What Is Predictability In Capital Projects?

Understanding what it means to be predictable is the first step to achieving on-time, on-budget capital projects. Here’s why

What is predictability, and what does it mean to be predictable in the context of a capital project? Predictability means understanding the capital project execution process well enough to develop a fact-based, accurate and reliable forecast of project outcomes. Predictability is essential in all aspects of a capital project execution, including safety, cost, schedule, and operability. It is the foundation of a successful capital project.

 

How To Measure Capital Project Predictability

How do you know if you’re achieving predictable project delivery? Fundamentally, we measure predictability by comparing forecasted outcomes to actual outcomes. For example, if you predicted nine months of construction, and construction was complete in 9.2 months, you can say: “My construction phase was relatively predictable.” If you predicted that detailed engineering would take four months, and it took seven months, you can say: “My detailed engineering phase was not predictable.”

It is important to note here that we do not measure predictability by only looking at the overall project duration. If you forecast that a project will take 19 months from concept to hand-off, and you beat the odds and meet this target, you’ve technically achieved predictability but you have no meaningful insight into why or how. Most important, you’re no closer to defining repeatable, predictable processes for your capital project organization. This is why Predictability Thinking™ is exponentially more powerful when applied at a granular level. 

We measure predictability by comparing forecasted outcomes to actual outcomes.

Ultimately, predictability is about identifying the precise time and place when your forecast fails and then adjusting either the implementation or the forecast itself. For example, you may have a project where engineering and procurement are achieved on-time and on-budget, but then construction is late.

Predictability Thinking™ gives you a robust framework for understanding why construction is late. It could be because the construction teams are under-resourced or poorly managed. But it may also be because engineering released deliverables based on building systems instead of a Path of Construction, doubling or tripling the amount of time it took workface planners to build Installation Work Packages that make sense in the field.

Understanding precisely when and where your forecast breaks down will give you the power to track, trace, and resolve execution problems at the source. In this case, the engineering team delivered on time but was ultimately responsible for the delays. Would your current system of oversight reveal this problem? Or would construction get blamed for the delay?

The Process of Predicting

Predictability is about the process of predicting. You must have a comprehensive understanding of your project execution process, reliable metrics, and an in-depth knowledge of key project deliverables. The act of forecasting project outcomes is the first and most crucial step in predictability-driven capital project management. Your forecast will be with you throughout the project, a touchstone against which you measure everything you do.

Predictability means understanding the capital project execution process well enough to develop a fact-based, accurate and reliable forecast of project outcomes.

That said, predictability isn’t just about the process of predicting and execution metrics; it’s also about culture. An organizational culture that does not prioritize predictability suffers because team members can’t trust each other. For example, procurement updates are not taken at face value because nobody believes they’re accurate. This culture bleeds into contractual relationships as well, as partners don’t expect or rely on predictable payments and fail to deliver in a predictable fashion. 

 

Prerequisites To Predictability In A Capital Project Organization

Here at Concord, we have established four crucial prerequisites for achieving predictable project outcomes. Wherever you are in your journey to predictable project delivery, you can begin to work on these fundamentals.  

1 | A Predictable Work Breakdown Structure (WBS)

An essential prerequisite for achieving predictable projects is the existence of a predictable Work Breakdown Structure (WBS) that connects engineering, procurement, and construction scopes and teams. This WBS provides a basic skeleton for the entire project and facilitates the kind of tracking and tracing we discussed earlier in this article. Without a WBS that allows you to figure out where and why forecasts break down, you have no assurance of achieving predictability. 

2 | A Culture and Framework of Transparency

Predictability is based on transparency. From your hiring process and contracting strategy to your WBS and your assurance processes, you must strive to develop a culture of openness and a formal management framework that supports transparency. Information hoarding, boundaries, and lack of trust between and among teams will undermine all of your efforts to achieve predictability. 

3 | A Commitment To Data-Driven Improvement

How frequently do you look at your project benchmarks? How often do you evaluate your project progress against those benchmarks? Capital project leaders who want to achieve predictability must establish regular, robust benchmarking campaigns. Get obsessed with data. 

4 | A Leadership That Values Predictability

Unfortunately, many traditional project delivery models unwittingly incentivize unpredictable behavior, encouraging people to hide problems until they can’t be hidden anymore. Predictability is not just about having data that tells you that all is well; it is about leveraging data to identify potential problems so you can head them off before they derail your project. Incentivizing predictable behavior helps to build a culture in which people will raise issues without fear or reluctance. 

The Concord team is standing by to support you in understanding and implementing the prerequisites to predictable project delivery in your organization. Contact Us today.

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