Headline-grabbing cost and schedule overruns of mega capital projects have become the norm, but do not have to be. The right mix of practical tools, clear and proactive communication and structured coaching enable organisations to make effective capital investment decisions while designing and managing efficient projects that finish on time and under budget, whether mega in scale or site-based sustaining capital projects.
Aligning strategic portfolio management and capital allocation
Achieving collaborative contracting
Leveraging digital tools and hybrid/remote solutions
Factoring renewables into upcoming capital projects
At the outset of the pandemic, many organisations suspended a large share of capital projects.
Due to necessity, it was imperative to review their capital budget, mapping and prioritising upcoming projects and identifying projects to be considered for revision or right-sizing.
Understandably, when money is tight, the easy answer is often to stop these projects. However, this affects future operations and often reduces productivity when demand and production ramp back up. Organisations need to understand how current economic pressure affects available capital, dictating how much planned spend needs to decrease.
A typical client challenge is the homogenous treatment of all projects in a portfolio.
Substantial capital effectiveness can be achieved by categorising projects based on their scale and complexity and applying tailored and adaptive investment decision processes. Our approach not only enables clients to achieve better outcomes for the same capital spend, and/or optimise their spend while not compromising outcomes, but also speeds up the time to market and time to benefits.
We work with our client partners to increase investment returns through full classification, transparency and control of the project portfolio, active optimisation of capital allocation to meet corporate goals, aligned with budgeting processes, adaptive stage-gate process for project development with appropriate assurance and governance standards and a single source of truth for all users with convenient progress-tracking reports across growth and sustaining capital.
Owners believe that contracts effectively transfer project risks to contractors. This is a dangerous mindset – risk can never truly be transferred to contracted partners; it always remains with the owner.
Most contracts work against the fundamental requirements for high performance as they fail to align, motivate or adequately resource teams. To protect owners and deliver successful projects, the barriers to achieving partnership and high productivity must be understood and addressed.
Without alignment, decisions made by default, rather than through mutual problem-solving, often benefit one at the expense of another. Rarely do teams understand how their performance impacts the ability of other teams on their critical path to deliver on time and, hence, the overall project.
We know collaborative and performance-based contracts reduced project uncertainty, actual costs by ~4% and time to completion by ~1%. We help our clients develop performance-based contracts that promote the right behaviour, where contractors are rewarded through demonstrating productivity improvement and realised (not forecasted) risk reduction.
Our view is that every project can be successful if it is fully and truly collaborative, and we craft contracting strategies and incentives design to ensure this is met.
The sudden and necessary adoption of remote work has, in many cases, shown surprising benefits and demonstrated the power of digital. Rather than reverting to the ‘old normal’, companies should identify what works well and institutionalise these practices to lock-in benefits.
Moving forward, parts of capital projects will continue to be run remotely, with the aid of digital visualisation tools. Expect evolving improvements on remote project controls tied with digital capabilities. We expect that as hybrid solutions become commonplace and reduce the need for travel, long-standing barriers will be removed for a new norm of experts from all over the world working temporarily on a capital project.
As this momentum gathers, clients tell us they are already being bombarded with new digital solutions that promise to revolutionise the way projects work. While this is a positive step in some ways, potential clients have expressed to us a lack of simple tools in the marketplace that unlock frontline performance and shed light on actual construction progress.
Our method to address this challenge relies on focused and results-based digital interventions, and a tested set of digital tools to improve frontline productivity, reduce supervisor administrative time and increase the visibility of performance in real time for project teams to make fact-based and timely decisions. We enable the returns on digital investment by helping our clients make the cultural shifts, build capabilities and develop 'fit for purpose' processes.
Project optimisation challenges within Capital are a great opportunity for organisations today to consider energy usage and carbon emissions.
By understanding your expected energy and emissions profile, you can begin to factor in how to modify patterns and improve your project financials. We expect to see far greater momentum in this direction across capital-intensive sectors, with deeper evaluations on carbon print and renewable energy projects.
With lifetime costs of renewable hybrids now lower than fossil fuels, many organisations are seizing this opportunity and actively building renewables into their capital project design to lower operating and capital costs.
We believe that incorporating newer technologies and considering your energy requirements early leads to greater flexibility down the line, which can result in a significant reduction in carbon footprint and energy costs while increasing overall project returns.
Innovation within renewable energy is accelerating at such a pace that it makes sense to widen your options now rather than follow a traditional approach.
‟Infrastructure is changing. Project team owners are demanding technologically smart assets with a smaller carbon footprint. The projects that thrive in this environment utilise technology to track real-time performance, understand the behavioural dynamics of contracting and focus on frontline productivity.”
Director, Head of Europe
We help our clients respond to these business challenges to deliver shorter schedules, lower costs and provide better clarity for large infrastructure projects and portfolios. Our people are former industry professionals and exceptional problem-solvers and consulting teams who all have prior engineering and construction experience.
Our track record includes a substantial number of diverse mega-projects around the world that we have helped to either plan or recover their projects through our focus on developing a series of approaches and digital tools that build high-performing project teams. This approach allows us to partner with clients to create a collaboration that helps us to define specific goals for success.
value identification in less than 4 weeks
capital effectiveness at portfolio level in 6-8 weeks
cost saving and 100%+ productivity improvements on capital projects
Australia and New Zealand
‟The engineering and construction sector’s productivity lags behind the total economy and is currently contributing more than a third of all carbon emissions in the world. My goal is to help clients capture better value from their capital investments while working towards achieving net-zero carbon emissions.”