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Bringing Partnership to Portfolio Management

With industrial companies often managing hundreds (and even thousands) of sites, their environmental managers increasingly manage many individual sites, keeping track of project status, site resources, numerous consultants, and various regulations. When managed disparately, environmental managers across different project sites can find it challenging to work toward a strategic goal. Viewing work only at the project or regional level can be an obstacle to realizing the benefits that come from managing environmental liability projects with a portfolio-level perspective. Portfolio management can help support big-picture strategies by forecasting and balancing risk, streamlining communication, enhancing resource utilization and continuity, and providing stakeholders a clearer picture of how individual projects are (or are not) contributing to and aligning with an organization’s strategic goals and objectives.

The shift from project management to portfolio management

Increasingly, environmental managers are adopting portfolio management for environmental liability sites. What are the drivers for this shift?

First, the regulated community is being asked to manage more liability sites with fewer environmental managers, creating more demand for outsourcing to consultants. Convergence contracting is not new to the environmental consulting industry, but expectations have evolved such that environmental managers are relying on consultants for more diverse services than ever before. Today’s environmental managers are responsible not only for compliance, due diligence support, assessment, and remediation efforts, but may also be asked to support enterprise-level efforts to break into new markets through regional real estate initiatives, provide stop-gap environmental, health, and safety (EHS) services as companies staff new facilities, or provide routine facility management services such as security oversight, energy and other utility optimizations, and facilities maintenance and landscaping.

Publicly traded companies are also facing pressure to address climate change as part of environmental liability management strategies. While incremental progress can be achieved at the project-level, companies have more opportunities to demonstrate alignment with enterprise-level objectives when sustainability goals are managed, measured, and reported at the portfolio-level. 

What constitutes a “portfolio” in the context of environmental management?

The term “portfolio” in architecture and engineering (A&E) typically has broad usage and implications. Portfolios of environmental sites can range from all liability sites associated with a company, to subgroups of sites organized according to a variety of factors, including:

  • Sites managed by the same environmental consultant
  • Sites within a defined geographic region
  • Sites with the same types of environmental releases (petroleum versus chlorinated sites) or similar operational legacy (refinery vs retail)
  • Sites within similar regulatory frameworks (states versus Resource Conservation Recovery Act [RCRA] versus Comprehensive Environmental Response, Compensation, and Liability Act [CERCLA]
  • Sites with similar end-state vision (remediation and resale versus long-term monitoring), or closure horizon

What are the benefits of managing environmental liability sites as a portfolio?

Portfolio management for environmental liability sites offers a way to strategically group interrelated projects and prioritize activities while creating efficiencies of scale. Portfolio management enables environmental managers to implement initiatives that support their organization’s overall strategies efficiently – both from a time and cost standpoint. Portfolio management can also help bring consistency to the way individual projects are managed thanks to technological tools and organizational processes that can be applied across efforts.

In addition to time and cost efficiency benefits, the shift from project management to portfolio management is tied to technological advances, as digital tools continue to leverage artificial intelligence and advanced analytics to assist environmental managers in managing increasingly complex networks of projects and stakeholders. Another benefit of portfolio management is the elevated business partnerships that arise from outsourcing in terms of increased engagement, mutual trust, and financial accountability.

Partnering for portfolio success

What can environmental managers expect from shifting to a portfolio management approach? Moving to a portfolio management structure allows environmental managers to:

  • Increase accountability. A portfolio management structure incentivizes consultants to serve in a business partner role as opposed to acting as a one-dimensional vendor. By broadening the scope of management expectations, environmental consultants engage with a heightened sense of accountability and are more likely to be able to “connect the dots” between sites, identifying efficiencies.

  • Leverage talent. The benefit to environmental managers is having more hands and more brainpower at the ready during critical junctures to compare notes, strength-test ideas, and innovate. Environmental managers who manage their sites as a portfolio invite input from their consultants with valuable experience in developing liability management strategies and remediating and closing a broad range of sites.

  • Streamline communication. Adopting a portfolio management approach may also allow environmental managers to reduce the number of consultant project managers with whom they work directly, which can streamline communications and create time efficiencies.

  • Optimize spend. A key benefit of portfolio management is an expanded field of vision that allows for an overall reduction in cost to close sites. Training a dedicated set of personnel on safety and performance expectations to reduce challenges associated with turnover, sharing equipment across sites, and integrating lessons learned from one site at similar sites are all examples of ways to economize costs across a portfolio.

  • Achieve regulatory closure. A portfolio management approach can help environmental managers close sites by ranking sites by risk level/complexity and setting pre-defined closure dates that teams can work toward. As closure dates are tied to reserve estimates and tracked annually, an effective portfolio management strategy involves routinely reevaluating proposed closure strategies and timelines with the following types of questions in mind:
    • Are sites achieving regulatory closure when expected? If not, what is the root cause of not achieving closure? Which factors can be managed to get back on track?
    • Which sites have strategic resale value and should be prioritized to achieve regulatory closure sooner?
    • Can a portion of the site be administratively closed? If so, what is the benefit to the enterprise?

  • Use technology as an enabler. The environmental industry has benefited from technological improvements year over year, whether from new characterization tools, new microbiological characterization tools, or novel injectants. Deploying new technology is paramount to achieving closure more efficiently. In relation to technology, a portfolio management mindset creates opportunities for long-term cost savings, such as purchasing large capital investment equipment instead of leasing, pilot testing technologies that can benefit multiple sites, and engaging with subject matter experts at universities to understand emerging technical approaches that may apply to more than one site.

  • Enhance data management. Portfolio data management leverages functionalities like automation, including streamlining reports and graphics, standardizing data validation, and even screening sites for emerging contaminants.

What are the downsides of portfolio management for environmental sites?

While there are potential cost-savings and other benefits to adopting a portfolio management strategy, there can be pitfalls, including:
  • Treating environmental sites as fungible properties rather than unique sites may detract focus from regulatory idiosyncrasies; distinct site complexities related to geology, hydrogeology, and chemistry; risk and liability components; and potential external stakeholder pressures. These elements can be “the limiting factors” or obstacles to achieving environmental closure and should be carefully evaluated from a management strategy.
  • Bundling sites within a portfolio based on only one factor such as “long-term monitoring sites” can limit the cost efficiencies associated with utilizing local contractors or subject matter experts who may be well-suited to ultimately achieving environmental closure based on their technical or regulatory expertise.
  • Having fewer project managers involved, or fewer project managers dedicated to just one or two projects, could lead to a loss of historical site knowledge or in-depth project experience. 

Interested in more?

Trihydro’s portfolio management experts have helped clients evaluate the potential benefits of portfolio management practices within the petroleum, waste management, and industrial sectors through our customized software solutions, business-focused mindset, and dedication to building long-term, trust-based relationships with our clients. Contact us today to discuss creating a portfolio management approach. 

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Allison Riffel
Allison Riffel, PE
Engineering Specialist, Golden, CO

Allison is a professional engineer with over 20 years of experience in site assessment, remediation, regulatory compliance and permitting. She specializes in remediation of chlorinated solvents, petroleum, and PCBs under RCRA, TSCA, CERCLA, and state voluntary cleanup programs with regulatory expertise in 11 states.

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