1. Program Management Office “PMO”
Steve Wallace
January 22, 2003

2. Components of ERCOT Spending – Summary
Discretionary: “CREATING NEW VALUE”
This portion of spending is determined by market participants (as recommended by the TAC). The participants and ERCOT must decide how much “discretionary” spending is needed each year. Therefore the budget for this area is set by the participants and ERCOT, then managed by ERCOT.
These costs are variable in the short-run, but add to future non-discretionary spending to provide ongoing support for these efforts.
Examples include new development and enhancements to existing systems or assets.
Non-Discretionary: “KEEPING THINGS RUNNING”
This portion of spending is determined and managed by ERCOT. ERCOT is accountable for creating efficiencies and productivity improvements in this area.
These costs are relatively fixed in the short-run.
Examples include maintenance to existing systems or assets as well as keeping the current operations running.
Discretionary Spend
Total ERCOT Spend
Non-Discretionary Spend
ERCOT Focus Areas: “ESTABILISHING PREDICTABILITY”
Manager and business unit accountability
Separation of baseline from investment spending
Technology management and coordination for compliance

3. Program, Technology and Risk Management
The PMO acts as the central control and communications point for coordinating Business and Technology initiatives as well as managing and mitigating risks. It is essential that all of the elements critical to success be considered at the beginning of a project. The six tightly connected elements noted below are key to developing and launching new initiatives and sustaining ongoing initiatives.
Performance
Measures
Organization
Structure
People need to have incentives to adopt new ways of working based on KPI’s
The organizational structure needs to be aligned with the process and technology architecture
Program
Office
People need to know how they are expected to behave and become proactive vs. reactive
Internal & External people need to know what is going on, vertically and horizontally
Culture
Communication
People need to understand what they are working toward and how they will achieve it together: e.g. ERCOT 2005 and ROI/ROA and Risk Management
Leadership
& Vision
Training &
Development
The enterprise needs to be equipped with relevant skills and to recruit and retain the best staff

4. ERCOT Operating Committee Program Management Office
Investment Implementation Process
Idea Generation & Value Identification (High Level Analysis & Estimating)
PUCT
Requests
TAC
Approved
Requests
ERCOT
Requests
Board Approval (Budget)
ERCOT Operating Committee
Program Management Office
On-going
Project &
Resource
Management
Program Management
& Reporting

5. High Level View of the PMO Functions
The Strategize process establishes tactical and strategic ERCOT Business strategies and plans, accepts input from TAC, Board, etc. aligns to the organization’s business goals and objectives and manages and mitigates risks.
PMO Service Delivery Model
Strategize
Plan
Manage Program
Manage Projects
Develop and Implement
Operate and Maintain
Consult
and Advise
In the Consult and Advise process, PMO partners with the various groups and participants to provide expertise and knowledge to help identify solutions to business problems
The Plan process develops cost estimates, resource requirements and timelines for executing the ERCOT business strategy, which is coordinated with and approved by executive management and participants.
The Manage Program oversees and reports on the projects identified and defined in the Strategize, Plan and Consult and Advise processes and reports to the operating committee.
The Manage Project process oversees the delivery of
individual projects, according to specification, budget
and schedule and is conducted by and is conducted by the business units, operations and IT groups at ERCOT.
The Develop and Implement process builds/configures, tests and deploys quality application and infrastructure solutions and is conducted by the business, operations and IT groups at ERCOT.
The Operate and Maintain process runs, monitors,
maintains, and supports live systems and is conducted by
the business, operations and IT groups at ERCOT

6. Active PMO Project Management for critical and large projects
Projects that will be managed by the PMO and Operating Committee will be identified according to two primary criteria:
Projected impact of the project on the ERCOT organization and its ability to meet strategic objectives
Complexity and size of the project
High Impact
Independent
Project
Team* or Outsource*
PMO
Managed Project
Low Complexity
and Few Resources Required
Highly Complex
or Requires Extensive
Resources
Decline
Independent
Project Team* or
Outsource*
*Oversight, Financial and Contract Management by PMO
Low Impact

7. Program & Project Management - Backup
“Toll-gate” and milestone style of project approvals
Simple deliverable matrix
Project monitoring by phase & key milestone deliverables
Development and adherence to technology and development standards
Consistent reporting, coordination, control and financial management
Automated, web based toolset where economically feasible, including metadata, business rules/processes and technology architectures
Financial Health: Will be over-budget Might be over-budget Will be under/on-budget
Staffing Health: Need additional staff/skills to complete Might need additional staff/skills to complete Will complete with existing staff/skills
Technical Health : Will miss delivery/next toll-gate date Might miss delivery/next toll-gate date Will make delivery/next toll-gate date
Schedule Health : Business is not devoting needed time Business may not devote needed time Business is devoting needed time
Business Health : Investment fails business requirements Investment may not meet requirements Investment meets business requirements
Project-to-Date Spend: Cash spent up to now on this project
Total Estimated Spend: Total forecasted project cash spending
Current Phase: The project management or lifecycle phase of the project
Next Business Review: Next formal review with project executive sponsor
Estimated Finish Date: Estimated date the project will be complete

8. 2002 vs. 2003 System Administration Fee - Backup
Proposed $0.33/MWH

9. Project & Technology Management Guiding Principles Backup
Define and utilize a standard set of project management phases and deliverables.
Track projects based on the defined phases & key deliverables
Have regular meetings with the project sponsors and executive committee.
Institute a “toll-gate” approval process for projects. Projects are only approved to proceed to the next phase.
The Program and Technology office’s main focus areas are to:
develop the project & investment methodology & deliverables
monitor compliance
recruit, retain, train & assist project managers
high-level resource planning
financial management and control
technology architecture coordination, selection and compliance

10. Governance Desired Outputs Backup
Consistent Program, Project and Technology processes:
Financial management
Project initiation, prioritization & rationalization
Project Management “toll-gates”
Overall Technology “Architecture” coordination & control
Scheduled Reviews
Standard reporting package for major projects, programs and technology:
Expense & capital update & variance
Approved project list with red-yellow-green health check
Labor breakdown between maintenance and project work
Defined documents to support the processes:
Template to allocate staff time
Database to track investment ideas & approved projects
Project health template & definitions

11. Investment Rationalization Guiding Principles Backup
Ensure business unit ownership of ERCOT investments and alignment with ERCOT short and long term business plans and strategy
Establish a cross-functional review/approval (enterprise-wide) process to ensure the business units are involved in the rationalization and prioritization of investments. Require that investments are aligned with the business and technology plans for short and long term strategy
Ensure only investments with the greatest business value are funded
Provide timely approval of project investments
Identify opportunities to leverage investments across the firm
Ensure costs, benefits & risks are adequately captured
Ensure business units, Operations & IT are held accountable for delivering agreed efforts
Common investment summary and project request forms
Consistent, enterprise-wide rationalization process
Systems and Software Architecture Coordination and Standards