Capital Diagnostics

To support and help companies and Boards understand the state of portfolios and projects throughout their life, and to identify key improvement opportunities, PIP has developed a series of capital project diagnostics to assess projects throughout their life.

From concept to pre-construction and the key phases of construction through to commissioning, each diagnostic has been designed to assess either readiness for the next phase or performance and risks within the current phase. Each diagnostic is focused on six core elements of project success: optimising project value; technical (and regulatory) readiness; construction (or commissioning) readiness; contractor procurement management; construction productivity, and, organisational alignment and effectiveness. A combination of questionnaires, interviews, analyses and workshops are used to develop a shared view of the state of the project as well as prioritised improvement initiatives. Whilst each diagnostic is tailored to a particular phase, typical questions addressed might include:

  • Is a company’s capital portfolio being regularly optimised and continuously performance-managed?
  • Are regular and effective value optimisation and risk mitigation processes in use?
  • Is the project building a high-performing owner’s team?
  • Is the company using an effective capital approvals/stage-gate process?
  • Are the detailed performance, cost and schedule assumptions required to achieve project success clear to the front-line teams that have to deliver on them?
  • Has the project adopted lean construction productivity management practices?
  • Is the project ready to fully accelerate around the first S-Curve inflection on time?
  • Does the owner’s team have effective control of its key contractors and vendors?
  • Do the project’s procurement processes leverage the scale of the whole company?
  • Are the construction and pre-construction activities happening at the right/optimum rate necessary to achieve the key schedule milestones?
  • Is suitable quality assurance in place and working well across all aspects of the project?
  • Is the project ready for commissioning and ramp-up? Can this process be accelerated?

Whilst the diagnostics can be run or reported as audits, PIP remains passionate about ensuring that project teams are active participants in the process so they understand and own any identified opportunities for improvement.

Example: Value optimisation for greenfield bauxite mine and alumina smelter

Following the financial crisis of 2008, the feasibility-level economics of this major new project were no longer attractive. We facilitated a value optimisation review to determine if there were sufficient improvement opportunities to justify the project. We helped them to identify 20% value savings, principally from construction compression and capital expenditure (CAPEX), and design improvements. We also helped them to clarify the roles and responsibilities of contractors and engineering, procurement and construction management (EPCM) to improve execution and construction capability.

Our portion of the overall project was just beginning construction when we retained PIP to undertake a review of our preparations and initial progress. [Its] diagnostic highlighted an opportunity to improve the transparency and communication of the material performance drivers for the project. The PIP team worked collaboratively with our owner's team and prime contractor to introduce simple reports and reviews that clearly identified performance issues. Visibility and understanding of these issues and performance measures at the worksite, and all the way through the organisation, enabled effective performance management to occur: as well as frank, fact-based discussions with the contractor about the need to dramatically improve performance. I'm pleased to say they responded and the project has turned a real corner towards on-time completion, as the performance metrics clearly demonstrate.MARK MACFARLANE

Meet our Capital Diagnostics expert