Executing Capital Projects More Effectively to Reduce CAPEX and Project Schedules
Owner operators today are faced with the challenge of implementing larger portfolios of capital projects than ever before, with limited resources and pressures to ensure projects are delivered on schedule, to specification and within budget. This is not easy to achieve.
Average CAPEX overruns of 20 to 30 percent and delays in production start of several months are common in many areas of the process, power and marine industries today. Examples of projects that have fared much worse are not difficult to find and gain considerable adverse publicity for the companies involved.
One trend that is clear is that there is a positive correlation between the size and complexity of projects and the relative magnitude of cost overruns and delays. It appears that as projects grow larger and more complex, the number of things that can potentially go wrong increases, as do the consequences and complexities in project execution. This is worrying in an industry where what was once considered a mega-project at US$1 billion is now becoming more the norm, and multi-billion dollar projects involving many different contractors working globally are being more frequently encountered.
Project Management Contractors (PMCs) face similar issues to owner operators in managing complex projects effectively, often against challenging fixed-price or incentive-based contracts. Many of the benefits described in this article can apply also to the PMC.
SPO Project Execution
CAPEX projects require effective, user-friendly tools for project execution that can be rapidly deployed. The SmartPlant Enterprise for Owner Operators (SPO) Project Execution solution meets this demand. The work processes in the SPO Project Execution solution can make a major impact in greenfield and brownfield CAPEX projects, saving between two to six percent of CAPEX. This is achieved through implementation of improved project execution processes supported by our SPO Project Execution solution, resulting in a combination of reduced CAPEX overruns and risk of project delays, improved quality and bringing plants online more quickly.
SPO Project Execution provides preconfigured, out-of-the-box work processes for managing several critical project management procedures for very rapid, low-risk implementation. The processes that are being initially prioritized are: