Business Reform & Procurement Strategy

Endeavour Energy, the second-biggest electricity distributor in Australia, serves the Greater Sydney metropolitan area. Over the last decade the region has seen strong population growth and significant urban development, particularly in Western Sydney.

To meet rising demand for electricity – projected to continue growing rapidly as a consequence of residential development – Endeavour Energy developed a five-year strategic asset management plan requiring some US$1.7 billion (A$2.4 billion) of capital expenditure. This required significant business reform to double the company’s delivery capability for a portfolio of new transformers, substations, switchgear and other distribution assets.

Brief

HKA was engaged to lead a strategic review of Endeavour’s business, focusing in particular on the structure of the organisation, and its project and programme performance and capability. Based on this work, our team devised a reform program, which we were commissioned to implement.

What we did

The four-year programme called for the creation of a new network organisational structure and radical change to the company’s commercial function.

Organisational change involved the establishment of a Network Development division and a project management office (PMO).

Our team led by example, embedded in the business as project directors and working alongside our client’s staff, before going on to develop in-house project managers and PMO staff through mentoring and training.

Other aspects of our work involved:

• Establishing innovative tools and controls for effective work planning, including a strategic delivery plan, resource planning model, and a comprehensive governance and reporting framework for monitoring performance.

• Developing project and programme management capability, including the creation of templates and procedures for project management and contract administration.

• Completing a series of strategic reviews to identify gaps and actions required to ensure effective and efficient delivery of capital works.

On the commercial side, a new approach involving significant private sector involvement was essential to deliver the expanded capital program, along with resources, processes and procedures to ensure value for money.

The new commercial model specified a reporting structure, interfaces with other divisions and PMO managers. Again, HKA specialists initially performed the commercial manager and supporting roles, before advising on recruitment of permanent staff and mentoring them during the handover process.

This work stream also involved:

• Implementing a new form of collaborative contract (GC21) tailored to the requirements of the business.

• Designing procurement and contract management procedures and systems.

• Preparing a robust delivery strategy for the five-year Strategic Asset Management Plan taking account of the need to build up capacity, outsourcing and throughput over time.

Outcomes

The reform programme led to a step change in the organisation and its commercial and project management capabilities.

Endeavour Energy doubled the volume of capital works delivered by the end of the four-year reform programme.

Building a peak resourcing strategy transformed the company into a sustainable business, considered the benchmark for others in energy distribution.

HKA is continuing to work with Endeavour Energy on other projects.