Business Realities

Most utilities do not have engineers at the help. We need to learn the vernacular of business to get executive buy-in for investment.

As a Consultant, I Meet Utility Engineers Across the Country and Around the World. Most are smart, experienced and capable. However, many are set in their ways and skeptical about change. They are particularly concerned about the business people who are running their utilities and cutting their budgets. They yearn for the glory days when load growth was high, rates were low and engineers like themselves occupied the executive suites. A person like this can be described as a HUE, a Hardened Utility Engineer.

A HUE sees things through an engineering perspective. The system should be well-engineered. Equipment should be well-specified and well-maintained. Standards should be strictly followed. Equipment failures are always bad. Anything less is bad engineering and is ruinous to the system. For a HUE, a decision should be made and money should be spent because it makes good engineering sense.

Engineers used to run most utilities. These engineer leaders came up through the ranks and had a good understanding of planning, engineering and operation of the system. For sure, these executives understood the business side of things. They also understood the language of engineers. When presented with an engineering justification for spending, they could weigh the business need against the technical need and make an informed decision.

Times have changed and most utilities are led by pure business people. These folks care about two things: profit and profit growth. Let's be clear, they also want to achieve high customer satisfaction, a good safety record, good reliability, positive regulatory relations and other key benchmarks. But these are means to an end; exceptional business operations should lead to exceptional financial performance. Good engineering is incidental.

Executives complain to themselves, “Engineers always want more money. A HUE just doesn't get it, coming to me with engineering justification. I don't care if it makes good engineering sense. I only care if it makes good business sense.” If this sounds familiar, there is probably a large communication gap between the business types running your utility and the engineering types who plan, build and operate the system.

Every year engineers ask for more money — in every department, in every region, in every program and in every blanket budget. [Challenge: Name one time when someone has requested that their budget be reduced.] Most CFOs are thinking, “You all asked for more money last year also. We cannot afford all of these engineering requests, and I certainly don't have the expertise to decide which is most important. Across-the-board budget cuts for everyone!”

I have a doctorate in engineering and am sometimes asked why I later got an MBA. It was not to escape engineering as a profession. Engineering is generally much more fun and interesting than business. But in today's environment, the effectiveness of a utility engineer is limited without a set of complementary business skills. Business knowledge is never a substitute for engineering expertise, but allows engineers to make recommendations in business terms through credible business cases. Believe me, it is much easier for an engineer to learn the language of business than for a business person to learn the language of engineering.

Asset management had high hopes of addressing the communications gap by creating a class of employees that could play in both the business and engineering sandboxes. These people would serve as a translator between the corporate office and front-line engineering. Enter SAM, the Savvy Asset Manager.

I have taught asset management to utilities across the globe. Most attendees are either a SAM or a HUE. SAM is interested in accounting, finance and budgeting. HUE is bored by these topics and wants to know about aging infrastructure, online condition monitoring and maintenance scheduling. Asset management remains a tactical topic for HUE that allows for smarter engineering decisions. More broadly, utilities have found asset management has not been an effective vehicle for culture change. What will it take to reach the HUEs of the world?

As an experiment, I taught class at the 2008 World University titled “Business Essentials for Utility Engineers.” Most courses at this event addressed engineering topics. Would anyone sign up for a business course? As it turns out, attendance was good, and the class discussion was spirited (aided by the always-challenging presence of Rick Bush). These engineers understood the need for business skills in their engineering jobs, and absorbed the course content with enthusiasm. I predict great things in their careers as they start to tackle difficult engineering problems with growing business acumen.


Richard E. Brown (rbrown@quanta-technology.com) is the vice president of operations for Quanta Technology. He is author the book Electric Power Distribution Reliability. Brown is an IEEE Fellow and is a registered professional engineer.

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