Notes From the Inside: How to Audit NERC Compliance Consultants

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James Holler, Founder, Abidance Consulting

James Holler, Founder, Abidance Consulting

Every NERC registered entity eventually needs a consultant to assist them with their NERC Compliance programs, but not every registered entity is up to the task. When is it time to call for help? And how do you know which consultant is right for you?

As a NERC compliance consultant myself, I’ve seen the good, the bad and the ugly when it comes to some of my colleagues out there. I’ve also seen situations where an otherwise good consultant was simply the wrong fit for a client’s specific situation. My hope here is to help you learn from what I’ve observed over the years to help you first determine if you need a consultant, and then to pick the best one for you.

First, be honest with yourself and consider your skills. If you have a hard time defining what “annual” means or how to create and implement an Internal Compliance Program, then developing a full blown NERC Compliance program on your own may not be for you. Even if you consider yourself knowledgeable, and know the difference between a critical asset and a non-critical asset, you may be getting in over your head.

Time is another major consideration. Do you have enough free time to get the job done correctly? There is nothing worse than completing your NERC Compliance program only to find that all of your hard work was wrong when you are audited. If you are not confident you have the skill, the tools or the time you might need to call in a professional consultant. Finding the right person for your project is not as easy as grabbing the yellow pages and making a call; it takes some homework and reference checking.

There are contractors as well as professional consulting firms and then there is the “guy who has heard about NERC” and is now calling himself/herself a NERC Compliance expert. A contractor is someone who you can use for a quick one or two week project, but for the bigger projects that require the skills of a variety of people, you need a professional consulting firm. A contractor will handle all aspects of the small job — from scheduling his/her time to submitting timesheets and invoices to you. The registered entity will sign a contract with this contractor and make payments only to him/her. He/she will handle all the details of the job and will be the only person the registered entity deals with. Any concerns should be directed to him/her and he/she will hopefully do what is required.

When you have a full blown project that needs to be completed, it’s probably time to bring in the professional consulting firm. These firms will carry millions of dollars worth of liability insurance, have numerous staff members that each specialize in different areas and, in some cases, can take over your entire NERC Compliance program from you, thus allowing you to go back to producing power, etc. Professional consulting firms will have multiple services and products that are geared towards your compliance efforts. A professional consulting form will have account managers, project managers etc., so that at each step of your project you can be assured that your best interests are being considered.

You wouldn’t go to a podiatrist for a root canal, and you wouldn’t want to hire a roofer to hang your wall paper. You need to find the right consulting firm for your NERC Compliance project.

The best way to find someone is to ask other organizations like yours for a good recommendation. Don’t simply rely on the smooth talker who uses big words like “quantitative” and other nonsensical language that is meant to show you they know a big word. Having an ad in the back of the monthly magazine doesn’t equate to having any skills or ethics. Those ads are often inexpensive and easy to get.

If a reference or commendation isn’t available, take the time to interview a handful (2-3) of consulting firms and ask them for 5 to 7 references. You may also want to call the local Better Business Bureau to see if any complaints have been filed against any of them. Get bids from the ones you felt comfortable talking with and then go with your gut. Did they return your calls promptly? Did they show up on time for the meeting? Did they present well?

Another important tip: Always get “not to exceed” quotes from the consulting firms and don’t automatically jump on the lowest bid. The cheapest firm with one or two staff could be very skilled and knowledgeable and just right for the job. Then again, they could be uninsured and just looking for quick money before they move on to the next unsuspecting client. Once you do decide on a firm, ask others in your area or friends in the power industry if they have ever heard of the consulting firm(s) that you are considering.

Ask for proof of insurance up front when getting bids. There is both liability insurance and workman’s compensation insurance. Any excuse for not having the paperwork handy is a sign they are not insured. If a contractor gets injured at your site and breaks every bone in his body, and is not insured, you are liable and could end up paying the big medical bills.

Once you feel comfortable with a consulting firm, get everything written up in a contract. Make sure that the start and finish dates are clearly stated and all materials being used are listed in detail. This is where a good relationship can go bad. A “facility ratings methodology” is not the same as a “facility ratings methodology that has been audited against the standard.” Set all expectations in writing. Any changes discussed while the project is in progress should also be put in writing (this is called a change order).

Some consulting firms will want to be paid based on the time it takes to do the job and the materials/tools used. It is far too easy for the job to run long when paying by the hour. A better approach is to pay by the job or a “not-to-exceed”. And, never, under any circumstances, pay any amount up front. The best payment structure is to pay on Net 30 terms…unless the consulting firm offers you a 1% to 2% discount for paying early. Be sure this arrangement is clearly outlined in the contract.

When considering a NERC Compliance project, critique your own skill level, check your “tool box” and determine whether or not you have the free time to finish the project in a timely manner. You may find it to be a whole lot easier to hire a professional consulting firm and go back to doing your “real” job instead of doing it yourself.

James Holler is founder of Abidance Consulting.

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