OPO: One Person’s Opinion: Managing In The 21st Century (December 1999)
This is evident in the amount of information that bombards us each day. Newspapers, periodicals, seminar and training courses, consultants, and legal proceedings at an ever-increasing rate discuss the issues facing the facility engineer and utility manager today. To maintain competency, provide value, and position for success in this new world, we must understand the complexity, interdependencies, and opportunities of each individual situation. One of these primary areas includes the management of utility services for our organizations.
To be a sought after, effective, all-around facility engineer and utility manager for the 21st century, one must be competent and fully fluent in five basic areas of the practice. These areas of competency include:
- Utility and energy procurement and management;
- Automation and process optimization;
- Optimizing internal and external use of resources;
- Project delivery processes; and
This is not intended to mean that as a facility engineer and utility manager, a person must be able to effectively do all the work themselves. Rather, I would advocate that a person should be schooled to adequately understand the issues of formulating high-value programs in each of the key areas of their business and that they should surround themselves with competent experts in each of these areas of practice.
You might challenge that communication is something that is required for all daily activities. While that is, in fact, absolutely critical to daily operations, the most successful facility and utility managers are those that truly communicate “up” the organization the total impact and interdependence of all systems, programs, and processes of the position, illustrating goals and benefits that contribute measurably to the increased value of the organization.
Utility Manager and Energy ProcurementI would offer that no single element of the facility or utility manager’s job has changed as much in the last few years as the energy and utility areas. I would also predict that how we deal with utility procurement in the near future will change so dramatically that to truly control costs, the function will become much more demanding than we are even experiencing today.
Deregulation and competitive supply alternatives began with the phone company, moved to the natural gas industry, and are now making their way through the electric utility industry. While pricing alternatives are available, and while these alternatives continue to become more complex and opportunistic, we must understand the holistic impact our facility operation has on energy and utility management (and vice versa, the impact utility procurement can have on facility operation). This can be demonstrated by looking at the recent utility infrastructure renewal project undertaken by the University of Maryland, College Park.
Faced with a deteriorating steam, chilled water, and electric utility infrastructure, the university was in need of substantial capital infusion to simply meet status quo reliability and environmental requirements for the campus. In addition, the university was about to embark on an aggressive growth campaign that was expected to increase the campus building population from approximately 10.5 million sq ft to nearly 12 million sq ft by 2004.
Overall, the university was spending nearly $22 million annually for operation, maintenance, gas, oil, water, and electric purchases. If changes were not made, this would grow to more than $40 million over the next 10 to 15 years. This figure did not include any capital funds required to repair the deteriorated utility infrastructure or central plants.
Through an innovative assessment of opportunities for simultaneously increasing efficiency and reducing current and future capital and operating costs, Sebesta Blomberg developed a program which predicted that savings would be adequate to fund the $60 million to $70 million required to ensure a reliable, environmentally compatible, and efficient steam, chilled water, and electric utility system for the campus. After a long and tenuous procurement process, the program was solidified, and vendors were contracted that assured the savings required to capitalize the infrastructure renewal program.
To say the least, future processes for the campus in terms of energy procurement and utilization, infrastructure renewal, and energy optimization programs will change dramatically. All past processes and practices will be replaced by a new paradigm and with a new end objective in mind. That is, besides focusing on reliability, efficiency, and environmental compliance, the entire utility system is now operated as a standalone enterprise for the purpose of profit and levelized operating budgets.
Automation and Process OptimizationComputers, automation, and process optimization continue to be a primary function and initiative in most all commercial, industrial, utility, and institutional facilities. While the degree of sophistication of systems is determined by each type of industry, occupancy, and process, I believe the term before obsolescence is quickly being reduced to the point where actual investment in new technology must be made on a continuous basis to simply stay even with the competition.
In the past, pneumatic and relay control logic and systems could be expected to remain relatively stable over the life of the equipment. In many cases, this life was expected to range up to 20-plus years.
Maintenance and operation were consistent year after year, and very little training was required to ensure reliable operation through the life of the equipment once a person was competent in this technology. Those days are over. In one extreme case, an industrial client made a decision to totally replace a PLC-based process control system before it was even fully operational. Complete changes in system hardware and software configurations, capability, and compatibility with higher-level data and communication integration systems affect the decisions we make at the plant and operations level more than ever before. This is only the start.
Total integration of operations, facility management, utility procurement, asset management and process operations will be the norm within the next five to 10 years. What Wal-Mart started for logistics and material supply and delivery will extend throughout all aspects of operations. Those that cannot or do not integrate will be left behind or consumed by more aggressive organizations. (Note that I did not give this benefit to larger organizations. While they generally have the capital to optimize operations, many are structured or operated in an atmosphere that does not encourage or generate the greatest benefits for the funds invested.) Full system integration will require that we throw out the current paradigms of our organization and that we search for new ways of doing business, providing services, and developing value within the organization.
Outsourcing vs. In-sourcingThe question of outsourcing or in-sourcing staff to provide for engineering, operation and maintenance, energy procurement and management, custodial, security, and food service is common through out the entire spectrum of industries, institutions, utilities, and commercial building owners and operators. While reasons vary between individual organizations, one fact seems to be consistent within all organizations. They are searching for a way to optimize the internal operation which, due to labor or compensation processes, management capability, knowledge, regulatory restrictions, capital constraints or any number of other reasons, they have not achieved with the current operating structure.
Whether a person is looking to in-source or to outsource, the organization must have clearly defined goals and objectives for each department and division, and it must manage those divisions to achieve those goals and objectives. I have seen many instances where the belief is that if you outsource the services, they will automatically optimize themselves. This is simply not the case.
In fact, I would challenge that it is just the opposite, and that to truly reap the benefits of outsourcing, you must very clearly define the tasks and manage the operations to ensure that all goals and objectives are met. Otherwise, with time, it will cost the organization substantially more than if the services had been maintained internally.
Project DeliveryAs time marches on, all organizations are faced with the need to implement projects that involve both facilities and processes. The effectiveness with which these projects are implemented will determine the ability of the organization to remain competitive in the future. This is true whether you are providing consumer products, food, services, education, health care, or any one of a number of other products and services.
Continuous improvements in the delivery of projects should be a primary measure of accountability for all facility and utility managers. The development and execution of an appropriate level of standards in the project delivery process serves as the cornerstone to efficient operations.
CommunicationClear, concise, and accurate communication is the key to the success of all programs discussed above. Hidden agendas, the protection of turf, the belief that if it’s not invented here then it is not right…these all lead to failure of the organization to truly capitalize on opportunities.
This does not mean that absolute harmony is required. The organization, and consequently the facility and utility manager, must continually challenge itself and the organization to improve in all areas of quality, efficiency, reliability, and performance. Communicating both up and down the organization, the goals, objectives, processes, milestones of accomplishments, and benefits of the actions are critical to success and growth.
The days of being referred to as the facility engineer are drawing to a close. An effective facility and utility manager has the potential to have a positive impact on the organization in ways that many do not yet see. How you set up the program to the benefit of the organization, and then how you communicate that benefit of your actions to the organization, is critical to your success and the success of your total organization. Think beyond the bounds of today’s operation, and bring that benefit forward in the 21st century. ES