Automatic Meter Reading Implementation Howard A. Scott, Ph.D. COGNYST CONSULTING, L.L.C. Technology...

AutomaticAutomatic Meter Meter ReadingReading

ImplementationImplementation

Howard A. Scott, Ph.D.COGNYST CONSULTING, L.L.C.

Technology and Customer Service for the Utility Industry

AMR Training, February 2, 2005

Copyright 2005 by , Pequannock, NJ 07440. All rights reserved.

AgendaAgenda

• AMR Business Case elements and the thinking that should go into it

• AMR Project Management

• Procurement

• Implementation

• Summary


AMR Business AMR Business Case ElementsCase Elements

• Elements of a business case

• The process of building the business case


AMR Deployment Strategies Tied to Technology, Business Case

• Rapid, full-scale deployment• Surgical or niche(e.g., hard to reads, large

customers, special needs)• Opportunistic (any field work/meter mgt.)

BusinessPlan

[Deployment]Strategies

ImplementationPlan

Technology

Financial SituationOther capital reqs., revenue, coverageratios, etc.

Needs/DriversImproved operations, con-servation, load mgt., demo-graphics, reliability, etc.

Recommen-dations

RFPProcurement,

etc.

CurrentSituation

Goals,Objectives

Existing Systems (Meter reading, CIS, Load Mgt., Outage Mgt., etc.)

CurrentSituation

Goals,Objectives

Existing Systems (Meter reading, CIS, Load Mgt., Outage Mgt., etc.)


Typical AMR Strategic Considerations• Alignment with corporate vision,

objectives, strategies• Key issues or drivers• Target customer segments• Available technologies• Standards and interoperability• Technology migration strategies• Expected impact on loads,

capacity requirements, energy purchases

• Density of customers• Business case hurdles• New services• Service area geography

• Data requirements, ownership, management

• Impact on staffing• Impact on policies• Ownership & financing options• Procurement practices• Meter optimisation• Integration with other information

systems• Political and public relations

aspects• Timing• Risk tolerance• Opportunity to collaborate


Avg. Reading & Customer Service Cost

Reading and Related CustomerService Costs

Value plus

Analysis May Need to Reach Beyond Average Meter Reading Cost

Customers in Groups of 5 Percent

Cost per

read ($)

Average Reading Cost

Meter Reading Costs

AutomateThese

““Tyranny of the Average” Prevents ActionTyranny of the Average” Prevents Action

AMR CostThreshold


AMR-Produced Information Enables Second-Tier Benefits

Information

Direct Savings

Control

Planning

New Services

How To DoLess Work

Extend Life of Assets

Organization-Wide Perspective Needed To See Problems and

Opportunities

Billing Cus. Serv.

MR,Field

Service Meter Shop

COGNY ST CONSULTING, L.L.C.COGNY ST CONSULTING, L.L.C.


Utility Customer Service Consists of Several Key Processes

. . .BeginState

EndState

• On-cycle meter reading

• “Advanced” services reading

• Billing

• Remittance Processing

• Collections

• Opening and closing accounts

• High bill investigations

• Theft Investigation

• Outage investigation, restoration

• Load research

• Handling other customer inquiries and complaints

• Establishing new services


More Sophisticated Applications Have More Stringent Data Requirements

• Monthly kWh reading – one read per month• Off-cycle meter reading – read within several days• Monthly kW demand – 2nd register, or interval monitoring• Power demand – kW, kVA, KVAR peak values (and time of

occurrence)• Static time of use – cumulative consumption in multiple tiers• Real-time pricing – communication to customer• Curtailment or interruptible service – communication to customer,

real-time read• Power quality monitoring - instantaneous drops, phase voltage

measurements• Outage detection – real-time monitoring


Time of Use Metering Requirements

• Significant differential (true marginal cost)

• Time-synchronization• Highly reliable data• Customer education• Customer-based

usage control technology

• Database to store history and bill from

0

2

4

6

8

10

12

1 3 5 7 9 11 13 15 17 19 21 23

Hours

Cost

per

kW

H

Peak

Off-Peak

Shoulder

Each application hasrelated requirements


Benefits and Costs for Key Customer Segments

CUSTOMER SEGMENT

Rural

Suburban Residential

Small Commercial

C&I

Etc.

Cycle Reads

Off-cycle Reads

Watch-dog.

Pro-filing

AM

R A

pp

lic

ait

on

Etc.

Data requirementsBenefits/willingness-to-pay/revenueSystem InterdependenciesDirect costsIndirect costsRisk factors


Model and Quantify Existing Processes

Customergets billfor prior

consumption

Customercallsabout

high bill

CSRattempts

to resolveon phone

Resolved

Customerpays bill

(unhappy?)

CSRdispatches

re-read

ReadwasOK

CSRdispatchesinvestigator

Access

Problemfound

Customergets

adjustment

100,000/yr

Y

N

Y

Y

Y

N

N

N

50,000/yr 40,000/yr

Correct,rebill

30,000/yr

20,000/yr


Redesign Existing Processes Incorporating Vision

AMR/CISflags high

consumption

Customernotified

Customerresolvesproblem

CustomerCalls

Customerpays bill

(unhappy?)

CSRdispatchesinvestigator

Access

Problemfound

Investigatorcross-sells

200,000/yr

N

Y

Y

Y

N

N

10,000/yr40,000/yr

5,000/yr

Here’s your consumptionWhy it may be high (rate increase, FAC, etc.)You may feel there’s a problemHere’s how to checkHere’s who you call(We don’t adjust)

CSRattempts

toresolve

Resolved


Steps in Building AMR Business Case1. Establish project champion, exec. sponsor, core team.2. Get educated: drivers, stakeholders, environment.3. Develop vision of the ideal system. Share with stakeholders. Identify

concerns.4. Establish base information in benefit areas.5. Model key processes in benefit areas, throughputs.6. Conceptually redesign key processes using AMR.7. Repeat steps 5,6 for major combinations of customer segments and

applications. Estimate savings.8. Estimate costs. Assemble benefits and costs into economic/financial model.9. Identify and prioritise barriers, risk factors. Develop mitigation strategies.


Contribution to Annual Savings from AMR - Composite

On-cycle ReadInitial/Final

Field Inves.

Outage Mgt.

Billing/Acctg.

Cus. Serv.

Theft Rdctn.

Meter Accur.

Load Mgt.

Arrears/Coll.

Cashflow


Capital Cost—Everything That Must Be Laid Out Up Front to Realize the Benefits

Capital

Cost

Meters Retrofit indexes/registers Meter interface units Data collection equip. Installation Handheld readers/

programmers Communication

infrastructure IT infrastructure

Project management Professional services

(purchasing, legal) Public relations Customer communications Employee communications Human Resources Plan Initial training


O&M Costs—Everything Required to Use and Keep the System Running

System Operators Communications costs RF licensing fees Data warehousing Back-up and preventive

maintenance On-going training Warranty costs Software maint. fees Data analysts

Maintenance technicians and clerks

Maintenance vehicles and equipment

Inventory, repair parts Shipping for repairs,

replacements


Direct, Hard Savings & Increased Revenues

Meter Readers Billing Clerks Customer Service Reps. Field Investigators Meter shop and field

service Vehicles, equipment,

insurance, etc. Labour benefits, overhead,

administration Postage, phone, building, etc.

Increased meter registration Reduce theft, losses New service revenues Reduce cash flow/float Reduce outage management

costs


Some Additional Considerations for Economic/Financial Analysis

• Type and number of meter/MIU situations for installation

• Meters to be changed or replaced versus retrofitted

• Type of labour that will do installations• Suspension of normal meter changeout during

installation• Inflation and discount factors• Lag factor for savings


Someone Is Going to Ask About the Hard Costs and Savings

• What’s the cost, payback, benefit/cost ratio?• Costs and benefits don’t occur all at once• Other measures: IRR, DCF, NPV,

ROIC, ROA, ???• Sensitivity analysis• Alternative scenarios

Show methe money.


Other, Less Quantifiable Benefits Can Be Part of Business Case

Employee moraleEmployee turnoverCustomer satisfaction Investor relationsPolitical capital

Environmental qualityBrand recognitionCompetitive positioningConservationSystem reliability


Risk Factors (Some More Legitimate than Others) and Mitigations Must Be Included

Battery lifeTechnical obsolescenceLacks of standards/

interoperability/ sole sourcing

Unproven technologyReliability and

performanceLong-term viability of

vendor

Excessive failure ratesFailure to hit business case

“targets” Increased maintenance, higher

than expected operating costs Inability to achieve savings

Rejection by various stakeholders

Deregulation, stranding of assets


AMR Project AMR Project ManagementManagement

• Dimensions of project management

• The Project Manager and the project team

• Selling the project

• Project planning


Dimensions of Project Management• Work integration – project plan and control processes• Task definition and scheduling• Scope and time mgt. – consensus on work, deliverables, exclusions,

deadlines, milestones• Procurement – developing, executing and monitoring contracts with

products and service providers• Human resources mgt. – identifying skills and availability, defining

responsibilities, selecting and training staff• Communications – gathering and disseminating information, managing

expectations; key tool for control• Quality mgt. – identifying standards and targets, monitoring• Cost mgt. – budgeting, estimating and control• Change management – adjusting and rescheduling• Risk management


Measures of AMR Project Success Can Be Multi-Dimensional and Subjective

• On-time• Within budget• Project goals met: delivered substantially what

was expected (specific performance of system)• Intangible benefits realized• Quality of the product – users satisfied• No “casualties,” either to the team or internal

relationships• Potential for long-term benefits created


Strong Project Manager Most Often Cited as Critical Success Factor

• Project champion• Time should be 100%

dedicated• Must be “on the hook” for the

project• Project Manager Success

Skills– Project planning and budgeting– Systems thinking– Controlling the project– Communications– Salesmanship

• Project Manager Leadership Characteristics- Vision- Enthusiasm- Expectations- Empathy- Courage- Aptitude to subject

(technology)- “Street sense,” political

awareness


Successful Project Manager Must Address These Issues

• Implementing change in the organization• Fostering creative behaviour, despite obstacles• Gaining resources, support and fair treatment• Avoiding destructive adversarial relationships

with people whose help and cooperation are needed

• Getting subordinates to work together as a team• Wielding organizational “power” (to attract good

people, support)


Every Successful AMR Project Needs An Executive Sponsor

• “Runs interference” for the PM and team• Helps secure resources and support• Strong and consistent senior management

support is critical to success• Helps PM keep the project on executive

“radar screens”– Regular reports and updates– Opportunities for input


AMR Project Stages Require Variety of Skills and Knowledge

STAGE Str

ate

gic

Th

ink

ing

Re

se

arc

h

Tea

m B

uild

ing

Se

llin

g

Ne

go

tia

tin

g

Ch

an

ge

Mg

t.

An

aly

sis

Po

litic

al S

av

vy

Le

ad

ers

hip

Tec

hn

olo

gy

Uti

lity

Op

s

Pro

jec

t D

es

ign

Pro

jec

t M

gt.

Pre

se

nta

tio

ns

Ec

on

om

ics

/Fin

.

Bu

dg

eti

ng

IT Le

ga

l/Co

ntr

ac

ts

Pu

blic

Re

lati

on

s

HR

Co

ntr

ac

t M

gt.

Ma

rke

tin

g

Exploration X x x X x x

Trial X X X x x x x x x

Business Case X x X x X x X X X x X X

Approval/$$$ x X x x X X x X x X

RFP x X x x X X X x x X X x

Selection x x X x x X X

Negotiation x x X x X x x X

Imple. Planning X x X x X X X X X X x

Install x x X x X x x X

O&M x x x X

Integration X x x X x x X X x x X x X

SKILL/KNOWLEDGE


Continuity of Teams Between Phases Ensures Smooth Project Progress

FeasibilityStudy Team

ProcurementTeam

ImplementationTeam

Operating Team


Project Manager Must Build Team

• Complement PM’s own skills and expertise• Not the same as the PM’s assistants or direct reports• Provides input and “buy-in” by different stakeholders• Identify expertise and skills needed, search for resources• Convince stakeholders to lend resources• Skills and subject matter expertise – different ones are

needed at different times• Enthusiasts• Seek personal and organizational diversity (engineering,

customer service, financial, legal, regulatory, procurement, metering, operations, audit, marketing)


START END•Work tasks are largely independent•Work has to be close supervised

Project Plan with Decision Points Is Easier to Manage

START END•Management complicated by interdependencies

START ENDPhase 1 Phase 2 Phase 3

• Decision points represent opportunities to review assumptions


AMR Project Engineering – Build Work Breakdown Structure

• Organize project into hierarchy– Phases – 1st level– Activities – 2nd level– Tasks – 3rd level

• Unit: task– Start and end dates– Duration (after schedule has been developed)– Effort estimate– Deliverable, completion measurements– Quality measurements– Standards

• Detailed tasks should be assignable to one person or role• Responsible parties must acknowledge assignment


Most People Underestimate How Long it Takes to Complete a Task

Estimates of Project Task

At Project Initiation

During Project

Planning

At Beginning of Execution

Actual

0

20

40

60

80

100

120

±10% Is a “Direct Hit”


Estimates Provide Opportunity for Reality Check

• Use standard estimates or make them up– Weighted AVErage = [Optimistic + 4 Most Likely + Pessimistic] 6– Networking for others’ experiences– Delphi technique

• Adjusted Effort = Standard Skill Factor (1 – IF) (1- PTE), where– Skill Factor: Expert=0.5, Highly skilled=0.75, Average-1.– WIF = Work interruption factor, typically 30% (meetings, idle time)– PTE = Part-time effect

– If person working full-time on project, PTE = 0– If person working ¾ time on project, PTE = 10%– If person working ½ time on project, PTE = 15%– If person working ¼ time on project, PTE = .2


Project Plan Includes Risk Assessment, Contingency Planning

• Assess Risk Factors– Size of project – duration, cost, resources, number of stakeholders,

interfaces– Stability - sponsorship and support, continuing priority, Change required in

organization (e.g., staffing, policies)– Experience – organization's experience with this type of project, team’s

experience

• Question assumptions– Technology doesn’t work as promised– Key team member leaves project/reorganization– Customers don’t accept

• Estimate Seriousness = Likelihood Impact• Develop and agree on contingency strategies: prevention,

mitigation, or acceptance


Procurement • System Selection Criteria

• Vendor Relationships


Several Factors Influence AMR Technology Selection

• Amount of data needed• Expected features• Anticipated impact on system

operations• Cost• Ease of interaction with other

systems• Industry experience with this

technology• Expected future uses• Ability of different utility

departments to work together

• Expectations and enthusiasm of utility managers

• Decision-making and procurement processes

• Degree of risk-aversion• Growth rate• Capital budget• Meter location• Existing meter population

(type, age, make and model)


Vendor Selection Criteria Reflect Organization’s Needs

• Cost: capital versus life-cycle• Responsiveness to requirements• Clarity of the proposal• Strength of vendor team• Personnel designated for the project• Experience, references• Creativity, innovation• Support, warranties


Precedence Relationships - Contract, RFP and the Detailed Statement of Work

• Don’t rewrite RFP into the contract – it’s an attachment• Don’t write DSOW into the contract – too hard to change• Determine what should be in the contract and what should

be in the DSOW


Implementation Implementation • Implementation scenarios and organization

• Pre-installation planning elements

• Project control system


Implementation Considerations • Implementation Planning Team, subteams• Project Management Team• Managing product and service suppliers• Project schedule, milestones, Gantt chart, etc.• Training of utility staff• Vendor/utility coordination• Equipment delivery, inspection and inventory• Installation procedures• Project installation control system• Communications plan• Human resources plan• CIS integration/synchronization• Process and policy adjustments


Implementation Organization for General Contractor Scenario

Cus. Ser. Rep.

Comm.Rel.

Other

ProjectManager

Ass’t. ProjectManager

Admin.Ass’t.

FieldInsp.

FieldInsp.

Reviews progress,provides resources,solves problems,overall guidance

Manages overallproject, internal liaison

Supervises fieldoperations, installations

Assist installers,inspect installations,troubleshoot

Reconciles,work orders,

confirms workcompleted

AMR Project Steering Committee

Operat’nsRep.

HR Rep.IT Rep.

FieldInsp.

. . .

Supportscommunications,

project tracking

ProjectAccountant


Effective Training is Critical Element of Project Success

• Too often approached haphazardly in tender, procurement stage

• Training costs time and money• Inadequate training: people uncomfortable with system,

don’t take responsibility for learning, don’t use all capabilities, call vendor too much

• Worst case – system performance, reliability suffer• Training must be a vendor-utility partnership• Just-in-time training• Train the trainer• Performance-based training ensures learning• Customized training materials


Installation Procedures – Working with Contractors

• Standard operating procedures versus non-standard operating procedures

• Employee screening• Replacement versus retrofit; job classifications• Performance criteria for individual installers• No. of installation attempts• AMR programming, data collection• Master schedule – needed for coordination (e.g.,

manual meter reading)• “Don’t touch” criteria and procedures• Adjusting procedures through regular meetings


Data in Utility's Systems Must Precisely Match Field Components

CustomerPremises

MeterRegister/

IndexMIU DCU

HostController

CustomerInformation

System

COGNY ST CONSULTING, L.L.C.© COGNY ST CONSULTING, L.L.C.©

GeographicInformation

SystemWorkOrder

System

Database Database

Database

Database

- Address- Location- Other Attributes

- Meter #- Service- Location- Etc.

- ID#- Units- Etc.

- ID#- Etc.

AssetMgt.

System

- ID#?- Etc?


Control System is Critical to Successful Project Management

• Ensures data is transferred accurately• Ensures proper data in billing system• Ensures all work orders get closed• Ensures contractors’ invoices are correct and

promptly paid• Enables project team to manage work• Ensures confidence in system Ensures system is working properly Recommendation: electronic project control

system with paper backup Digital photographs of removed meter

indices/registers


Effective Communications Smoothes Project, Prevents Costly Misinformation

• Objectives– Increased acceptance– Increase installation

efficiently– Smoother transition

• Branding the project• Timing/reinforcement• Format, media• Content

• Audiences:– Directly impacted

employees– Indirectly impacted

employees– Customers/consumers– Local community groups– Mayors, council(s)– Board– Shareholders– Financial community


Integration Integration • Objectives

• Technology

• Process Redesign

• Policy Adjustments

• Operations and Maintenance

• Sales and Marketing


Integration Deals with How the System Benefits Are Realized

• Merging operation of the new system into processes of rest of organization

• Merging maintenance procedures for new system with existing maintenance organization

• Using data from the new system fully for revenue- cycle services, system management

• Applying capabilities of system to new products and services

• Establishing continuous improvement around use of system


Integration Objectives• Realizing all benefits “sold” in business case• Maximizing benefits/strategic advantages• Ensure system costs remain in line with

projections• Ensuring stability, longevity of system

The Seeds of Integration Must Be Sown Early, So It Is Expected• Project Manager must sell ideas in feasibility stage.• Project team must include personnel from impacted areas.• Stakeholders should go through a process reengineering

exercise, to be revisited later.


Modifying Policies for AMR• Access to meters, AMR devices• Requirements to permit installation• Responsibly for vandalism• Response to theft of service• Ownership of data• Limitation on adjustments

– Do policy adjustments require changes to charter? Regulatory commission approval?

– Are third parties (advocacy groups) involved?– Timing: how long to change them, when do you start?– Who works on this?


Operation and Maintenance Protocols• How quickly to respond to missed reads• Ability to estimate; tolerance for estimates• Who reads the meters (job descriptions)• Physical inspections• Tweaking mobile routes to maximize yield• Audits, manual reads• Preventive maintenance on network• Monitoring noise, protecting the frequency


Sales and Marketing Integration• What was the business case based on? e.g., negative

demand• Need to establish creative process• Providing additional value to customers with new

services derived from the system• Example: TOU, TOD consumption profiles

– Marketing and roll-out; target markets– Service charges– Availability/reliability– Sign-up rates/penetration– Cross selling– Data mining/links to CRM


SummaryA brief overview was presented:• What is metering?• What is Advanced Metering (AM)?• How do the technologies work?• To what extent is AM in use? • How do you build an AM Business Case?• How do you manage an AM Project?• How is an AM system procured?• What do I have to do to implement an AM project?


Questions?

Howard A. Scott, Ph.D.

Phone: 973-696-5793

Fax: 973-696-4832

[email protected]

Automatic Meter Reading Implementation Howard A. Scott, Ph.D. COGNYST CONSULTING, L.L.C. Technology...

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Transcript of Automatic Meter Reading Implementation Howard A. Scott, Ph.D. COGNYST CONSULTING, L.L.C. Technology...