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Volume 5 of 28 Index Page 1 of 1 Southwest Gas Corporation Volume 5 of 28 Index Page 1 of 1 Description Page No. Prepared Direct Testimony of Jose L. Esparza Jr. 1 Tab 10 1 IN THE MATTER OF SOUTHWEST GAS CORPORATION DOCKET NO. 20-02___ PREPARED DIRECT TESTIMONY OF JOSE L ESPARZA JR. ON BEHALF OF SOUTHWEST GAS CORPORATION FEBRUARY 26, 2020 2 Table of Contents Prepared Direct Testimony of Jose L Esparza Jr. Description____________ Page No. I. INTRODUCTION ..................................................................................................... 1 II. PROJECT GOVERNANCE AND OVERSIGHT ....................................................... 3 III. SOFTWARE PROJECTS PREVIOUSLY DISALLOWED IN DOCKET NO. 18- 05031. ...................................................................................................................... 6 IV. THE SOFTWARE PROJECTS/PURCHASES IN EXCESS OF $1 MILLION THAT CLOSED TO PLANT SINCE THE CERTIFICATION PERIOD IN THE COMPANY’S LAST GENERAL RATE CASE. .............................................................................. 13 Appendix A – Summary of Qualifications of Jose L Esparza Jr. Exhibit No.___(JLE-1) Exhibit No.___(JLE-2) Exhibit No.___(JLE-3) Exhibit No.___(JLE-4) Exhibit No.___(JLE-5) Exhibit No.___(JLE-6) Exhibit No.___(JLE-7) Exhibit No.___(JLE-8) Exhibit No.___(JLE-9) Exhibit No.___(JLE-10) Exhibit No.___(JLE-11) Exhibit No.___(JLE-12) 3 1 Southwest Gas Corporation Docket No. 20-02___ 2 3 BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA 4 Prepared Direct Testimony of 5 Jose L Esparza Jr 6 I. INTRODUCTION 7 Q. 1 Please state your name and business address. 8 A. 1 My name is Jose L Esparza Jr. My business address is 5241 Spring Mountain 9 Road, Las Vegas, Nevada 89150. 10 Q. 2 By whom and in what capacity are you employed? 11 A. 2 I am employed by Southwest Gas Corporation (Southwest Gas or Company) and 12 oversee the Company’s Information Services (IS) and Customer Engagement 13 function. My title is Senior Vice President Information Services and Customer 14 Engagement. 15 Q. 3 Please summarize your educational background and relevant business 16 experience. 17 A. 3 My educational background and relevant business experience are summarized in 18 Appendix A to this testimony. 19 Q. 4 Have you previously testified before any regulatory commission? 20 A. 4 No. 21 Q. 5 What is the purpose of your prepared direct testimony in this proceeding? 22 A. 5 To provide an overview of the project governance and oversight for approved 23 enterprise technology-related capital projects that are included in the Company’s 24 revenue requirement including to provide testimony supporting the 25 reasonableness and prudence of the software projects previously disallowed for 26 1 27 4 1 recovery in Docket No. 18-05031 and software projects/purchases that are in 2 excess of $1 million that have closed to plant in service since the certification 3 period in the Company’s last general rate case (GRC). 4 Q. 6 Please summarize your prepared direct testimony. 5 A. 6 My prepared direct testimony consists of the following key issues: 6 Provide an overview of the project governance and oversight for all technology- 7 related capital projects. 8 The reasonableness and prudence of the previously disallowed software 9 projects. 10 The reasonableness and prudence of six software projects/purchases that 11 have closed to plant in service since the certification period in the Company’s 12 last GRC. 13 Q. 7 Please describe why you are the person most knowledgeable about the 14 matters that are presented in your testimony. 15 A. 7 I am currently responsible for the Company’s IS function as well as the Enterprise 16 Project Management Office (EPMO), and as such I am familiar with the EPMO 17 functions and the IS capital projects presented for cost recovery in this case. In 18 addition to being the Senior Officer over IS and the EPMO, in my prior positions 19 as Director and Vice President I have served in numerous project management 20 governance leadership roles to ensure projects are managed properly and 21 delivered within the time frames and budget outlined in their project 22 documentation. 23 . 24 . 25 . 26 2 27 5 1 II. PROJECT GOVERNANCE AND OVERSIGHT 2 Q. 8 Please describe the project governance structure and oversight process at 3 Southwest Gas for technology-related capital projects. 4 A. 8 Southwest Gas maintains an EPMO to support technology-related capital 5 projects, a Portfolio Review Board (PRB) and Portfolio Advisory Council (PAC) to 6 centralize the governance of processes, tools, and resources to maximize the 7 business value of these capital projects. Southwest Gas also maintains a staff of 8 dedicated business analysts and project managers, and has developed project 9 management frameworks and processes to support each project. The Company 10 promotes Project Management Professional (PMP) certifications for EPMO 11 employees and consultants with the title of Project Manager in order to validate 12 the core competencies of those managing some of the company’s largest 13 initiatives. 14 The EPMO is founded on standards and practices from the Project 15 Management Institute (PMI) as a basis for its project governance. PMI is globally 16 recognized as a non-profit organization that creates the standards for project and 17 portfolio management practices that are written in the Project Management Book 18 of Knowledge (PMBOK), used to certify project management professionals. The 19 PMBOK provides guidance on project governance and includes specified criteria 20 to determine the appropriate project organizational structure. 21 Some other notable features associated with the Company’s EPMO project 22 management include: 23 o Each project is sponsored by a Company executive and typically 24 maintains a governance structure consisting of a Steering Committee, 25 Oversight Committee, a dedicated project manager from the EPMO, and 26 3 27 6 1 a project team. 2 o Each project will undertake a planning phase for purposes of identifying 3 the key objectives, governance structure with associated stakeholders, 4 scope, budget, duration, staffing decisions including system implementor 5 selection (if applicable) and need to hire other potential contractors, and 6 the identification of all project deliverables through project completion. 7 o Each project follows standard Southwest Gas procurement guidelines in 8 the evaluation and selection of the system implementation partner and 9 platform solution. 10 Q. 9 Please further describe the PRB and the PAC? 11 A. 9 The PRB is a resource to help improve and standardize policies, practices, and 12 tools to facilitate project portfolio management for significant capital and O&M 13 projects meeting the specified criteria for review. The PRB is a committee 14 consisting of director level company stakeholders that play an essential role in the 15 proposal review, capacity planning and tracking of enterprise portfolio projects. 16 The PRB serves the PAC as a technical resource to the council specifically 17 to provide recommendations on the initiation, planning, and maintenance of the 18 project portfolio. PRB members are the “Gate Keepers” of proposed projects for 19 the portfolio and their responsibilities include: 20 screening preliminary project proposals and documentation 21 ensuring consistent project prioritization and ranking assessment 22 monitoring project portfolio status 23 validating portfolio reporting information 24 proposing recommendations to the PAC for improved portfolio 25 management processes, procedures, and tools. 26 4 27 7 1 The PRB convenes periodically to assess project proposals, monitor the 2 status of active projects to support the company’s financial investments, and 3 review resource capacity to determine timing to launch new projects and 4 initiatives. 5 The primary purpose of the PAC is to institute portfolio governance and 6 sustain it with disciplined oversight. To that end, the PAC builds and maintains a 7 portfolio based upon corporate strategies/initiatives, risk profile and capital 8 distribution as determined by senior management. In addition, the PAC brings 9 together influential company leaders in conversation with each other to explore 10 and evaluate the business rationale and justification for requested projects. The 11 PAC also evaluates project requests against Company objectives and promotes 12 innovations in project and portfolio management. The PAC has ultimate authority 13 to oversee the management of major capital projects. They promote decision 14 transparency, standardized policies, accountability, and buy-in. A copy of the 15 PRB and PAC charters are attached hereto as Exhibits Nos.__ (JLE-01) and (JLE- 16 02), respectively. 17 Q. 10 Does Southwest Gas use contractors for certain EPMO projects? 18 A. 10 Yes, it frequently uses contractors for resource flexibility based upon the need of 19 the project. As mentioned above, considerations for system implementors and 20 other supplemental contractors are typically identified in the planning phase of a 21 project. Enterprise Resource Planning (ERP) system projects generally require 22 specialized technical and functional skills. Many ERP implementations require 23 subject matter expertise in systems integration, business process, and software 24 configuration. In many instances those skills are not readily available locally and 25 may vary according to the solution selected for implementation. The amount of 26 5 27 8 1 time that a consultant works on a project depends on the consultant’s role,
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