A.T. Kearney’s recently released Excellence in Capital Projects study highlights the major capital project best practices. It also details the challenges facing both the sector and the teams that manage high-impact, billion-dollar projects.
Three common themes distinguish the capital project leaders from the rest of the pack — not surprisingly, advanced risk management is among them. The three characteristics of the leaders are:
- A bigger role for senior management: senior management at leading companies play active roles in capital projects, at all stages and in all aspects of the projects
- A Portfolio view of projects: the leaders in the study look at their projects as a portfolio, rather than taking one project into account at a time
- Advanced risk management: leading companies stand out based on how they identify, prioritize and manage risks
The study also shows that 63 percent of capital projects are over budget and 75 percent are not meeting their schedules — and so rapidly adopting best practices from capital project leaders is vital for all organizations. Feedback from our own customers such as Crossrail, which is Europe’s largest capital project, shows all three themes in action.
Crossrail, which is building a new railway across London with 21km of tunnels to be drilled under the city, is actually a portfolio of many new build and enhancement projects. There is a single risk management process and system across the whole portfolio and it is mandated by senior management that tier-1 contractors use the same approach so that a single, common view of risk can be see across the portfolio. Contractors’ ability to manage risk effectively is one of their major selection criteria for awarding new work. This safeguards the project as a whole. Find out more about the Crossrail project.
As an enterprise risk management (ERM) software provider, we are excited to see the adoption of ERM in capital projects being recognized as a major factor in project success.
How ERM ready is your own organization? Download our “ERM Readiness Guide” to find out.