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Industry Development Projects Process

Introduction | Planning and Delivery | Cost Estimation | Current Projects

Introduction

Below is an outline of the high level process and principles the System Operator employs to undertake software development projects on behalf of the to Electricity Authority and the industry, and to enable it to deliver the System Operator service under the Electricity Industry Participation Code. 

This description, together with key cost information about each industry development initiative (required by Section 42 of the Electricity Industry Act), is intended to provide participants with:

  • confidence about the planning and delivery processes used to deliver major industry initiatives to ensure projects can be delivered within stated timeframes and deliverables
  • greater transparency of what costs and cost principles are used to estimate project costs and how expenditure is monitored

Planning and Delivery

Transpower's business divisions are the budget owners of their respective ICT capital budgets.  This facilitates clear business ownership and ensures ICT capital is being spent in line with divisional priorities.  Transpower has implemented key roles and processes to ensure that needs are met in the most cost effective manner.  Transpower also has standard governance forums for investment decisions and delivery of capital projects.

The Service Delivery Life Cycle (SDLC) is the process framework that supports the software development function within Transpower.  The SDLC has two main components:
Governance - Governance exists to provide effective leadership, organisation structures, policies, standards, and processes.
Service Management - Service Planning is to ensure alignment between business initiatives and Transpower's business plan. 

Each investment goes through five stage gates:

Stage Description
0 Business Problem Definition: This stage requires that the relevant business owner defines the business problem they are trying to solve and whether it must include a systems investment.  From an industry development perspective, this stage incorporates the policy development process, including subsequent legislative Code changes. 
1 Business Problem Definition: This stage requires that the relevant business owner defines the business problem they are trying to solve and whether it must include a systems investment.  From an industry development perspective, this stage incorporates the policy development process, including subsequent legislative Code changes.
2 Solution Development:  This stage is the start-up of the Capital Project. This is the stage that will most contribute to a successful outcome for the project. The capital funds for the development of the project management plan and the business case are released after the Initial Business Case has been approved.  The technology solution would have already been identified and selected as part of Stage 1. Stage 2 completes the detail planning and confirms the capital project approach and the business case is finalised, the solution is designed, built, tested, and implemented. The Business Owner and the Project Manager ensure that the solution being designed meets business and technical requirements at least cost.
3 Solution Development:  This stage is the start-up of the Capital Project. This is the stage that will most contribute to a successful outcome for the project. The capital funds for the development of the project management plan and the business case are released after the Initial Business Case has been approved.  The technology solution would have already been identified and selected as part of Stage 1. Stage 2 completes the detail planning and confirms the capital project approach and the business case is finalised, the solution is designed, built, tested, and implemented. The Business Owner and the Project Manager ensure that the solution being designed meets business and technical requirements at least cost.
4 Disposal: Unnecessary or retired solutions are decommissioned.

The System Operator CAPEX Plan reflects costs for Stage 2 – the capital phase of the project.

Cost Estimation

An estimation and scheduling tool provides baseline estimates on submission of the Initial Business Case and Final Business Case. The level of confidence applied at each of the stages depends on the risk assessment of the project.

The baseline cost components for both these stages are divided into a number of activities, where applicable.  These are project management, governance, procurement (including hardware and software), requirements, design, build, test, deployment, data migration, training and decommissioning.

Below are the relevant cost estimations and timelines from the business case for each of the Section 42 initiatives

Reporting

Each project is governed by its Project Advisory Team (PAT).  The Project Manager reports on the project status, including status of project budgets to the Business Owner and the PAT on a fortnightly or on as agreed basis.

Overall reporting of project budgets is monitored by Transpower finance through monthly reporting on both capital and investigation budgets.  Any discrepancies between the budget and the forecast spend for the project are agreed by the Business Owner and managed via a business case adjustment process. 

We have set out below, for each of the section 42 initiatives, the actual expenditure to date versus the original estimated cost from the business case produced.

Current Projects