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Costs and benefits: Implementing an AMIFM/GIS

Jeffrey R. Meyers
Vice President, Miner and Miner

Michael J. Daniels
Manager of User Services, Miner and Miner

Charles C. Killpack
General Manager, ESRI


The role of the AM/FM/GIS is to maintain, provide access to and analyze information about the distribution plant and surrounding landbase, including customer locations. In the capital-intensive environment of the electric or gas utility, the network of facilities represents a substantial investment that requires management to gain the benefits of optimal performance. The information infrastructure (systems related to and data about the network and customers) of a utility is not only a powerful management tool, but also represents a substantial asset that requires management to be utilized properly.

Most utility users and developers agree that a GIS can increase access to information and improve customer service, providing benefits that are difficult to measure. The purpose of this White Paper is to focus on the “hard” or tangible benefits and costs of implementing an AM/FM/GIS.

Many utilities have embarked on re-engineering or other strategic initiatives that have highlighted AM/FM/GIS technology as a part of a larger strategy to improve customer service and competitive position. Some of the common themes in these initiatives include:
  • Improve reliability and safety in the operation of the transmission and distribution systems.

  • Improve cycle-time in responding to customers requests for service and facilities improvements, as well as in outage response.

  • Manage transmission and distribution systems maintenance to ensure priority use of resources, especially with respect to capital-intensive improvements and replacement of facilities.

  • Effectively distribute consistent, up-to-date data across the company to provide better, more timely decision support.

  • Provide a quality source of data as a part of the formation of a strategic information system.
Many utilities see a key role for AM/FM/GIS in providing benefits within each of these larger areas of improvement through automation.

Cost Assessment and Examples
Constructing an AM/FM/GIS and integrating it within the information systems of a utility has a number of cost contributors. Cost of implementation may vary depending on the areas of focus for the AM/FM/GIS, the size and scope of the data to be captured, and the number of users to be supported. The current state of legacy systems and automation may also affect the cost. Among the usual costs described in development of an AM/FM/GIS are:
  • Data automatioticonversion

  • Hardware and software system acquisition

  • Applications development

  • Project management

  • Training
Since the number of variables is high with respect to cost, it can be difficult to generalize the cost factors described above. However, a few examples in each category may be helpful.
  1. Data Conversion/Automation. The factors affecting data capture costs include the type and state of existing data, the scope of the data to be automated, and the geographic scale of the utility. Availability of commercial data is also a factor. The variances in these factors make it impossible to generalize. Some examples may be cited:


    • A medium-sized gas utility in the northeast US estimated its data capture of geographic data from existing paper (strip) maps, purchased street data at about $1.7 million.

    • A large urban and suburban electrical utility in the southwest US estimated its capture of geographic data from paper maps, including field survey for customer locations, and integration with its CIS at about $4.2 million.

    • A medium-sized urban electrical utility in the midwest US estimated its conversion from one digital system to a more modern one at $140,000, including internal costs.

    • A large urban electrical and gas utility in the upper-midwest US estimated its conversion from one digital system to a more modern one at $400,000. with most of the work done by in-house staff.


  2. Hardware and Software Acquisition. The variables in the system acquisition portion of cost are normally considered to be the type of hardware selected, communication network available, use of existing hardware, type of base GIS software and commercial database selected, and number of user seats implemented. Here are two examples:


    • An electric and gas company expected to spend about $220,000 for hardware and $200,000 for sofiware base technology, resulting in a per seat cost estimated at $16,000 to provide all new equipment.

    • An electric and gas company spent a total of $1.3 million in hardware and software base technology for its users, for a per seat cost estimated at $12,500. Again, all new equipment was provided.


  3. Applications Development. The scope and cost of applications development varies with the nature and complexity of the applications to be implemented. In particular, the use of commercial off-the-shelf software versus entirely customized solutions plays a major role. A few examples follow:


    • An electrical and gas utility developed a completely customized suite of base data maintenance and mapping, electrical and gas network analysis, work order design tools (integrated with an existing work management system), and a desktop query and display environment for a budget of just over $2.5 million.

    • An electrical utility purchased and implemented (in-progress) a customizable suite of base data maintenance and mapping, work order design tools (integrated with an existing work management system), and a desktop query and display environment for a budget of just over $1.2 million.

    • A gas utility developed a base mapping and data maintenance package, plus a mains replacement application using in-house staff and consultants for an estimated $300,000.


  4. Projec[ Management. Project management costs are often difficult to quantify, since the costs for software developed by vendors contains the cost of managing the development, and the only known or budgeted costs are normally those of the utility itself. These costs will also vary with the scope of the data conversion task and the applications to be developed. Projects for major utilities familiar to the authors had internal project management costs which ranged from $70,000 to $750,000.

  5. Training. Training is an often-overlooked component of the cost of building an AM/F M/GIS. Costs vary mostly with the level of involvement in data conversion and QA/QC, and with the scope of applications and number of users to be trained. Again, for major utilities projects familiar to the authors, internal training costs including salary during attendance varied from $40,000 to over $200,000 for a very large project off shore. A well-managed gas project with an average number of users and an internal support staff had budgeted training costs of around $110,000.
Tangible Benefit Assessment and Examples
The analysis of tangible benefits also carries with it the complexity of the environment of every utility. All of the factors in costs come in to play, along with other factors associated with current state of facilities and business processes. The benefits to be 57ഊrealized must be carefully and conservatively analyzed for each prospective utility. The normal high-level categories suggested are:
  • Increased productivity through reduced labor in map preparation and update.

  • Increased productivity through access to information for analyses involving plant, such as network studies.

  • Improved engineering and operations efficiency in maintenance and system upgrades, resulting in reduced plant investment.

  • Decreased dependence on expensive centralized mainframe computing environments.

  • Avoided costs in replacing or improving existing paper records that may have deteriorated over time, or in consolidating records that have never been consistent.
Each of these major categories has several subcomponents, and the variations for each user are marked. Within the experience of the authors, some examples for each category can be provided.
  1. Increased Productivity in Mapping. Nearly every utility investigating automation can improve in map production, and in the number of uses and users of map products. Most AM/FM/GIS users anticipate cost savings from increased efficiency (reduced staff or overtime) in automating map production. Here are a few examples:


    • The electrical retail unit of a gas and electric utility reduced their mapping staff from 8 to 6 based on an AM/FM/GIS application, resulting in annual savings of an estimated $58,000.

    • A gas company expects to reduce engineering drafting overtime and outside services by an annual amount of approximately $40,000.


  2. Increased Productivity Through Information Access. Engineering and operations functions can require data that is time-consuming and costly to produce and maintain.

    For example, both electric and gas utilities commonly perform network analysis studies to plan for system improvements. The effort to assimilate network data to support models is labor-intensive and normally requires a highly skilled technician or engineer. Driving the analysis model from the AM/FM/GIS database can result in reduced labor and improved analytical models. There are a number of aspects of engineering and operations which could produce similar benefits:


    • A gas company calculated that it would save $360,000 per year in corrosion protection, distribution engineering and operations and purchasing through better information access.

    • An electrical utility reduced its labor force by one technician no longer required for data gathering as a result of AM/FM/GIS, resulting in estimated annual savings of $38,000.

    • A gas company eliminated the need for outside consultants for special studies that resulted in an annual savings of around $40,000 for the ten-year life of the AM/FM/GIS project.


  3. Improved Engineering and Operations Efficiency. The opportunities for improving efficiency in design and operations of the utility network range from better maintenance and corrosion protection to improved subdivision service design. Cost savings for this category are normally measured in terms of saving engineering time, or reduced costs in plant through better design and maintenance.

    A large urban and suburban electrical utility reduced its underground subdivision development budget by $1.5 million through the use of a GIS application.


    • A medium-sized gas utility reduced its mains replacement budget by $200T000 per year based on the implementation of an AM/FM/GIS to prioritize the replacement of gas mains.


  4. Decreased Use of Mainframe Computers. For some utilities, the cost of maintaining and expanding mainframe computing to support an existing AM/FM system can be avoided by moving functions to a distributed micro-computing environment. The costs avoided are usually calculated in terms of reduced computing cycles which are considered then to be available for other expanding requirements such as CIS or work management, or in one notable case, permitting the utility to eliminate one of two mainframe computers. This last case resulted in a net monthly operating reduction of $120,000 for the five-year life of the new system.

  5. Avoided Costs in Maps and Records Replacement/Consolidation. At utilities where diverse and non-standard maps exist, through historical practices which led to differing mapping standards, or through merger and acquisition of other companies, the cost of redrawing and maintaining duplicate sets of records can be significant. This cost is also present when paper or mylar (or vellum or linen) records need to be replaced because of degradation. In one case familiar to the authors, a gas company calculated that it would save $485,000 over ten years by avoiding consolidation and replacement of existing strip maps.
Intangible Benefit Assessment
Intangible or “soft” benefits are often discounted in assessing the value of AM/FM/GIS to a utility, or sometimes not accounted for at all. This is the conservative approach, which is highly recommended. However, there are a number of benefits and opportunities for benefits which accrue to the AM/M/GIS user that cannot be quantified, and these are worth noting if only for the sake of completeness. The common categories of intangible benefits cited by most AM/FM/GIS analyses include:
  • Improved customer satisfaction through better response to service calls and requests for information.

  • Improved distribution engineering practices resulting in capability to perform more or different functions through automation without increasing staff.

  • Increased job satisfaction among employees resulting from technological efficiencies.

  • Better more consistent safety practices; support for dig-safe activities, sharing of data with other utilities, and crew safety.

  • Improved response to regulatory and other outside agencies requesting rate, reliability or other operating information.

  • Better decision support through graphical display of data for outage dispatch, leak survey, and other customer-related information.

  • Improved marketing efficiencies through relating spatial facilities and customer locations with demographic data.
The benefits identified fall into the first two categories defined in the original paper, namely Increased Productivity in Mapping and Increased Productivity Through Information Access. Two additional examples are provided, along with some additional financial details.
  1. Increased Productivity in Mapping.

  2. The electrical business unit of a gas and electric utility reduced their mapping staff from 11 to 5 based on AM/FM/GIS data maintenance and map products applications, resulting in annual savings of an estimated $278,400.
    3.

  3. Increased Productivity Through Information Access.

  4. The same electrical utility re-assigned two engineers no longer required for data entry and manipulation to support distribution system planning models, as a result of AM/FM/GIS, resulting in estimated annual savings of $117,600.
    5.
The figures above were estimated based on the payroll cost for the employee, and included a total overhead allocation of 47°/0, consisting of Payroll Benefits equaling 26°/0 and general and administrative overheads of 2 10/O.
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