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Change Management Prevents $3.8M Sunk Costs

CLIENT:

SaskPower

LOCATION:

Various, SK

ROLE:

Program Manager (Acting)

PROJECT YEAR:

2022

In September 2022, when I assumed the role of Acting Program Manager, $6.6 million worth of cross-arm replacement projects had been designed, tendered, and were awaiting increased spending approval. Actual costs exceeding estimates prompted an investigation into the business case for cross-arm replacements. The investigation revealed two key findings:

  • The replacement cost could only break even if the pole had at least 20 years of remaining lifespan.
  • If the pole or conductor was undersized, any investment in cross-arm replacement would be a sunk cost.

These findings supported what construction crews already considered common sense. As a result, the following strategic decisions were made:

  • Investment of $8.3 million to rebuild 113 km of 25 kV line, eliminating approximately $3.8 million of sunk repair costs.
  • Informing District Operating PLTs about SaskPower’s existing policies that guide the rebuild-versus-repair business case. This alignment between Asset Management and Operations staff reduced friction caused by a lack of transparency in decision-making criteria.
  • Responding to Operations’ request to witness cross-arm failures firsthand. Over two days with a PLT, we identified $250,000 worth of cross-arm repairs missed during recent inspections.
  • Re-assessing the risk scoring matrix for Northern cross-arms based on the actual impact of failure, compared to previous assumptions. Previously all cross-arms in the same line were assumed to carry equal risk. In reality, deflection, dead-end, and crossing failures cause outages and threatened public safety, but tangent failures generally do not.
  • Revising projected program funding requirements based on actual tender costs from Northern Saskatchewan districts. The challenge of working in the remote wilderness make tender costs several times greater than the provincial average unit cost.