SSE, Case Study in Utilities

SSE needed a procurement team setting up within their £2billion Smart Metering Programme. To tackle this complex challenge, we developed a procurement strategy for smart meter expenditure and associated contracts, put the required system integration contracts in place, recruited a team of permanent staff and transitioned the service successfully back to SSE within the defined timeframe.

Business Challenge

SSE called upon us to support their £2billion Smart Metering Programme having attempted to recruit a team internally without success. The challenge was significant. Instigating the smart metering programme was a huge undertaking requiring a thorough understanding of the business, key stakeholders, implications of activity across multiple business functions and negotiating the challenges of industry regulation and compliance.

Our Solution

To address this challenge, we firstly needed to understand the complexities involved, identifying and engaging with all key stakeholders. A multitude of perspectives were considered including financing, regulatory demands, legal, asset management and technological considerations. Our Programme Lead was appointed to the Programme Board and represented SSE’s Chief Procurement Officer in all matters relating to the programme. This ensured that we were present and available to both enable and further discussions surrounding the programme. In addition, our knowledge of the programme was always up to date enabling us to be aware of any factors that might impact upon the success of the project and allowing us to mitigate those risk factors immediately.

Following detailed discussions, we agreed the following key objectives:

  1. Develop a procurement strategy for £1.2billion expenditure on Smart Meters and associated installation and maintenance contracts.
  2. Put the required system integration contracts in place to deliver £400m plus in IT system changes.
  3. Recruit a team of permanent staff and transition the service back to SSE.

We worked closely with SSE’s legal team to draft and negotiate bespoke terms with the metering providers. It was necessary to ensure that the terms and conditions provided robust provisions and consequences surrounding time, cost and quality failures, in order for SSE to adhere to regulatory obligations imposed upon them. As a result of detailed work with the legal team, the contracts we negotiated shared the regulatory risk with the supply chain and were UCR 2016 compliant.

In addition, we recruited high calibre, passionate procurement professionals dedicated to concluding the successful programme in line with SSE’s 2020 regulatory target.

Results

Graphics:

100% of contracts UCR2016 compliant

Shared risk

Successful delivery of procurement function

  • The Smart Metering procurement function has been successfully established, with robust contracts in place which share risk between SSE and their suppliers.
  • All suppliers are successfully signed up to comparable terms, providing a balanced approach to risk and an innovative approach to funding in collaboration with equity finance partners. Furthermore, all contracting approaches were delivered as UCR 2016 compliant procurement activity.
  • After just nine months we were able to hand over the programme to the internal team we had recruited for the client. This team are now concluding the programme in line with SSE’s 2020 regulatory target, with retained advisory support from us.

“Quote from Adrian McNeile here”

The Team

  • Warren Kozera – Delivery Director – Smart Metering
  • Warren Ward – Delivery Director – System Integration
  • Sue Wilde – Senior Managing Consultant 
  • Richard Hoskins – Senior Managing Consultant 
  • Mark Elkington – Senior Managing Consultant
  • Nathan Davies – Senior Managing Consultant

Contract period

August 2015 – Ongoing