It is not unusual for a utility to face obstacles during a major improvement project. But, when construction bids come in higher than expected, it brings an interesting challenge to the table.
This was the scenario in Madison, WI last year. The local combination utility, Madison Gas & Electric Co. (MGE), was planning a large-scale natural gas project spanning 4.2 miles through three communities.
State regulators approved the work and a general timeline was set. However, high estimates from contractors put the $3.1 million budget at risk. After in-depth review and thorough analysis, MGE decided to use its own employees to get the work done. This seemingly unconventional approach worked well.
MGE generates and distributes electricity to 137,000 customers in Dane County and purchases and distributes natural gas to 141,000 customers in seven south central and western Wisconsin counties. MGE is a principal subsidiary of MGE Energy.
The natural gas improvement project included installing a new:
• 400 psi 12-inch steel gas main through the town of Verona, city of Madison and city of Middleton.
• Regulator station at the end of the line to reduce pressure to a distribution level of 175 psi.
Reliability was the driving force behind this effort. Wisconsin’s western Dane and Iowa counties have been growing at a consistent pace – putting more pressure on existing facilities. New infrastructure was needed to build capacity and help MGE meet the changing needs of customers.
Additionally, the city of Madison was planning roadwork for 2010 that would require MGE to take outages at some other critical facilities that serve the area. The new gas main would be needed to ensure reliable service for customers during the road construction. With the city’s work imminent, it was important for MGE to find a way to get the gas project done in a timely manner.
One option was to move forward with a contractor who bid on the project. That would require asking MGE management for a budget increase and then asking the Public Service Commission of Wisconsin for permission to spend more money.
The other alternative was for MGE to do the work.
“It seemed like a good strategy to do the project ourselves, but we first had to take a close look at the details to make sure we could do it efficiently and cost effectively,” said John Kilsdonk, MGE’s Manager of Gas Engineering. “Making this decision was not black-and-white.”
MGE evaluated several components. One of the first considerations was employee skills and talent.
Skills. “It was crucial to make sure their skill sets matched the job requirements,” said Pete Luther, MGE’s manager of Gas Operations. “With a group of experienced welders and equipment operators on staff, we knew we were in a good starting position. Plus, several of our employees had worked for contractors doing this type of work in the past.”
With a management staff that had experience overseeing projects of this magnitude, it quickly became clear to MGE that its staff was qualified to take on this challenge.
Manpower. MGE also evaluated staffing. How many people would be needed for this project, and how would assigning staff to the new project impact other work? With a sluggish national economy, MGE did not have many other new construction projects scheduled. This made the pending gas project more feasible.
“We looked at schedules, talked to employees and made sure we had department-wide cooperation so we could realistically take on this new project without compromising other deadlines and regular tasks,” Luther said.
MGE also put a plan in place to hire contractors if needed for routine code work such as leak and cathodic protection surveys.
Equipment. Equipment was another key factor. Pipeline construction requires very specialized equipment like side-boom tractors. MGE does not own this type of equipment which can be difficult to locate. The company had to track down rental equipment, verify availability and get cost estimates.
Other factors. Several other factors also played a role in the decision-making process. MGE had to plan for, budget and manage a range of tasks that contractors typically handle:
• Implementing a traffic control plan.
• Setting up staging sites – a base of operations or onsite office area where meetings could be held, materials could be stored and equipment could be parked overnight.
• Restoring disturbed areas, which includes breaking up soil and tilling it so it could be seeded and mulched.
After a detailed analysis of all the factors involved, MGE determined its employees could complete the project on time and within the original budget.
The final step was to get approval from management. After explaining how staff was equipped to do the work safely and within budget, it was not difficult to convince them that this was a good approach.
MGE Crew Goes To Work
Construction began in August, with an MGE crew of about 12 people working on the project site daily. It was completed successfully in December 2009. A small amount of restoration work remains and will be finished shortly.
“Other utilities may have trouble taking on this type of project because it requires traditional welding and heavy steel work that they do not deal with regularly,” Kilsdonk said. “Additionally, with companies being leaner today, many do not have the manpower available to dedicate to a four-month project.”
This project was a positive experience for employees and the entire company. It was a learning opportunity that will benefit MGE on future jobs. From scheduling to tracking details, going through the process once paves the way for greater ease and efficiency in the future.
Strategies that worked well include:
• Regular communication with the municipalities involved to keep them aware of what was happening when.
• Regular communication with employees. One of the reasons this project was successful is because employees had input from the beginning in the analysis and decision-making process. Their involvement in a large, specialized project instilled a sense of comradery among them. They were excited to be part of this major effort and continued to be flexible with schedules and cooperative with each other.
• Holding tailboard meetings at the start of each day to cover safety issues, daily responsibilities and other topics. Making a plan in the morning helped keep productivity up throughout the day.
• Hiring a safety expert to ensure compliance with OSHA and other safety regulations. With a portion of the project located in Wisconsin’s capital city, it was convenient for state regulators to stop by periodically to monitor the project and conduct safety inspections.
Some lessons were learned along the way too.
“We now have more experience scheduling employees for this type of project,” Luther said. “This was new for us, and we started out a little short staffed – trying to get the job done with less overtime. We quickly realized we needed to switch to 10-hour days to get the project completed on time.”
MGE also learned it is necessary to be prepared to deal with situations that cannot be anticipated. The company had to complete a historical analysis of several areas along the project route because records indicated possible cemeteries on farmland. The Department of Natural Resources and the Wisconsin Historical Society required that a historical archaeologist be onsite during portions of the project. This could have slowed the overall process.
Also, strict erosion-control requirements in Dane County had the potential to affect the timeline. Throughout the four-month project, erosion control measures were installed and maintained by MGE. Each time a half inch of rain or more fell, MGE had to go out within 24 hours for an additional inspection. Weekly inspections will continue until restoration is completed this spring, and 70% of the vegetation growth has been established.
“We stayed within budget but gave a little with the schedule,” Kilsdonk said. “We were expecting to start work when the bids came in. Then it took us about four weeks to make the decision to do the work ourselves. It is important to remember that weather and other circumstances can slow progress too.”
Although there is not a project of this magnitude on the agenda for 2010, MGE will look for other opportunities that are well-suited for employees.
MGE’s union was supportive of the natural gas project and would like to do more work in the future with MGE employees. For more information, visit www.mge.com.