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Turn risk into confidence
Gain insight into how organizations can turn capital project risk into confidence—and more effectively and consistently deliver on project goals.
- Why are capital construction projects fraught with risk?
- Turning infrastructure risk into confidence
- Roles in building and delivering capital projects
- What can organizations do to adapt?
- More from The flip side series
Why are capital construction projects fraught with risk?
Large capital and complex infrastructure projects are often late, over budget, or delivered with poor quality. So it’s no secret that government and industry should improve their reputations when public funding is used. Sponsors and leaders of major projects, in both the government and the private sector, need to explain the benefits of these projects to the public and provide iron-clad stewardship.
In order to meet project goals, sponsors and leaders must manage a range of risks. These risks can include partnership difficulties with contractors; unforeseen site conditions; complying with health, safety, and environmental regulations; and more.
Project management woes can also stem from difficulties in getting to readily available, relevant, and reliable data. In many cases, data is stored in multiple—and disconnected—systems, or even stashed away in filing cabinets.
To create an environment where leaders are willing to risk their reputations to sponsor infrastructure, agencies need to continuously de-risk projects. Implementing the right tools and technologies can help meet this goal.
How can industry and government turn infrastructure risk into confidence?
Capital projects are risky and “passing the buck” isn’t the answer to mitigating the risks. Instead, leaders and agencies should develop appropriate risk-sharing approaches while maintaining accountability for project outcomes. They should, for example, consider:
- Infrastructure finance. How do they develop and operationalize public private partnerships and innovative finance programs?
- Investment confidence. What capital projects should they invest in and how? Do they have the right data to make analysis-driven capital investment decisions?
- Delivery confidence. Is the organization ready and able to deliver the project? How well are they delivering against expectations and market leaders?
- Cost and schedule confidence. How confident are they that the project’s cost and schedule are being managed effectively throughout the capital projects lifecycle?
- Digital capital projects. How are they leveraging the power of new digital tools and technologies to harness data-driven insights and improve the delivery of capital projects?
What role can decision analytics, innovation, and technology play in building and delivering capital projects?
There aren’t enough dollars available to fund every project, and the old methods of allocating costs equally or formulaically often result in inefficient deployment of precious capital. Better decision analytics can help organizations accurately assemble project costs and benefits with the full lifecycle in mind so better, more informed choices can be made about new construction and maintenance programs.
Investment in new technology innovations that enhance project management, monitoring, and oversight can pay off in long-term costs. For example:
Construction analytics. There can be an overwhelming amount of data, and it’s often maintained in separate systems. Agencies must be able to monitor construction risks at the portfolio level and drill down into the project level. Running key performance metrics and comparing them to benchmarks, prior periods, and historical levels can help spot trends that may otherwise take months to identify. This can help them turn data into insights to better manage the construction portfolio.
Drones and wearables. Drones can provide real-time data on project status by monitoring projects that span many acres or are located in hard-to-reach areas. They can also be used to track productivity and quality. Wearables such as lenses or Radio-frequency identification radio-frequency identification tags can boost productivity. In addition, they can reduce cost overruns as construction activity can be monitored in real time at the labor, equipment, and materials level.
3D printing. Innovative construction techniques, from 3D printing to modular prefabrication, require investment and adaption. While these emerging technologies will require testing and changes to some building codes and regulations, they hold great promise for increasing productivity, improving site safety, and driving innovation in fabrication and design. Being able to print replacement parts anywhere and anytime can be a boon for infrastructure projects that may be located far from logistics hubs.
Smart Cities. Technology will change not only how we build, but what we build. Smart cities can be created by integrating smart sensors into the built environment, providing a new way for the public to interact with infrastructure. And smart cities can make infrastructure more efficient, relevant and useful, popular with the public, and adaptable and scalable as infrastructure needs evolve.
What can organizations do to adapt?
Large projects require planning, and so does changing how they are built. Emerging technologies can help project sponsors and leaders deliver projects with a renewed sense of confidence—but only if organizations are prepared. For example, new IT systems, updated construction policies and procedures, and advanced employee training may be steps organizations need to take now if they want to benefit from emerging technologies over the next five to ten years.
The relationship between government, the public, and the built environment is changing. Advancements like smart cities are creating a new interplay between infrastructure stakeholders—and new projects will increasingly need to consider “smart” impacts. The public and social infrastructure, therefore, will need to be more flexible and adaptable to changes in migration, the way we work, and the desire for configurability and personalization.
What can organizations do to turn risk into confidence and deliver on their infrastructure and capital project goals? Use prioritization tools to select the best projects, bring in project finance expertise to maximize the use of public and private construction funding, employ emerging technologies, and implement decision analytics to help drive projects to successful completion—on time, on budget, and at a high level of quality.
More from The flip side series
If you’re interested in learning more, please contact us. We’d be happy to schedule a meeting with you and your team.