An Assessment sets the stage for great results.
Engagements with new clients generally start with an Assessment.
The purpose of an assessment is threefold:
- Opportunity Matrix Review: An independent and expert review of the client’s E & S activities and progress to date and unexploited opportunities;
- What’s in the Way?: The identification of potential impediments to a successful E & S program; and
- Size of the Prize: An estimate of the client’s current total E & S expenditures and by how much these expenditures might be reduced over a three year period.
The results of our review of E & S activities undertaken to date are summarized in what we term the Opportunity Matrix. The color code in the matrix below indicates the current status for a hypothetical client.
The Opportunity Matrix provides a quick overview of progress to date, where there may be problems, and unexploited opportunity areas.
Energy Advantage has worked on E & S programs with many clients and, through this work, has gained an understanding of the different issues that can impede or even derail an E & S program. An important part of the Assessment involves reviewing E & S activities and interviewing key executive and operating people involved in these activities to try to identify which, if any, of these impediments might be present. Common What’s in the Way? Culprits are listed below:
- Lack of senior management commitment;
- Lack of proper program governance;
- Poor information management;
- Lack of effective change management;
- Lack of required E & S knowledge and expertise;
- Lack of necessary E & S tools; and
- Lack of capital.
Since any of the above impediments can seriously endanger the success of an E & S program, their removal becomes the first order of business should the client decide to proceed with a program implementation.
The estimation of the Size of the Prize for an E & S program implementation is critical (see diagram below). While individual E & S expense areas may not be material to the client’s business, the total of all relevant expenses often is. This is particularly the case because these expenses are generally much more controllable than other major expenses (eg., labor, taxes) and many E & S activities have positive spin-offs in terms of brand enhancement.
Most importantly, if the savings potential of an E & S program is deemed to be material in terms of the client’s profitability and enterprise market value then critical senior management commitment to the program is almost certainly assured.