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Our experience has shown that every large capital project should include a detailed value improvement process coupled with a rigorous capital business case review. The need for a robust process has been highlighted by current worldwide economic conditions where capital funding is constrained and it is crucial that projects deliver on the promised, projected returns.
In order to achieve this, consideration should be given to the following:
- Optioneering and project risk and opportunity review;
- Project sequencing and aligning the successful launch within the optimal window of opportunity;
- Holistic revenue assessment process to determine future impact on capital expenditure;
- Value engineering, through a demand challenge and KPI process establishment.
The outcome of an effective Capital Efficiency initiative is a better understanding of your assets, their value and performance. A comprehensive understanding of the Project and Facilities Management platform to serve the asset, together with identification of further income optimization and overall performance management will ensure maximization of potential. The success of any initiative can only be measured if you have addressed the following:
- Is your project ‘strategic’ or ‘commercial’?
- Do you have any firmly established value parameters?
- Is your data reliable?
- Have your decisions been acted upon?
- Are you confident your technology works?
- Do you know what the project costs over its life?
Time and again in the region, we have seen an erosion of project and shareholder value during the execution of these major developments. In its most simplistic form, focusing on capital efficiency and value can drive alignment across a myriad of departments and functions in organizations – when questioned as to why this is needed, the justification for change across these same departments and functions becomes easy once everyone recognizes the answer is ‘it will save us money’. Effectively assessing capital value and planning capital expenditure effectively creates clarity across the organization and supports decision-making criteria for the long term benefit of the organization. It will more than likely provide organizations with the best possible chances of achieving their future objectives: successful outcomes, which are measured against developed success criteria.