Electric utilities are confronting two significant and conflicting trends. On one hand, staffing levels are constrained due to attrition from retirements and a competitive market for talent. Utilities are challenged to balance the essential investments in assets with a controlled number of internal resources, and they are frequently turning to outsourcing for assistance. On the other hand, the demands being placed on generation infrastructure — both in terms of capacity and reliability — continue to grow.

As a result, utilities have fewer in-house resources to dedicate to an increasingly critical set of operations, maintenance and capital improvement priorities. As the physical and technological landscape of power generation becomes more decentralized, managing generation portfolios is becoming increasingly more complex and labor-intensive for utility stakeholders.

As utilities explore better alternatives to address the plethora of projects spanning multiple locations, partnering with a qualified, experienced engineering firm utilizing a master services agreement (MSA) is a proven solution that can help. The MSA is a convenient tool that gives the utility a go-to source for supporting upfront planning and design work. By partnering at a portfolio management level, the utility can obtain comprehensive services that enable more efficient allocation of resources while managing scope, schedule, costs and risks.

We have experience working in this model. In March 2023, Burns & McDonnell entered into an MSA with Tampa Electric. The portfolio management model has been a highly effective delivery method to proactively manage the large and diverse scope of capital projects at the Florida utility’s generating stations. This paper will explain why Tampa Electric selected this approach, how it has played out, and how it has resulted in mutually beneficial outcomes.

In the fall of 2022, Tampa Electric was seeking engineering services to support various retrofit projects at two different locations in its generation fleet. The utility put out a competitive bid opportunity for an engineering services MSA to perform all design activities from project development through full-scale execution. Burns & McDonnell successfully bid and and was able to enter into an agreement with Tampa Electric.

There were several reasons Tampa Electric chose to pursue a program-based approach. The utility is constrained by limits on internal resources, which have held steady while projections for capital investments were, and still are, anticipated to grow. That investment growth is tied to continued population growth in Tampa Electric’s service area. Where the internal personnel used to act as a self-perform team, they have shifted to providing oversight and technical guidance for the projects.

Grouping multiple projects into an MSA had the advantage of creating a more diverse pool of firms to bid on the work. The utility was seeking interest from larger, more qualified firms that had the diverse and multidisciplinary resource offerings to support and manage the projects demanding attention.

Another driver for the program approach was to better align the utility with its capital funding process. The utility executes capital projects in a stage-gate approach to make more prudent business decisions over the course of multiple projects and over each budget cycle. Historically, a single budget year was not typically adequate to execute a project from start to finish. One of the more significant culprits tied to this was extended lead times — attributable in part to recent supply chain challenges — which further reduced the probability of successfully completing a project in a single fiscal year.

An advantage of the program is the ability to forecast two or three years out and develop the projects ahead of their target in-service dates. That aligns project priorities with the capital approval process and supports efforts to keep projects on schedule and on budget. Preliminary design work from Burns & McDonnell has helped develop better cost estimates to plug into the utility’s long-term forecast, supporting better business decisions tied to project timelines and overall anticipated costs. It also enables the utility to better align projects with planned plant outages.

Under many three-year MSAs, it is fairly typical for the engineer to skip straight into detailed design, using rough estimates internally derived by the utility for developing a scope and budget. This could be characterized as an “ask forgiveness, not permission” approach.

In contrast, the five-year MSA between Tampa Electric and Burns & McDonnell reflects the utility’s detailed stage-gate process. Beginning at the 10% gate — representing long-term forecasts — the team develops a conceptual design, schedule and cost estimate for consideration and implementation into capital budget planning efforts. Tampa Electric can make better-informed decisions as it understands the long-term forecasted impacts by reviewing project deliverables, in-service dates, estimated costs and cost profiles.

The utility evaluates whether each project should progress its design to the 30% gate for further development and refinement. The utility’s capital planning team can then review the project’s overall viability. The team provides preliminary design information, schedules and cost estimates to help answer key high-level questions, such as:

• Why do this project?
• Why do this project now?
• Why do this project this way?

This deliberate stage-gate process has improved evaluation of capital projects, establishing consistent and collaborative procedures dialed in through workshops and meetings led by dedicated project managers focused on developing the scope and estimate for each project. These early-stage scoping and estimate efforts allow utility stakeholders to prioritize projects that bring the maximum benefits to customers.

One of the keys to making the portfolio management approach successful is maintaining consistency on both sides of the partnership. This includes the utility assigning dedicated project managers and technical leads for each project. The relationships fostered between the partnering teams at the management and lead levels serve as a solid foundation for working together effectively.

Dedicated teams are an important part of the value proposition. Rather than working with five different engineers on five different projects and having to train all of those teams on Tampa Electric’s standards, preferences and expectations — an especially challenging ask in a time of limited internal resources — the same dedicated team can tackle the parceled projects in a way that significantly reduces the learning curve. The earliest submittals will require some work to establish a baseline, but from there, individuals can jump efficiently into each effort.

Handoffs between team members and at the various stage gates become more seamless, based on a more defined, upfront understanding of the project scope. Working together as a unified team enables strong lines of communication and shared assumptions, with points needing clarification more easily identified. Conversations are collaborative, not adversarial.

Open dialogue also helps mitigate the amount of construction requests for information (RFIs) and helps provide the end user with a design that’s the right fit. Project checkpoints for each design phase minimize open-ended questions and avoid design misses. When everyone is pointed in the right direction on mutually agreed-upon approaches, it minimizes design rework and mitigates cost overruns and schedule delays.

Portfolio management, similar to program management, can be a powerful tool for unlocking efficiencies in both schedule and cost, with the ultimate goal of maintaining exceptional safety and quality standards. Successful applications of the approach, like the partnership between Tampa Electric and Burns & McDonnell, bring all partners together in a setting of full transparency.

Aligning on expectations at earlier design stages will minimize downstream impacts at the construction phase. When the engineer can act as an extension of the utility team, everyone becomes invested in the success of each project and the program as a whole.

One of the most useful cornerstones of the partnership between Tampa Electric and Burns & McDonnell has been a living document maintained at the utility throughout the program duration. In it, the utility tracks all relevant projects, target installation year, disciplines involved and at which stage gate each project stands. This regularly updated document is essential to planning for effective use of resources.

Not all utilities operate with that level of sophistication. Too often, once a project becomes urgent, that utility will quickly solicit a request for proposal (RFP), skip development and proceed directly to detailed design. Following a more methodical plan improves outcomes by aligning needs and expectations with the capital planning cycle, ideally providing multiyear foresight on projects and the necessary resources.

When staffing resources are limited, materials are at a premium, and supply chains are constricted, utilities can seize more control over the viability of their assets by planning for the long term and packaging projects into a portfolio to optimize implementation and capital expenditures. That enhances the utility’s ability to deliver reliable power, affordably, in the present and for years to come.