A.T. Kearney perspectives

Managing capital projects in times of scarce financing, high cost volatility, and limited technical capabilities in a global economy is proving to be increasingly difficult. Both project owners and contractors are finding it very challenging to manage risks, keeping projects compliant with demanding budgets, technical requirements, and schedules.

Volatility in commodities prices and availability, together with the current lack of skilled labor, requires a proactive approach to maintain costs within budget and make sure that scarce resources are utilized efficiently.

Moreover, as the demand for capital investments becomes more global, specific approaches are required to address the threats of new and more complex supply chains and to leverage the opportunities from low-cost providers.

Excellence in Capital Projects Management

In our experience, the best performers among the companies we have analyzed and consulted for stress the following themes:

• Alignment with strategic objectives: Projects are screened at the highest level of the organizations to ensure that all possible options are analyzed from a total-lifecycle perspective—leveraging available capabilities (financial, technological and personnel-related)—before approving the investment
• Anticipation and proactive management of risks: Organizations are structured to anticipate the right supply chain and subcontractors for a portfolio of projects, incorporating an understanding of the threats and opportunities of the supply markets in the early stages of design. Processes enable swift identification and correction of potential non-compliance with performance, cost or schedule requirements. Tools zero in on the right information to effectively manage risks
• Industrialization: Rational and reusable designs replace tailored approaches, in a trend driven by the rationalization of specifications, the standardization of components, and a quest for design commonality across projects. Leaders also put systems in place to secure talent development and the optimal utilization of scarce resources and capabilities by promoting continuous learning
• Operational integration: Functional silos evolve towards more integrated ways of working, aligning the views of design, procurement, logistics, construction, assembly, commissioning, maintenance, and operations across the project lifecycle
• Sustainability: A focus on regulatory compliance gives way to using sustainability as a differentiating competitive factor