M.J.P.M. Franssen MSc


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Master of Science in Asset Management Control

 

 

Would implementation of Tactical Risk Management within Electrabel lead to higher cost-effectiveness?

The present world economical situation demands a highly efficient organization to compete with others that are in the same branch. GDF Suez and her enterprises are no exception to this. The company has a worldwide exposure and therefore also a great responsibility to her environment and her shareholders. To give account to her shareholders and to meet the requirements of the Sarbanes-Oxley law, GDF started a program called CoDis. ‘Enterprise Risk Management’ (ERM) was then developed to manage and implement the financial aspects of CoDis. ERM was declared mandatory for her business-line levels.

Electrabel Netherlands is one of the enterprises of the Electrabel Holding that are owned by the GDF Suez group, and is responsible for the electricity production on behalf of the European market. For this, Electrabel Netherlands has the capability of seven power plants to fulfill the demand for electricity.
An efficient management of her assets (power plants) is considered essential to consolidate or expand her market share. As Electrabel Netherlands is part of the business line of GDF Suez, the process of ERM is applicable for her too. Because of the financial approach, ERM offers insufficient grip and control for the Fleet & Performance Management (F&PM) department to manage and control her assets. ERM has a ‘strategic’ focus resulting in strategic risk (and opportunity) management, where as the assets have an ‘operational’ focus that result in operational risk (and opportunity) management. The aim of this dissertation is to develop a method that provides insight in the tactical risks and opportunities the power plants managed by F&PM are exposed to thus balancing the strategic and operational risks and opportunities. The method needs to become an approach to get a right balance between costs/investments and system performances for F&PM to base her decisions on and adapt her tactics.

The research question that was derived from this is:
“Which Tactical Risk Management (TRM) approach should Electrabel Generation (Fleet & Performance Management) choose in order to achieve a higher cost-effectiveness during the exploitation phase of the power plants?”

The research is based on a literature study and a case study. The results of these have been used to develop the Tactical Risk Management method.

From the literature study for risk management methods was concluded that no Tactical Risk Management method that explicitly relates risks and opportunities to costs and performance was developed before. The case study has revealed that the organization of Electrabel is ‘risk-aware’ (and capable of further improvements). The case study also confirmed that the risk-awareness is divided when looking at the different power plants and that ERM offers too little grip for a risk management method at the ‘tactical level‘ of F&PM.  Risks and opportunities are captured in Business Cases (BuCa’s) but often miss a thorough foundation. The effects of a BuCa towards operational costs and/or system performances of a power plant are (at the time) not clear at all. 

According to Stavenuiter (Stavenuiter, J., 2002), ‘complex technical systems and the multitude of installations that these systems consist of, demand an advanced management system for tracking and tracing changes in order to effect Asset Management Control and so manage all the necessary processes thereby achieving a capital asset capable to meet the operational need in the most cost-effective way’. This Asset Management Control System has been used as a basis for the development of the Tactical Risk Management method in order to bridge the gap between strategic risk management and operational risk management.  “Asset Management Control” (AMC) is a management approach to manage and control over the lifecycle all processes needed to achieve a capital asset capable to meet the operational need in the most effective way for the customer/user” (Stavenuiter, J., 2002).

By relating risks and opportunities of Electrabel towards (operational) costs and towards system performances, a cost-effective Tactical Risk Management method was developed. The Tactical Risk Management method enables Fleet & Performance Management to balance strategic and operational risks and opportunities based upon cost-effectiveness and risk management effectiveness. The method comprises a calculating technique to objectively identify and prioritize propositions that comprise these risks and opportunities. It is recommended that people who are related to the processes of F&PM and to the Tactical Risk Management process are trained in the Tactical Risk Management method and calculating technique.

The Tactical Risk Management method is considered part of the overall Risk Management process of the Electrabel organization. The method forms an addition to ERM at strategic level and operational risk management at operational level. The implementation and consolidation of Tactical Risk Management within the organization is the next step that needs to be developed. Some ideas for this have been identified already and were summarized in the recommendations.

De Thesis kunt u hier bekijken. (EN)

De presentatie kunt u hier bekijken. (EN)

 

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