In manufacturing, companies spend up to 10% of their revenue on capital projects, constituting hundreds of millions of dollars. With a project portfolio this size, you may be surprised to find that many large enterprise organisations rely on a mix of PowerPoint, Word and Excel to manage their portfolio. This is like using a cable tie to guard priceless artworks. Operating in dynamic environments means the lack of guidance and transparency, as well as the dispersed systems, are a recipe for business processes breakdowns as the right people don’t have the visibility to respond to issues, disruption or opportunities.
Daan Gooskens, Digital Consultant for CAPEXinsights, talks about the importance of pinpointing the exact business processes that need to be addressed to achieve optimal capital project success.
“It’s often not one big-ticket item that needs rectifying, rather, it’s a mass of moving targets throughout the business process that ultimately impact organisational outcomes”
Capital culprits: how do budget and schedule failures happen?
When you drill down into capital project business processes, several issues consistently surface. The first is the instance of small projects that influence a portfolio budget - many of them unaccounted for in portfolio planning. They are often too small to warrant dedicated project management, but when it adds up to 5% or 10% of the portfolio budget, it leaves millions of dollars left to potential mismanagement and the organisation vulnerable to enterprise risk.
This isn’t a roadblock, as such, yet it’s almost guaranteed to set up organisations for those cost blow-out ratios. It’s absolutely vital to ensure the right processes are in place to provide governance support to teams at every stage of the project lifecycle, and if this isn’t in place, there is little opportunity to mitigate risks before they become critical. You might like to read our article on discretionary funds and small projects to find out more about this all-too-common headache.
Another challenge is that portfolio managers simply can’t be everywhere at every moment in time. From a day-to-day capital project delivery perspective, the management work is simply being done on the ground. This raises numerous challenges, not least relying on varied experience levels of contributors to interpret requirements for diverse project needs.
In fact, for many smaller, sometimes essential or urgent, projects, the site engineers are best placed to identify and manage the work. However, those individuals are not exposed to capital project delivery often, so hunting down the right tools and guidance can be time-consuming, and what might seem like a simple process to someone inside business processes every day can generate the potential for missed steps.
Lastly, there are usually so many different systems for different purposes, and they don’t always talk. Fragmentation of information can pose many challenges for organisations. As a portfolio manager this can mean missing critical information if it’s not submitted to the right platform, and as a project manager it creates complexity in accessing information, applying for approvals and keeping all project elements on track.
When it comes to capital project challenges, each one of these adds up, so what’s the solution?
When you know what you’re doing, the rest falls into place.
The bottom line is transparency. From a portfolio perspective, understanding in real-time what is happening and where, is core to successful capital project portfolio management.
Having transparency across project delivery, including hurdles and implementation, enables insights to successfully build and manage a portfolio, and to optimise the projects in the portfolio.
Traditionally, manual reporting and physical monthly meetings between portfolio managers and project managers or engineers play important roles in allowing managers to make portfolio-wide decisions and adjustments to respond to anything from supply chain disruptions to stage-gate approvals and risk intervention.
A direct digital view gives real-time insights into what’s happening at any point in time through dynamic reporting and dashboards. This single source of truth provides portfolio-wide visibility and enables data-driven decision making and proactive risk management, positioning managers to focus their time and energy into what needs it the most.
But does transparency take away from trust?
Far from the ‘Big Brother is watching you’ mentality, enabling transparency across capital projects can be empowering at all levels. With less reliance on compiling reports or fronting up to scheduled meetings armed with reams of information, project managers can engage in fluid, two-way information exchanges, providing them with the information and guidance they need at any time, and allowing portfolio managers to add value only where it’s needed.
Reliance on digital connection is greater than ever, and providing a platform to empower users at all levels to follow the right processes for their project lifecycle is extremely powerful. Having a system that provides a holistic view places value on people’s time from a top-down and bottom-up perspective.
The right projects, delivered right - a symbiotic approach
A successful capital delivery process looks through both project and portfolio lenses. It’s not only about doing the right projects but doing those projects right. The key to striking this balance is to have a holistic system in place - which is what CAPEXinsights was designed for. The solution was derived through Beca’s 100 year project management and engineering legacy combined with our deep digital capability – it is a complete capital project and portfolio solution.
For more information on how CAPEXinsights can simplify your business processes and help you achieve your capital project and portfolio potential, please don’t hesitate to reach out to us.