reduce capital investment waste and increase RONA with portfolio management OPPMnordic power & heat company
Revenue: 3.7 bn
Operations: power & heat
Employees: 8,000
Synopsis: This client is an energy company focusing on the production and operation of power plants, including the generation of heat. The company also sells waste services such as recycling, reutilisation, final disposal solutions, soil remediation, environmental constructions services, and other energy-related services and products e.g. consultancy services for power plants and electric vehicle charging.
This utility was faced with the challenge of implementing a series of new processes and systems for managing its capital investment portfolio. The organisation’s 4 divisions each had existing systems and processes which had to be aligned if they were to be combined for better holistic capital management.
This project was initiated after a well known strategy house suggested that 30% of this organisation’s capital investment program could be considered as wastage. Local management added to this challenge by committing to increase RONA by 9% over the next three years.
HPS were brought in to help senior management:
- identify the items that made up the 30%
- implement a single effective enterprise solution that enabled proper capital investment management across all business units
- identify how to deliver the promised sharp increase in RONA
The technical solution was simple, HPS helped this client implement:
- a single instance of OPPM to manage the capital investment processes of the 4 business units, by merging and integrating the processes through a series of workshops
- a series of half day training and informative sessions that showed the different business units how to use the information to manage the selection of investment that gave higher RONA
- a detailed knowledge transfer so that the expertise the HPS staff had learned about the organisation was not lost following go live.
Training
During implementation, we adopted a hierarchical Train the Trainer approach for most users. We jointly trained the trainers, who subsequently trained the super-users. For specific user groups, we provided one-to-one training as required. We supported the client for a few months after Go Live until local staff could replace us.
By deploying OPPM in a structured way, we had:
- merged the 4 business units processes, and now the organisation was able to prioritise and select investments across the business and not just within each vertical
- a more informed customer, that understood why capital investment management was important to delivering increases in RONA and reduction is waste – although local management failed to increase RONA as promised
- effectively used a role-based training and development processes to better ensure the new tool and new processes was embedded
