A Different Approach to Capital Projects
At IAG, we approach projects differently. After years planning and executing projects as and for operators, technology specialists, developers and EPC contractors, we grew frustrated with the consistent failure of capital projects across the industry. Despite increased oversight, funding, and systematizing the stage gate process, a recent survey of senior project executives by Mckinsey* found that on average, projects overrun their budgets and schedules by 30% to 45%. The impact of overruns exists on every level: project team member stress and frustration, anxious management steering committees, explaining misses to investors, lost opportunity from production delays, and delays in bonuses and rewards. And we’ve found that for every month a project is late, the project cost increases 5-10%.
"On average, projects overrun their budgets and schedules by 30% to 45%.*"
We decided there was a better way. We pooled our extensive experience to create a different approach to projects. Our method is built and executed by multidisciplinary project experts. It harmonizes the competing and hidden incentives in projects and can flex to address different project compositions and industry needs - including funding approaches, timing, production, generational experience gaps, technologies, and staffing requirements. For more than 25 years, we have deployed this approach to plan and deliver successful projects. Over the long term, the IAG approach has documented results of 6.7% in project cost savings and a 1% reduction in schedule from the baseline cost and schedule.
Over the long term, the IAG approach has documented results of 6.7% in project cost savings and a 1% reduction in schedule from the baseline cost and schedule.
TWO PRONGED APPROACH
1. Owner Integration: Projects must be developed and executed with all stakeholders aligned behind the asset owner’s business goals, objectives, and priorities. The best way to accomplish this is through a project leadership team deeply integrated with the owner, working as one team, helping to build the project organization in alignment with owner goals.
2. Expertise: Project leadership teams must be composed of highly experienced, multi disciplined project professionals that can address the nuanced complexities of a project – in essence, providing the right people at the right time.
These principles are culturally embedded and codified in IAG’s DNA. In this series we explore what Owner Integration means for different project phases and efforts, beginning with Owner Integration in Project Development.
References
*https://www.mckinsey.com/business-functions/operations/our-insights/why-the-time-is-right-to-reinvent-capital-project-delivery
