7 Best Practices for Major CAPEX Project Success Assurance
Many projects experience failures that can result in poor project delivery performance, process capacity and reliability degradations after commissioning. According to a number of industry analysts, 60 percent to 95 percent of equipment lifecycle costs are the result of decisions that are made during the CAPEX phase, prior to handover and/or start-up and transfer to the project owners.
This is why companies must manage the risk of large-scale project failures in advance and address equipment lifecycle decisions during the CAPEX phase, rather than after the commissioning and handover phase. The goal is to protect and assure that these projects, which can amount to multi-billion-dollar investments, are designed, built and delivered to the quality expected and to the specified technical standards that meet the necessary regulatory requirements.
Below are some of our lessons learned which can help asset owners plan for project success assurance for major capital investments and large-scale industrial operations.
Onshore Project Success Assurance: Lessons Learned
1. Understand Challenges and Risk Factors
A number of challenges can impact owner confidence throughout the project and hinder progress. Recognizing that the following factors can affect project success will enable organizations to make risk-informed decisions:
- Regulatory and risk management challenges
- Project complexity
- Governmental bureaucracy
- Lack of a robust, qualified or skilled workforce
- Economic changes
- Competitive market forces
- Cost and availability of materials and equipment
- Poorly estimated budget
2. Identify Recurring Failures
Project success requires a sustainable process safety performance with continuous improvement. Learning from experience, particularly failures, is critical. Some of the recurring themes for project failures include:
- Incomplete view of project risks
- Project competence gaps
- Lack of attention to detail
- Lack of trust among personnel
- Mitigating risk too late
- Poor project culture
Once recurring failures are identified, focus on the following activities to facilitate improvements in organizational safety culture and help assure project quality:
- Investigate incidents that occur at facilities to identify and address the root causes
- Apply lessons from incidents that occur at other facilities within the company and within the industry
- Measure performance and strive to continuously improve in areas that have been determined to be risk significant
- Audit PSM systems as well as the performance of work activities that make up a management system
- Hold periodic management reviews to determine if the management systems are working as intended and whether or not the work activities are helping the facility effectively manage risk
3. Define Success and Factors of Interest
Knowing what objectives the organization is working toward will define how you measure project success. The following criteria are often cited as important factors contributing to overall project success but should be expanded on to reflect your organization's specific business needs and the regulatory and operating environment in which it performs:
- Completion within budget
- Delivering on schedule
- Meeting Health Safety and Environment (HSE) goals during construction
- No security/theft problems
- Efficient commissioning
- Regulatory compliance
- Process capacity/performance delivered
4. Determine How to Monitor and Mitigate Success Risks
An effective Process Safety Management (PSM) system can help organizations establish a proactive,
5. Implement a Scalable Solution
Leverage the expertise of a trusted advisor with knowledge of managing risk during the full range of EPC phases, from concept feasibility and engineering design, procurement and construction through to operations, maintenance, modification and decommissioning. A scalable solution should be tailored to your facility's needs, with performance and success driven by fit-for-purpose management systems.
6. Execute a Project Success Assurance Approach
Maintain a high awareness of process hazards and their potential consequences. Organizations should provide employees with the requisite authority and resources to promote success in their assigned roles, for example:
- Providing the time and tools for people involved with investigations
- Populating and using process safety metrics
- Performing audits and management reviews
- Analyzing all of these results to discern performance trends
7. Measure and Evaluate Project Success
Maintain a healthy curiosity with respect to how the organization is performing. Relevant, clear metrics address both leading and lagging indicators and should be tracked, trended and responded to. A particularly important organizational skill is to be able to look at seemingly non-relevant incidents or events and find out what lessons are relevant – even if the incident was not in your industry or appears on the surface to not be safety related.
ABS Group provides project assurance solutions for a range of companies in the oil, gas, and chemical and industrial manufacturing sectors to help achieve major CAPEX project completion. To learn more about improving asset reliability and maintenance, view our asset management services.
Complete the form below to access the technical presentation, Project Success Assurance for Major CAPEX: Best Practices and Lessons Learned, by Steve Arendt, ABS Group VP of Global Oil, Gas and Chemical. Arendt will present in October on What to Do if PSM/HSE Performance Flattens Out? How to Resume Your Drive to ZERO at the 2018 International Symposium taking place at the MKO Process Safety Center in College Station, Texas.