Capital projects make the energy infrastructure that makes our quality of life possible and is essential to realizing sustainable and reliable living environments.
noe h. saenz – energy capital
By Noe H. Saenz, Energy Capital‘s Editorial Board Chairman
It is well known that the construction industry is one of the least productive in the world compared to most industries. The reality is though that, construction does not happen in a vacuum. It is part of a much larger process involving multiple phases and a multitude of stakeholders. In fact, the actual construction phase happens almost at the end of the capital project process.
So, what is a capital project? It is a long-term investment project involving multi-discipline planning, financing, engineering, procurement, construction, commissioning, and startup activities. That requires large amounts of resources (financial, labor, materials, technology). Mainly, to develop, improve, or maintain capital assets. For instance, such as manufacturing facilities, oil & gas platforms, chemical plants, solar farms, roads, bridges, hospitals, etc.
Capital projects make the energy infrastructure that makes our quality of life possible. Besides, it is essential to realizing sustainable and reliable living environments.
The problem, though, is that capital projects fail way too often. They fail to meet their intended objectives in safety, cost, schedule, quality, etc. According to KPMG’s Global Construction Owners Survey, around 80% of construction projects fail to meet their original objectives.
Why do capital projects fail? And so often?
The reason: poor communications. But not communications systems; it is about people communications, which directly affects people relations. These two areas directly affect EVERYTHING else in a project.
The reality is that capital projects are unique and very challenging in many ways. Just to name a few:
- Many multi-disciplinary teams from different companies and organizations must come together. Notably, to plan and manage multi-million-dollar projects in a very short time. Most of the time, these teams have never met before. This creates all sorts of challenges in communications. Also, in relations among stakeholders who sometimes are not even aware of each other.
- Business-people and project-people don’t speak the same “language”. So very often, they are on different “channels,” not really understanding each other. A study from the Construction Industry Institute (CII), a research organization of the University of Texas at Austin; found that business people do not get much involved in capital projects, but only a few hours in total. This is affecting their understanding of the capital project process, their challenges, and opportunities.
- Our multi-cultural, multi-generational, multi-office, virtual business world makes it tougher to bring together the right stakeholders at the right time. Also, to make the right decisions on time. So, project managers; and their teams; must be diligent and intentional in communicating. Also, in relating to their internal and external stakeholders to keep them aligned throughout the project’s life.
Key takeaways
The above points put a lot of pressure on the project management manager. Also, on her team to focus on getting The Project stuff right. Thus, frequently putting the People Stuff to the side.
Key Facts:
- Poor communications cause costly misalignments and misunderstandings.
- Projects without the input –and support- from the right stakeholders will likely fail.
- Weak people relations make good projects go wrong.
- Strong people relations can make bad projects go well.
Bottom line: The best project systems or procedures will NOT make a project successful; but the best people communications and relations will.
In conclusion: People communications and relations should be The Key Focus in every capital project -from beginning to end. However, little has been developed to help guide capital project teams in these critical areas. Therefore, one reason for the lack of focus on this area is that most of us engineers or technical people do not see the people side of things as important. No one has time for that…. let’s get to work!
So, what to do?
So, what I have learned over my 22+ year career in the engineering and construction industry as a project engineer, project manager; and business leader is that successful capital projects are able to implement not only a good project plan but also a good people plan. In fact, I call this Managing Capital Projects with a People Campaign; particularly, one that guides the PM team on good people communications & relations practices.
