At our Oregon summer place, I took time from fishing to view IID board of director meetings, and two remarks resonated with me at the 9/20 meeting . Director Benson’s statement to the counsel for the professional employees association that they are well paid & not to expect much money (less than 2%) for increases next year, and Director Galindo’s rebuke to the two candidates for not attending a strategic planning session.
Having worked on budgets & employee incentives I wondered why Director Benson would make such a dire forecast to IID career employees, who have seen millions expended to consultants, unless he truly means home grown employees are less valuable. The success of the energy professionals released, that includes a General Manager and Vice president, would tend to negate that evaluation. So, does he mean that there is less money for employees due to unexpectedly high cost of consultants, including actual & forecasted settlements? Or, does he imply the company is performing too poorly to afford a professional staff that is to blame? I hope not. Home grown IID staff is as good as any I worked with at several Fortune 500 companies. Normally, there is a target number of employees based on a strategic plan that incorporates efficiency studies for the entire organization making sure there are no critical holes that could affect service. Such holes can create a rudderless ship, and gets me to Director Galindo’s comments.
With regard to Director Galindo’s comments on the value of strategic planning I certainly agree on the importance of planning. And, I have a favorite Apache saying, many have heard me say before, “Any path will get you there if you don’t know where you are going.” But, my experience facilitating strategic plans at several successful companies, like Westinghouse, Bechtel, Parsons, Williams Companies, KBR, and Imagineering, plus IID’s first plan in 2001, has impressed upon me that strategic plans must be well thought out, communicated and followed. They are also dynamic documents, but they should never be changed if it means not following best business practices, government/industry laws and standards, such as Sarbanes Oxley, procurement bidding processes, labor laws, and necessary checks and balances.
With that said, I worry most about the later, Checks & Balances, due to events of the last year, particularly a return to pre- 2001 project management, as well as apparent “fox in the henhouse”, and “working both sides of the street” oversight.
Pre- 2001 Project Controls – means managers of projects report to the heads of their respective departments rather than report to the head of an independent project management office. However, you cannot run projects efficiently without this independent, professional management oversight. Professionally run companies have found that project managers working for and reporting to their own department manager are prone to keep their manager happy, even if this means looking the other way and not reporting overruns that could make the manager look bad. Also, they are less likely to be thoroughly trained in latest project management techniques. After IID created an independent project management department, overruns were reduced over 200%, and in the last 10 years it can be substantiated that independent project management has saved IID over $200 million. Why change a project management plan that worked? As a note here, directors are also no longer directly notified about project status. How can they effectively monitor company health without accurate, instantaneous status information?
“Fox in the Henhouse” and “Working Both sides of the Street” – refers to a consultant being able to represent independent power producers that want to connect with IID with the consultant also able to approve because they represent IID. This creates a situation where the consultant and the developers that the consultant represents can benefit on projects for which they both have financial interest. Another example, is a consultant partnered in a large energy storage project also representing IID energy management of that project. Any “Fox in the Henhouse, or Working Both Sides of the Street” situation is obviously never good business practice simply because it leaves the door open to fraudulent behavior and misuse of public funds.
My above comments are not meant to diffuse the need for efficient strategic planning. They are meant to point out that planning for efficiency of operations is a complex; yet common sense assembly of many pieces to the organizational puzzle, all of which must pass a test that requires checks and balances, accountability and visibility for shedding light on inefficiency and fraud. This is important to any strategic plan, and the public should insist on no less for its directors & managers. After one year of a three year contract, is a Succession Plan being created without holes in key positions? I mentioned the criticality of such a plan in an earlier letter and hope it has been addressed.
I also see from the ECA meeting that the Transmission Plan due last March, that I’ve also mentioned in an earlier letter, was completed this month, six months late and bearing similarity to the strategic projects being worked on by the energy staff that was terminated and later openly criticized for its efforts in transmission. This seems egregious, especially if the consultant was also allegedly paid an additional $300k for late completion when the same consultant was also the transmission consultant to vacated energy staff. Missing are the Imperial Valley projects like Highline to El Centro Rebuild that is probably OK, but also deleted was anything with the S Line 230 kv that seems to be an obvious problem as it is ready to fall down. I assume the special protection system referral was to Path 42, but that was not clear. As you know, how much risk to assume plays a big part in evaluating transmission plans.