6 Steps to Getting Capital Program Governance Right in the Energy Transition
The Australian Energy Market Operator (AEMO) recently profiled in its 2024 Integrated System Plan that the optimal development pathway to support transformation of the National Electricity Market will include: $142bn capital investment by 2050, with a need for 10,000km of transmission lines (4,000km of new in the next decade), and adding a further 200GW of capacity (6GW every year to 2050), creating 60,000 jobs. This is no mean feat.
To truly be successful in delivering the infrastructure transformation at pace, we must importantly also consider the industry context and dynamics when shaping our portfolio and program governance and delivery models.
At Rennie, we work nationally across the asset delivery lifecycle – from policy through to implementation, which has allowed us to understand several critical success factors to deliver on our large-scale infrastructure transformation objectives. Our experience suggests the following 6 steps are essential to efficiently managing projects at scale.
Carefully design and establish an engine room to deliver on strategy – Policy objectives and targets are set and clear. However, translating policy into implementation requires an ecosystem of governance and control from government, through to delivery partners, through to project teams. At every point of accountability there needs to be effectively structured hub and spoke capabilities with connection back to a core engine room that drives outcomes with a clear mandate and strategic alignment. This program delivery model needs to be carefully designed, right sized, and may need to evolve over the life of the portfolio and program.
Appoint talent to the program office that brings understanding of the strategic context in addition to technical capability – Too often program offices are stacked with technical capability which result in the function serving in a ‘best efforts’ facilitative manner, rather than providing much needed strategic insight to decision makers. To support programs of the nature and complexity of renewables and transmission, there is a critical need for program offices to have deep expertise in energy technologies, delivery of large-scale infrastructure projects, and understanding of the policy and regulatory context – only with this can a program office play an activist role to drive outcomes in line with objectives.
A right sized and digitally enabled toolkit – The need for high quality foundational PM methods, processes and frameworks is a given, however traditionally in many organisations this has led to the acceptance of rudimentary tools and administratively intensive efforts to drive complex programs; these have often proven to be insufficient and in many instances has been to the detriment of program outcomes. A solution agnostic approach should be taken to assess the suitability of a program office’s toolkit, assessing the right mix of point solutions vs digital enterprise portfolio and program management solutions vs custom build of overlaying reporting solutions. In doing so, existing frameworks and processes should also be challenged rather than being taken as a given. The benefit of investing in such technology to achieve real-time and data driven insights is broadly touted, however benefits associated with building a PM community who are competent with such tools, so they are not embraced, empowered, and rewarded in doing so should also support a case for change.
Management of the risk universe from every angle – From market and policy settings not being ready for coal retirement, to social licence and supply chains not being secured for project delivery, to the interdependent nature of major energy transition initiatives - the risk universe impacting the success of our transition is diverse and varied in nature. Program offices need to step up to play a lead role in the identification and management of strategic and systemic risks and issues, being empowered to bring together stakeholders to collectively shape effective mitigation or response strategies. Program offices need to also move from being a dependency tracking function to an integral interface management function between key stakeholders including government agencies, regulatory bodies, community groups, and internal departments.
Moving from being a centre of excellence to being a champion for purpose, personal development and reward – Establishing a program office as a centre-of-excellence is nothing new, and without being the oracle or all wisdom program offices are uniquely positioned to play a key role in orchestrating the sharing of knowledge and best practice to support capability development across a PM community. There is however the need to go further, particularly in the renewable energy context – where the program office can help drive and ensure PM troops rally behind a shared purpose, working with delivery partners to develop capability development programs which attracts and builds talent, and supports workforce satisfaction, retention and ultimately improved program delivery.
Adopting a culture of continuous improvement – It goes without saying that the program office should adopt a culture of continuous improvement, however this must go beyond incremental improvement, to being fostered in the culture across the program. This should be supported by a roadmap and aspiration for further uplift, but should allow for feedback – both internally and externally – to learn from successes and failures, and allow the adoption of strategies based on evolving challenges and opportunities to enable the program to stay agile and resilient on the journey towards a net zero, sustainable future.
Its the "How" that Matters
The complex, dynamic and varied nature of the energy transition calls for an ecosystem of governance and control which is carefully designed, resourced with the right blend of technical and energy specific capabilities and empowered with the right toolkit.
The role of the program office needs to be lifted so that it operates as an engine room, fulfilling a strategic role to support decision makers, manage cross portfolio interfaces, and supporting the development of a high performing PM community. Without this, programs will fail to achieve the all-important task which is before us to roll out energy infrastructure to achieve our clean energy future objectives.
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