maintenance area peer group, consisting of the site maintenance managers from each of the stations in the fleet, must be created and chartered. This group meets regularly to ensure alignment of the functional area’s policies, programs, processes and procedures across the fleet. The leader of the peer group is the CMM. The CMM must be a clear communicator, a skilled change agent and capable of intervening and resolving cross-functional issues when they arise. The CMM will deal with many.
While most station reporting lines are established vertically from the site executive down, the CMM structure provides an additional horizontal vector of accountability focused on functional excellence. This results in 200 percent accountability for ensuring performance is achieved according to plan. An illustration of this corporate governance model is depicted in Figure 1.
|Figure 1 Fleet Standardization Governance Model|
Site managers remain fully accountable for delivering on results for their station. The new governance model must not undermine this accountability. The new model adds the accountability to deliver those results in the agreed-upon fleet standard way.
Implementing the Governance Structure
Standardizing practices across multiple nuclear stations is not a task for the faint-hearted. Each site will have a strong commitment to its own established practices. A rigorous process with clear goals is required to drive change.
At the utility serving as our example, an alignment project sponsored by the chief nuclear officer (CNO) was used to establish and maintain momentum. The approach adopted was collaborative in nature and lead by the CMM. Although the vast majority of the assessment and alignment work was performed by the CMM, members of each peer group had a critical role in collecting information, making decisions and guiding the direction of the team.
Policies and Practices Next, the CMM and the peer group focused on establishing common policies, programs, processes and procedures. The CMM took an inventory of existing policies, programs, processes, procedures and templates and examined the respective pros and cons of each with the peer group. Each document that supported a critical alignment area was reviewed and the team decided whether it should be the fleet’s standard bearer for top performance. Once the decision was made, each site had to commit to adopting the new standard. Lower-performing stations were required to close a larger gap in aligning their processes with the new best practice.
Improving individual processes required considerable work on the part of the peer groups. In order to coordinate the peer groups’ resources and keep them focused on continuous improvement, the CMM worked to create a common self-assessment schedule, benchmarking schedule and a regular meeting schedule. This was done to provide certainty to the peer group’s work calendars.
Workload and Staffing The first task the CMM performed was to identify workload process efficiencies (or inefficiencies) across the fleet. Each site’s historical workload data (completed work requests, PM/CM/EM/Mod work orders and so on) and its current workforce staffing data was assembled and reviewed. Efficiency rates at each site were calculated to frame the discussion for the peer group and identify if a particular site demonstrated superior performance and thus potential best practices that could be adopted across the fleet.
The CMM also assessed the sites’ organization structure for similarities and differences in roles, responsibilities and staffing levels. The workload assessment, combined with the organization assessment, allowed the corporate functional area manager and the peer group to design a standard organization structure and recommended staffing levels for the sites and the central support group.
Operational Performance Measures Standardization also requires common operational performance measures and tracking. These common measures are a critical tool in the CMM’s toolkit for managing the performance across the fleet. To achieve this, the CMM inventoried all current performance indicators and measures across the fleet, including their definition and the methodology used to collect and calculate them. The CMM and the peer team agreed upon the measures to use and how they would be defined and calculated in a standardized manner.
Financial Performance Measures Financial oversight of the fleet is critical to the success of the organization. A common financial view of the maintenance function is a key enabler to establishing effective oversight.
In this case, the CMM collected historical and future years’ budget information to understand the similarities and differences between sites in how they were reporting financial information. Budget differences, report layouts and the cost-reporting elements were assessed and a common approach to financial tracking and reporting was decided upon by the peer group.
Vendor Services Additionally, the CMM examined vendor service contracts with each site to determine whether the fleet was adequately leveraging its size with key vendors. It was discovered that different sites were using the same vendor under separate contracts for the same services. Similar services were also being provided by four to six different vendors and the fleet was not fully leveraging its inherent economies of scale. Services were aggregated with fewer vendors and volume discounts were negotiated, saving the company considerable money.
Once all gaps in performance were identified and the peer group’s recommendations were formally documented, the CMM and the peer group presented their findings and a detailed implementation plan to the senior leadership team. The presentation to senior leadership (including all site vice presidents) ensured that the maintenance peer group’s recommendations would be vetted and approved as a fleet: no single site would get veto power.
During the process, multiple opportunities to improve performance, organizational structure and expectations were identified and addressed.
Organizational Design The most visible gap in standardization across the fleet was the large number of different positions, roles, responsibilities and accountabilities within various maintenance departments. The CMM recommended a common organizational structure with consistent roles and responsibilities. These were documented in a corporate organizational structure process that was subsequently approved by senior leadership.
Craft Qualification Another gap was related to craft qualification. Employee qualifications at all plants in the fleet were not aligned. Standardizing these resulted in multiple cross-functional benefits. First, standard qualifications allowed craft resources to be shared between multiple sites during outages and surges in workload. This not only increased craft-resource sharing but also resulted in a dramatic reduction in on-boarding time for the security and in-processing team. Standard maintenance qualifications enabled the use of common maintenance procedures and a reduction in errors through improved familiarity. Standard qualifications also allowed maintenance trainers to spend less time planning and preparing lesson plans for the craft.
Single Worker Tasks Another area of productivity improvement was the identification and implementation of single-worker tasks. Some stations within the fleet had a rigorous system of identifying and documenting single-worker tasks, while others did not. This best-practice procedure was implemented across the fleet, enabling overall craft productivity to increase because jobs that were traditionally planned for two people could be completed by one. The list of single-worker tasks was maintained in a central database and was constantly updated and reviewed at peer group meetings.
Generic Work Orders The identification of generic work orders for facilities work was also adopted to enable craft personnel to perform routine facility work faster and fill in down periods throughout the day. This allowed the maintenance planners to devote more time to planning higher-level, critical work orders.
Work Identification During the standardization process, the team discovered that one station had a best practice for identifying work that could go directly into the work request (job jar) system rather than converting the job to a work order, which required formal work order planning through the T-13 process. This practice was adopted across the fleet, resulting in a significant reduction in work backlog and improved productivity.
During the process, many lessons were learned that are applicable to any functional manager embarking on the task of fleet standardization for his or her function. Here are a few.
- 1. Face-to-face interactions are critical. You cannot standardize a fleet function by conference call. Because of the strategic importance of this task and the associated operational and financial benefits, all peer group members need to be engaged face to face during the process. The very act of working on a difficult assignment such as this serves to build a much stronger team that seemed unlikely at the start when the managers seemed skeptical even of each other. Such a change requires face-to-face interactions
- 2. Standardized does not necessarily mean identical. During the process, instances will exist where an identical organizational structure or process does not make commercial sense at all locations. When designing the organizational structure, any differences between the sites should be highlighted, documented and agreed upon with senior management prior to putting the organization into effect. This still creates the clear “standard” but does not require it to be identical.
- 3. Watch out for data inconsistency. When assessing the fleet’s current workload, differences in data and data integrity issues are usually present. Inconsistency in how certain sites count and report historical data may lead to incorrect conclusions. Historical workload data must be verified and validated with the data owners and, in most cases, normalized for site-specific differences.
- 4. Different stations will be on different performance paths. Consideration should be given to the different status of each station on its path toward operational excellence. Not all sites will be at the same stage of their performance path and implementation timelines will need to be customized. Additionally, it is hard to “see your way through the fog” when a site’s current performance level is below that of some of its peers.
- 5. Attack the work in the right order. The team discovered that the order of subjects addressed mattered. They found it extremely helpful to address the critical alignment areas of workload followed by policies, programs, processes and procedures that support the work. Looking at the organization structure and workforce should come later to avoid being sidetracked on people rather than positions.
The benefits associated with standardizing critical functions across a nuclear fleet are significant but challenging to achieve. The team at one nuclear fleet operator found a path to success with standardizing one function that should be duplicated with other functions. While there were many naysayers at the beginning of the project, the end result was a maintenance team that was energized, cooperative and significantly more productive than at the start of the process.
As always, the question was, “Why didn’t we do this 10 years ago?”
Author: Sean Lawrie is a manager with ScottMadden Inc. He has worked with several of the largest nuclear fleet operators in North America in the areas of organization design and productivity improvement. Lawrie graduated from the Babcock Graduate School of Management at Wake Forest University. For more on ScottMadden’s approach to fleet standardization, go to “Energy” at www.scottmadden.com.