Commercial Learning Dave A Roberts, EA Technology

Transcription

1 Commercial Learning Dave A Roberts, EA Technology 1

2 Context and background The customer recruitment story Unfortunate costings and long timescales Changing contracts for the future Final thoughts 2

3 CONTEXT AND BACKGROUND 3

4 The project overview The largest network related EV trial in the UK (if not the world): 220x 3.5kW charging Nissan LEAF 18month lease deals Locally clustered Controlled at peak times Analysed datasets 10m project to understand the issue and trial a mitigation solution (Esprit) Led by EA Technology, working with SSEPD, Nissan, Northern Powergrid, Zero Carbon Futures, plus others 4.5m funded via Ofgem s Low Carbon Networks Fund Real people, real cars, real networks. REAL LIFE

5 Innovation squared: EVs Innovation #1 Innovation #2 1. Commercial innovation A blueprint for commercial contracts and management of projects delivered by a third party on behalf of a Distribution Network Operator (DNO) 2. Technical innovation Trialling a technology (Esprit) to mitigate the impact of Electric Vehicle (EV) charging on the local electricity network My Electric Avenue is the public facing name for I 2 EV 5

6 Who is EA Technology? An engineering, exporting, SME based in the NW of England We support energy networks to become more cost-effective and reliable through: Power Engineering Consultancy Specialist Electrical Engineering Services Power Skills Training Services Specific products We excel at partnership brokering, customer engagement and innovation: Customer-Led Network Revolution New Thames Valley Vision My Electric Avenue Employee-owned Values-led Innovation focused SME 6

7 Why did we get involved? To address a likely issue Bringing a potential tomorrow problem to the minds of today Combining our best skills in collaborative working To prove / test a solution Esprit developed and patented by EA Technology Providing a route to market 7

8 What roles did we play Partner liaison Risk management Delivery Dissemination Integration Technical verification Trial/data verification Project Management Technology supplier Supply of Esprit Provision of equipment Problem solving, etc 8

9 The commercial overview - concept Conventional approach Project led by EA Technology on behalf of SSEPD Wrote bid Delivered project and all milestones Managed budgets and risk Contract back-to-backed from Ofgem to SSEPD to EA Technology Skin in the game The right commercial tension Contracts then put in place between EA Technology and all project partners / suppliers Our approach

10 The commercial overview - practice 1 contract between Ofgem and SEPD (Project Direction) 1 contract between SEPD and EA Technology 11 sub-contracts put in place between EA Technology and.. 1x DNO 4x SMEs 1x OEM 1x sole trader 2x academic organisations 1x delivery partner 1x consultant

11 Some specifics of Ofgem s Low Carbon Networks Fund Introduced to look at the issues posed and solutions that can enable the efficient transition to a low carbon economy Tier 2 projects compete for funding in annual competitions based on value for money for customers, and their technical / commercial validity 90% of costs are funded by customers; 10% is put up by the network operator and only recovered based on delivery against milestones An agreement to share the 10% contribution..including all milestones.. An agreement to sign up to the terms in the contract....and any funding restrictions. 11

12 THE CUSTOMER RECRUITMENT STORY 12

13 The need for customers Technical trial Minimum of 100 customers in (very) local clusters Social trial Minimum of 100 customers across GB to improve statistical significance 13

14 The cluster challenge You ll never get 10 people on one street! Even if you do, you ll only get two or three clusters The contract stated No funding for cars / kit allowed until all customers recruited Project would be halted if [above] criteria was not met 14

15 Stepping up to the mark See our website for videos from test drives: 15

16 Cluster validation process Magic number ten Declaration of Intent forms Checks and surveys Cluster validated Funding approved 10 customers registered on one LV feeder Cluster sign up Network Capacity & PLC Home - charging points Customer - credit checks Report to Ofgem Cluster operational

17 Keeping everyone informed Regular dialogue amongst project team Regular dialogue with Ofgem Regular dialogue with customers 17

18 it was all going so well 18

19 oh *%! 19

20 Contract restrictions, risk mitigation and Board meetings Direct extract from (one of many) reports presented to EA Technology Board Following a highly charged telecall with Ofgem late on Thursday 19th December, it was made clear to the project team that Ofgem are seeking seven clusters of ten participants (with ten vehicles deployed), and that anything else could be deemed insufficient, with the only subsequent option being a Change Request (minimum timescale 8 weeks). There appears to be no flexibility around this, despite a clause in the contract stating that different permutations could be sought providing they do not detract from the SDRCs and learning. This leaves the project with a predicament; we wanted a steer from Ofgem by 20/12/13 that our approach was acceptable. The only steer we have at this junction is that clusters of less than ten are only acceptable once we have seven (of ten) in place. 20

21 Action to avoid catastrophe EA Technology chose to roll out vehicles without Ofgem s approval This meant we underwrote the project during it s most critical stage SSEPD made available a short term bridging loan to EA Technology But had we failed to recruit by just one customer in the timescales given It would have crystallised a loss of 1.2m for EA Technology Resulting in probable liquidation of the company! 21

22 A worrying time, but a positive result Rolled out vehicles from December 2013 In March 2014 we achieved our targets In parallel with continuing to convert new customers / clusters Weekly updates to my Board on progress 22

23 UNFORTUNATE COSTINGS AND LONG TIMESCALES 23

24 Unfortunate costings Spreadsheet transcription error Raised prior to project award Project conditions changed at last minute Changed approach for recruitment and deployment and increased cost Extract of Full Re-Submission Spreadsheet annotated to highlight the challenge of managing a spreadsheet 149 columns wide (11 widescreen computer monitors across [at 100% zoom]) 24

25 Delivering more for less 25

26 Delivering more for less Transcription error resulting in reduced overall budget. 26

27 Delivering more for less Size of project increased to greater than originally planned. 27

28 Delivering more for less Funding increase borne by partners (and almost entirely by EA Technology). 28

29 Delivering more for less Bridging loan made available by SEPD to ensure adequate funds before recruitment was completed. 29

30 Responsiveness to a Change Request ID funding issue Started May 2013 With Ofgem August 2013 Withdrawn by EATL Dec st April st April st April st CR 1 st April st April st April 2016 FY12 FY13 FY14 FY15 FY16 Bidding Partner contract(s) Project award Contract with Ofgem Customer recruitment Tech. roll out Control, analysis & report We are here 30

31 Responsiveness to a Change Request ID funding issue Started Apr 2014 With Ofgem Sept 2014 Approved by Ofgem Jul st April st April st April st CR 2 nd CR 1 st April st April st April 2016 FY12 FY13 FY14 FY15 FY16 Bidding Partner contract(s) Decision published Oct 2015 Project award Contract with Ofgem Customer recruitment Tech. roll out Control, analysis & report We are here 31

32 Recommendations to streamline contract negotiation Face-to-face meeting to: discuss the request agree (subject to evidence) or reject Importantly, agree all the evidence required in a face-to-face meeting avoid extending the decision as this increases uncertainty and risk to the project The above is equally applicable to Project Direction as Change Requests

33 Discretionary Reward: It s a LOOONG time to get your money back! 33

34 CHANGING CONTRACTS FOR THE FUTURE 34

35 Key Project Learning On Bidding Fixed price quotes are provided on the basis of an anticipated level of required effort and predicted risks Changes made post-bid submission significantly increased overall project risk It is not always feasible / reasonable for project partners to increase in-kind support to fill in any resultant funding gaps 35

36 Key Project Learning On Contracts Project Direction should be output focused Contracts need to flex to suit the range of parties involved Financial liabilities should be dispersed between the signatories in accordance with the roles and responsibilities held Change Request Process should be streamlined 36

37 Key Project Learning On acceptance of Risk The financial risk in our case was borne by Project lead; this would be daunting for any SME Differences between Regulation and customers perceptions; need for some flexibility when dealing with customers The relationship with Ofgem was arms length and lacked empathy with the SME position (we are not a Regulated DNO) IP is all a SME has, it s reasonable they look to protect it Adoption of Product IP vs Application IP and an intentional split management within project lead 37

38 FINAL THOUGHTS 38

39 However let s not forget our successes We ve delivered everything we set out to.. We ve taken on risk.. We ve recruited hundreds of customers.. We have a tight project team... We have been recognised as world-leading..for less money than intended and with more onerous conditions..and are still living to tell the tale..and have shown novel ways to engage and connect with homeowners and the general public..across 11+ very different organisations. We would all work together again And spread the name of the project, the challenge and the solution to a wider audience than ever before

40 THANK YOU 40