A simple guide to capital project management for organizations that will only ever build one facility
Not every capital project is undertaken by an experienced cadre of professionals working in an organization that was designed to execute challenging, multifaceted construction projects. It’s not uncommon for companies to be formed around a single project — a pop-up capital construction team, if you will.
This happens, for example, when a company develops new technology and needs to build a facility in which they can put the technology to work. As an owner company, they need to deliver a capital project, but they don’t have the capability in-house.
At the outset, these organizations are usually resource-constrained and unwilling (or unable) to invest in good project management. As a result we see very lean, inexperienced internal management teams overseeing a patchwork of contracted support — project conditions that are all but certain to lead to cost overruns and delays.
How can these pop-up capital construction teams succeed with projects that far more experienced and integrated organizations might find challenging? What can they do to mitigate known risks and overcome the odds? Here are five tips for those embarking on a one-off capital project.
1. Focus on mission-critical project elements.
When you have a very small team, your most important asset is management. Specifically, small team managers need to be religious about executing around priorities. If your most important objective is to get funding in place, for example, then anything that will get you there is mission-critical. Scoping, technology selection, intellectual property work and the predictability of your project delivery system all become mission-critical. Focus on these things first.
2. Invest in the project definition.
Money spent on good definition is money well-spent. Any investment in project definition will typically pay for itself many times over by helping you better understand your business case and thereby reducing risk. Obviously, there is a trade-off. You can’t invest everything in definition, but you must establish a clear and reliable idea of your scope, project cost and deadlines. These form the foundation of your project execution strategy, which is the centrepiece of your efforts to get your project built on-time and on-budget.
In short: You’re asking for trouble if you cut back on project definition to save money. Equip your organization with experienced advisors who specialize in capital project predictability, and you’ll avoid common pitfalls like these.
3. Insist on the A-Team.
The hard reality is that the best EPC companies want to do business with companies that will come back for their services again and again. These “sustaining companies” will almost always get access to the A-Team, while one-off projects too often end up with the B-Team. Here’s what it boils down to: Don’t rely on your EPC negotiation for due diligence. Your due diligence needs to happen independently of your negotiations with the EPC company. Insist on the best.
4. Double up on management.
When you’re putting together your foundational team, hire two experts: A Project Engineering Manager and a Project Execution Manager. Many companies incorrectly assume that engineers are trained in capital project execution, and they are not. If you’re serious about delivering your project in a predictable manner, hire not only a lead process engineer but also an experienced execution manager. The execution manager will orchestrate the contractors and the building schedule, develop a risk register, analyze costs and negotiate with EPC companies. This liberates your engineer to focus on process optimization, site conditions, technology selection and other mission-critical engineering work.
5. Hire support staff.
If you want your capital project to succeed, you must hire qualified support staff. Research, scheduling and technical writing all take a great deal of time. If you want your engineer and execution manager focused on mission-critical work, you need to provide a support team to manage clerical and administrative tasks.
These five tips are just the beginning of a cohesive capital project execution strategy, but we’ve touched on the areas were we most commonly see problems. With these strategies and the help of an experienced and competent project execution manager, most one-off projects will be on the road to success.
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