Major capital projects are the backbone of the oil and gas industry. These projects are long-term, multi-billion-dollar investments, but are often plagued by schedule overruns and cost inefficiencies.Â
Despite having dedicated project departments to oversee, plan and execute these projects, many organisations still struggle to improve performance, efficiency or on-time delivery.
Why you should optimise the execution and delivery of capital projects
Improving the management and delivery of capital projects brings significant financial benefits. One notable benefit is the refinement of project estimates, enabling the organisation to better control expenditure and realise significant annual savings.
These improvements also mean a reduction in rework and scope changes, improved productivity in terms of man hours, and improved efficiency in terms of time taken to complete and deliver projects.
How to boost projects delivery
Project underperformance is often caused by poor data management, where past projects suffer from poor data management practices, limiting the project team’s ability to gain insight and learn from past experiences.
Combined with a large sample of projects going further back in time, analysis and improvement efforts are hampered by longer timelines, delaying the implementation of necessary improvements. Non-streamlined processes and lax adherence to established procedures also contribute to project underperformance.
Improving the management and delivery of capital projects can have a positive impact on ongoing projects that are several months into their lifecycle, as well as on newly initiated projects that are poised to benefit the most from these new initiatives.
For project departments looking to improve project delivery for better performance and efficiency, the following areas (non-exhaustive list) should be focused on:
1. Design
- Improve design quality: Implement detailed design protocols to minimise rework. Conduct thorough site surveys to inform design decisions.
- Timely detailed engineering: Define clear and achievable timelines for detailed engineering to promote accountability.
2. Project Management
- Streamlined processes: Develop and implement well-defined project management procedures. Emphasise the importance of applying lessons learned from previous projects.
- Adherence to schedules: Enforce strict adherence to project schedules. Clearly communicate responsibilities using the RACI (Responsible, Accountable, Consulted, Informed) matrix.
- Performance management: Use performance scorecards to track progress and incentivise desired behaviours.
3. Estimates/Schedules
- Unified Scheduling: Maintain a single, integrated project schedule to avoid confusion and delays.
- Improved accuracy: Foster a culture of accurate data collection and reporting to improve schedule adherence.
- Prioritisation and resource allocation: Establish clear prioritisation methods to resolve scheduling conflicts between projects and maintenance activities. Allocate resources effectively based on project priorities.
- Realistic estimates: Analyse historical project completion data to assess the feasibility of current budget estimates. Include project baselines in the updated plan for comparison and reference.
4. Construction
- Continuous improvement: Develop and implement a proactive plan for continuous improvement of construction processes. Review and possibly revise the Construction Management Model to optimise efficiency.
5. Processes
- Streamlined approvals. Identify and address bottlenecks in the approval process, such as excessive sign-offs for Project for Construction (PFC) documents. Set clear timelines and expectations for approvals.
- Performance management: Implement performance management systems, including KPIs for project delivery, individual performance and operational efficiency.
- Continuous Improvement Framework: Have a continuous process improvement framework that includes activities such as audits, compliance monitoring, root cause analysis and lessons learned.
Capital projects play a critical role in the oil and gas industry as a key driver of organisational growth and success. Internal review and improvement efforts are essential to address the inefficiencies within these projects. By focusing on the key areas outlined above, the projects department can significantly improve its performance and efficiency, resulting in improved project outcomes, significant annual savings and increased stakeholder satisfaction.Â
Time and time again, our team fails to improve the delivery and performance of our capital projects, which often suffer from budget and schedule overruns.
