Optimizing the Procurement Process

THE BENEFITS OF CONSULTANT SUPPORT DURING THE PROCUREMENT PROCESS

The typical procurement effort set up to acquire the products and technologies needed to support the telecom networks of tomorrow poses a unique challenge for utilities and the telecom groups within. These groups are faced with continual equipment price increases in combination with reductions in equipment useable lifespans, resulting in equipment changeouts and system turnover far more regularly than would have been expected in the past. Collectively, these factors have led to increased organizational involvement and additional scrutiny added to the already difficult procurement process, causing it to feel daunting and unnavigable to the telecom groups charged with making these critical purchasing decisions.

Engaging a consulting engineering firm for assistance during the process of evaluating technologies, vendors, and the solutions in-use across the industry can help in several ways.

NAVIGATION OF THE RAPIDLY EVOLVING TECHNOLOGY LANDSCAPE

Given the historically, relatively long lifespan of telecom equipment and technology in the utility space, utilities may find themselves struggling to match the current pace of technological change we are seeing within the utility telecom ecosystem. The retirement of legacy technologies during the transition to the IP-connected world has ushered the upgrade or replacement of systems that may not have been touched in over a decade or more, leaving many utilities faced with uncertainty regarding which steps to take, which technologies to evaluate, and what solutions are right for the road ahead.

Telecom engineering consultants focused on the utility industry see this problem plaguing electric utilities every day. The business of engineering design for utilities of all sizes puts them in a unique position of staying current on technology changes including those behind proven solutions implemented across the industry. Engaging consultants familiar with real-world strengths and weaknesses of systems and technologies being implemented today allows for the development of solid bid specifications and requirements that are not solely dependent on specs alone but may also benefit from the lessons learned from other deployments.  This can help ensure quality responses from vendors according to the client’s needs and allow for efficient response review, evaluation, and selection.

INCREASING ORGANIZATIONAL ENGAGEMENT AND BUY-IN

What were once purpose-built networks to address a specific singular need, today’s telecom networks are increasingly recognized as a company-wide strategic asset, critical to the success of the business’ many functional groups and initiatives. As a result, decisions about network equipment upgrades and replacement are no longer confined to telecom groups alone, and instead must factor in the current and future needs across the organization. The procurement process is generally more successful when cross-functional collaboration and engagement between the procurement group, technical staff, and stakeholders throughout the organization is established early in the process.  

Consolidation of what were once independent, disparate systems focused on supporting individual functions or applications into single, unified platforms supporting multiple applications that reach across multiple groups within the company, adds to the difficulty, complexity, and time needed to make a purchasing decision for a few reasons:

• Increases the number of stakeholders that need to be involved in the purchasing decision
• Increases the level of scrutiny on the purchasing decision and the impact it could have
• Increases the amount of documentation and justification the telecom group leading the effort must have to create, responding to the increased level of buy-in any purchasing decision may require

The criteria used for evaluating potential options and the weight given to each requirement can become a source of contention as the number of stakeholders increases, making the decision criteria more clouded and complex. For example, the desire to choose the lowest bidder despite other evaluation criteria can put the business and technical stakeholders at odds with the procurement groups.

Engaging qualified consultants to assist with the procurement process can help alleviate these issues by taking advantage of proven tools and methodologies that have been developed over years of successful execution and fine-tuned to the needs and culture of utilities.

The increasing pressure for utilities to minimize O&M expenses has highlighted the importance of proper planning and sequencing of activities that lead up to the selection and procurement of equipment.

MINIMIZING O&M EXPENSES

The benefits of engaging a consultant during the procurement process begin early in the project lifecycle and aren’t limited to the official procurement phase of any effort. The increasing pressure for utilities to minimize O&M expenses has highlighted the importance of proper planning and sequencing of activities that lead up to the selection and procurement of equipment. Whether its ambitious internal-only efforts that are frequently paused due to the realities of other critical priorities or embarking on the wrong path and spending time on the wrong activities, at the wrong time, these departures can cost organizations valuable time and even more valuable O&M budget.

According to FASB guidelines, activities necessary to “acquire property, plant, and equipment (PP&E)” and “bring it to the condition and location necessary for its intended use” are generally eligible for capitalization. The definition of which activities are eligible is left broad intentionally, capturing the usual steps organizations must take as a part of any system upgrade process. Experienced consulting engineering firms that recognize and understand this consideration can work with the utility’s plant accounting group to help minimize O&M expenses.  

Consultant engagement early in the project planning and development process can allow utilities to leverage consultants’ shared experience and industry knowledge to proceed through the preliminary phase of the project lifecycle more efficiently, while remaining confident in the preliminary project plan, budget, and probability of success.  

CONCLUSION

Telecom networks have always been a critical part of the electric utility industry, but as that business has changed, so too have the needs of those networks, and the ever-changing requirements being placed on them from across the organization. The stakes surrounding the decisions about telecom network upgrades and replacements have never been higher, placing a tremendous and growing responsibility on various business units, perhaps for the first time. Engineering consultants can play a crucial role in helping utilities minimize the risks associated with these decisions, by being:  

1. a vendor-independent voice focused solely on what’s best for the utility, leveraging real-world experience to differentiate between results and hype

2. an experienced partner, leading the messy process of organization-wide collaboration and buy-in

3. good stewards of the utility’s budget

Utilities, like many other businesses, are under constant and increasing pressure to do more with less. Without help to manage all aspects of a comprehensive procurement process, it’s difficult to imagine how the organizations’ diverse objectives can be achieved.

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