SPP Integrated Marketplace Day 2 Market Lessons Learned & - - PowerPoint PPT Presentation
SPP Integrated Marketplace Day 2 Market Lessons Learned & - - PowerPoint PPT Presentation
SPP Integrated Marketplace Day 2 Market Lessons Learned & Project Approach Bill Clarke Tyler Wolford Jon Sunneberg June 22, 2011 Agenda Introduction Day 2 Market Lessons Learned Operations Trading Tools &
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
3
Introduction
Bill Clarke, TEA
- Executive Director, RTO Services
Tyler Wolford, TEA
- RTO Project Manager
Jon Sunneberg, NPPD
- Market Strategies Manager
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Introduction
Today’s Purpose
- Share lessons learned from TEA’s Day 2 market startups
- Outline key differences between the current SPP market and Day 2
markets
- Review TEA & NPPD’s initial program approach for the SPP Integrated
Marketplace project
- Provide an outline of potential milestones and next steps for MPs
- Encourage discussion and idea sharing am ongst MPs
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Introduction
The Energy Authority ( TEA)
- A stand-alone Risk Management and Energy Marketing
Company wholly owned by Public Power
- Vision – TEA will be the strategic partner of choice in providing
energy solutions to public power
- Mission – Maximize the value of member and partner assets in
wholesale energy markets
- Strategic partner to and staff extension of our members
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Introduction Our Mem bers
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Introduction
TEA - Mem bers
- TEA has 35 members nationwide
- Equity Members (7)
- Nebraska Public Power District (SPP)
- City Utilities of Springfield (SPP)
- JEA
- MEAG
- Santee Cooper
- Cowlitz, WA PUD
- Gainesville Regional Utilities
- Contract Members (28)
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Introduction
TEA - Active RTO/ I SO Custom ers
- MISO
- AMP
- City Water & Light, Springfield, Illinois
- City of Fulton, Missouri
- City of Rochester, Minnesota
- City of Columbia, Missouri
- Prairie States Generating Station
- Southern Minnesota Municipal Power Authority (SMMPA)
- University of Missouri
- SPP
- Nebraska Public Power District
- City of Springfield, Missouri
- City of Lafayette, Louisiana
- Louisiana Electric Power Agency (LEPA)
- PJM
- AMP
- City of Dover, Delaware
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
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Day 2 Market Lessons Learned
High Level Sum m ary
- Data - Data and information exchange requirements are significantly
greater under an RTO than the traditional market
- Com plexity – Dual clearing markets are much more complex due to
the multiple markets to operate within (DA & RT), more products to utilize, additional settlement charge types, and overall greater market risks from uncertainty
- Flexibility – Operational flexibility of resources is more often
rewarded in dual clearing markets
- Personnel– Roles and positions within the organization will change
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
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Day 2 Market Lessons Learned Operations
- From a strategic point of view, think of your generation and your
loads separately
- Generation resources are revenue producers – generation is sold to the
market
- Generating plant staff incentives changed from maximizing run time to optimized around
market prices
- Load is essentially a cost center – fully purchased from market
- System Operators will need to interact with & verify data more
frequently
- Review of data accuracy & timeliness is critical
- Assure data is properly entered into RTO systems
- Operational flexibility is rewarded
- RTO rules & charge types provide incentive to hand over as much control
as possible
- Knowledge of your system needs to be “translated” into data
submissions
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
14
Day 2 Market Lessons Learned Trading
- Hourly trading is virtually non-existent in an RTO market
- RTO market serves this role
- Physical bilateral transactions decrease
- Financial bilateral transactions increase
- Increased optimization of assets
- Day ahead vs. real time
- Fixed vs. price sensitive demand bids
- Transactions with liquid trading hubs
- Utilization of virtuals
- Analysis of trades to evaluate P&L
- Load & price (LMP) forecasting is beneficial
- Strategies to Offer Units to Market
- Recovery of start-up, no load, & energy costs
- Optimize around three markets – DA, RTBM, & RUC
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
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Day 2 Market Lessons Learned Tools & System s
- It is easy to underestimate the volume of data moving
between the utility and the RTO
- Significant increase in IT infrastructure needs
- Servers, data storage, bandwidth
- Interaction with SPP systems
- Consider what tools you will need
- Submitting data to the RTO
- Verifying data was received by the RTO
- Verifying unit offers meet market monitor limits
- Retrieving settlement statements
- Reconciling the settlement statements to your expectations (shadow
settlements)
- Well Defined Audit Trails
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Day 2 Market Lessons Learned Tools & System s
- Data, Data, Data
- Large increase in amount of data to be transferred, analyzed, and stored
- Granularity of data: five-minute, hourly, daily
- Budgets have to account for storage of this data
- Be cautious with use of spreadsheets
- The markets change frequently, requiring constant monitoring and
updating of software and processes
- Structured approach to software implementations
- Involvement of business users and technical staff key to understanding
impacts and implementing systems
- Vendor dependence increases
- Push vendors to communicate with RTO staff early for specification changes
- Seen as many as 8-12 software patches a year due to market changes,
commercial model changes, and software enhancements
- Plan for multiple environments – Production, QA, Testing, & Disaster Recovery
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
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Day 2 Market Lessons Learned Analytics
- Analytical tools & personnel will become integral to success
- More reporting requirements
- Forecasting ARR/ FTR LMP analysis (nodal tool)
- Historical FTR valuation models
- Yearly, Seasonal, Monthly, Other
- Forecasting & Historical reporting of daily/ hourly LMPs
- Position Reports
- FTRs, Day Ahead, Real Time, Financial Schedules, Physical Schedules
- Data Warehouse Reports
- Results Reports – Evaluate strategy effectiveness
- Documentation requirements and their impact on tools/ systems
increase (registration, resource adequacy, GADs, ARR/ FTR allocations, FTR auctions)
- Risk management studies should take into account increased
uncertainty, multiple markets, congestion, & alternative strategies
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
21
Day 2 Market Lessons Learned Settlem ent & Credit
- Dual clearing markets introduce a level of complexity not seen in
bilateral or Real Time Balancing Markets (RTBM)
- MISO - 56 charge types
- SPP - 53 proposed charge types vs. current 5 EIS charge types
- RTBM will be settled on a 5 minute basis (12x the amount of data)
- This complexity brings with it a number of vital questions
- Were your decisions profitable?
- What data should you be analyzing?
- What could you have done better?
- Transfer of data to general ledger/ accounting systems
- FERC Order 668 requires public utilities to record RTO market
transactions on a system net by hour basis
- Credit requirements & complexity increase given:
- Number of product types (Virtuals, DA/ RT Bids, FTRs)
- FTRs may require completely separate and fully secured credit line.
- Financial market exposure will increase credit requirements for MPs
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Day 2 Market Lessons Learned Settlem ent & Credit
Settlement & Resettlement Statements
Aggregated Line Items
Charge type calculations
Billing Determinants
Weekly Invoices
Your weekly financial obligation to the market
Entry level analysis
Invoices – “Tip of the Iceberg” Which level of data should you analyze?
Intermediate analysis Advanced analysis
- Incorrectly calculated market
charges can be recovered through Settlement Disputes
- An effective feedback loop
“from bill to bid” is necessary to maximize revenue and/or minimize costs
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
24
Day 2 Market Lessons Learned Personnel
- Cannot stress enough – demands on staff will increase
- Don’t under estimate this impact
- Operations/ Trading
- Increased workload for Day Ahead activities
- Physical trading as it currently exists will likely decrease
- Financial trading will likely increase
- Hourly trading decreases with focus towards communication with RTO
- Plant Operations
- Shift incentives from maximizing run time to optimizing around market
prices
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Day 2 Market Lessons Learned Personnel
- Analytical Staff
- Analyst to evaluate market results
- Analyzing FTR requirements and auction submittals
- IT Staff
- Developer
- Software/ Change Management (PM/ BA Roles)
- Settlement
- Significant increase in workload with start of MISO
- More com plexity = increased need for inter-departm ental
interaction
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Day 2 Market Lessons Learned Sum m ary
- Data - Cannot stress enough the volume and importance of data in a
dual clearing market
- Complexity – Multiple markets, increased market products, increased
risk, all load and all generation exposed to the market
- Flexibility – The RTO rules are structured to encourage turning over
control to the market operators
- Personnel – Roles & positions will change, workload will shift
- Other considerations
- Participation in SPP working groups, task forces, etc. is critical to stay
current on market changes
- Financial products can cause concerns among governing bodies
- Some entities may require regulatory approval in advance of trading financial
schedules, TCRs, and virtuals
- Software systems
- Submissions, forecasting, reporting, strategy analysis, settling, etc.
- Build vs. Buy
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
28
Program Approach
Q: W hat do w e need to do in 2 0 1 1 to prepare for the I ntegrated Marketplace project? A: Create “core” assessm ent team
- Created an initial “core” team to identify impacts & develop approach
- Representatives included the following departments/ roles:
- Project Management
- Market
- Generation
- Settlements
- Analytics
- Setup monthly team meetings to develop materials
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Program Approach
Q: W hat do w e need to do in 2 0 1 1 to prepare for the I ntegrated Marketplace project? A: I dentify 2 0 1 1 deliverables Utilizing known SPP deadlines, prior experience, and project management best practices, we determined our outcomes should be:
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
31
Program Approach Project Fram ework
Q: W hat is im pacted by this project? A: High level im pact assessm ent for each w orkstream
- Needed to answer the following questions:
- What systems & processes are currently in place?
- How will these change for the IM?
- What systems & processes will we need?
- Should we build or buy?
- Who is the “expert” on each system & process?
- Are there other impacts that fall outside SPP workstreams?
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Program Approach Project Fram ework
Q: Given this assessm ent, how should w e organize our project and personnel? A: Define project fram ew ork
- Align with SPP program structure where possible
- Workstreams / Towers / Reporting
- Some changes based on our organizational structure
- Assign “standard” project roles where possible:
Executive Sponsor Technical/ Business Architect Program Director Business SME Program Manager Technical SME Project Manager
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Program Approach
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Program Approach Project Fram ework
Q: How w ill w e ensure effective com m unication? A: Define com m unication plan
- Define internal status reporting & escalation process
- Define stakeholders and the necessary level/ frequency of status
reporting
- Board of Directors
- Executive Leadership
- Departmental Managers
- Regulatory Bodies
- Program Team
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Program Approach
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Program Approach Project Fram ework
A: Define Com m unication Plan ( Cont.)
- Define external status reporting & escalation process
- To be discussed at June CWG meeting
- Necessity of MP/ SPP workstream status meetings
- Document communication matrix
- Create centralized location for information sharing (i.e. SharePoint)
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Program Approach Project Fram ework
Sum m ary & Key Takeaw ays
- Define your outcomes
- Assess systems & processes
- Consider your own organizational structure & stakeholders
- Promote standardized status reporting across the project
- Clearly define communication & escalation paths
- The same person may fulfill multiple “roles” within the project
- Utilize SPP provided planning materials & timelines
- Just like any other project – only bigger
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
39
Program Approach Kickoff Meeting
Q: W hat should w e com m unicate to our entire organization about the I ntegrated Marketplace project? A: Define Kickoff Presentation
- Project Definition ( W hat?)
- Project Impact ( W hy?)
- Roles & Responsibilities ( W ho?)
- Timeline/ Milestones ( W hen?)
- Project Framework ( How ?)
- Assumptions
- Goals/ Success Factors
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Program Approach Kickoff Meeting
Q: How do I obtain the inform ation necessary for a Kickoff Presentation? A: Refine I nitial I m pact Assessm ent
- Roles & Responsibilities
- Include all system/ process SMEs, not just workstream leads
- Consider your organizational management structure
- Timeline/ Milestones
- Develop milestones for each workstream
- Begin with SPP milestones and work backwards – incorporate the five
standard project phases
- Understand the impacts “build vs. buy” decisions will have on your
timeline
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Program Approach Kickoff Meeting
Q: How do I obtain the inform ation necessary for a Kickoff Presentation? A: Refine I nitial I m pact Assessm ent ( Cont.)
- Assumptions
- Document the assumptions you are making
- Goals
- Develop goals that define project success
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
43
Program Approach Budgetary Im pacts
Q: W hat w ill be the budgetary im pacts for our
- rganization?
A: I dentify Budgetary I m pacts
- Consider both time and capital expenditures
- Build vs. Buy decisions
- Meet with Workstream Leads and System SMEs as necessary to
capture requisite level of detail
- Include technical staff in discussions
- 2012 budgets need to be well defined by Fall 2011
- 2013-2014 budget numbers will not be fully defined until Spring ‘12
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Program Approach Budgetary Im pacts
A: I dentify Budget I m pacts ( 2 0 1 2 )
- Personnel
- Planning Activities
- Organizational Group Attendance
- System(s) Setup
- New QA (Test) Environment for Market Trials
- Servers
- Storage
- Business Software Licensing
- Markets
- Operations
- Settlement
- TCR
- Project Communication System
- Working Group Travel
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Program Approach Budgetary Im pacts
A: I dentify Budget I m pacts ( 2 0 1 3 -1 4 )
- Personnel
- Execution / Internal Development
- Review & Testing
- Organizational Group Attendance
- Training
- New Production Environment
- Servers
- Storage
- Business Software Licensing
- Markets
- Operations
- Settlement
- TCR
- Working Group Travel
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
47
Detailed Analysis
Q: W hat do w e need to evaluate further in order to develop detailed project plans? A: Define outstanding questions/ Refine im pact assessm ent General
- System & process gap analysis – What will we build vs. buy?
- What is the work effort involved in every aspect of this project?
- What are the expectations of our internal and external customers?
- Who are the internal stakeholders who need to be educated about
IM? How do we educate them?
- How will existing positions and roles change? Will new positions be
created?
- How will grandfathered agreements be handled? ARR/ TCR Impact?
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Detailed Analysis
A: Define outstanding questions/ Refine im pact assessm ent CBA W orkstream
- What is the timeline for operation?
- What will be the roles & responsibilities of existing LBAs?
Regulatory, Tariff & Contracts W orkstream
- Changes to SPP Tariff?
- Changes to NPPD Tariff?
- Impact of demand response on legacy load control systems
- Contractual changes required for entities:
- Inside BA but not in SPP market
- Outside SPP market
- What are the registration and regulatory deadlines we need to meet?
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Detailed Analysis
A: Define outstanding questions/ Refine im pact assessm ent Markets W orkstream
- Existing system updates vs. purchase of new systems
Registration W orkstream
- What are the various registration deadlines? ARRs, assets, etc.
Business I ntelligence W orkstream
- What data will reside in the SPP “data warehouse”?
- How will this impact our IT decisions?
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Detailed Analysis
A: Define outstanding questions/ Refine im pact assessm ent Settlem ent & Financial
- Do we need regulatory approval to trade “new” financial products?
- How will checkout & settlement processes change?
- What are the credit impacts to our organization?
TCR
- What products exist for the evaluation of ARR/ TCR markets?
- How can we begin to evaluate and prepare for mock TCR auctions?
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
52
Next Steps
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Sum m ary
I n 2 0 w ords or less…
- Data
- Complexity
- Flexibility
- Structured Approach
- Communication
- System Impacts
- Personnel Impacts
- Defined Requirements
- Engage in SPP Meetings
- Start Now!
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Agenda
- Introduction
- Day 2 Market Lessons Learned
- Operations
- Trading
- Tools & Systems
- Analytics
- Settlement & Credit
- Personnel
- SPP Integrated Marketplace – Member Program Approach
- Project Framework
- Kickoff Meeting
- Budgetary Impacts
- Detailed Analysis
- Next Steps
- Questions
55
Questions
56
Supporting Docum entation
The following slides contain supporting documentation and are not a part
- f the 6/ 22 Presentation
Majority of the supporting documentation came from SPP/ Accenture
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Detailed “Next Steps”
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SPP Program Organization
SPP I M Program Managem ent Approach presentation ( 5 / 2 5 / 2 0 1 1 ) - Slide 3
59
Program Approach SPP Program Escalation Routes
SPP I M Program Managem ent Approach presentation ( 5 / 2 5 / 2 0 1 1 ) - Slide 5
60
SPP Im plem entation Tim eline
SPP I M Program Managem ent Approach presentation ( 5 / 2 5 / 2 0 1 1 ) - Slide 8
61
SPP Phase Activities
SPP I M Program Managem ent Approach presentation ( 5 / 2 5 / 2 0 1 1 ) - Slide 1 0
62
SPP Mem ber Entry/ Exit Criteria
SPP I M Program Managem ent Approach presentation ( 5 / 2 5 / 2 0 1 1 ) - Slide 1 1
63
SPP Risk Managem ent
SPP I M Program Managem ent Approach presentation ( 5 / 2 5 / 2 0 1 1 ) - Slide 1 3
64
SPP Workstream Org. Model
SPP/ Accenture Provided - Unknow n Presentation
65
SPP Weekly Meeting Cadence
SPP/ Accenture Provided - Unknow n Presentation