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Capital projects life cycle

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Stage gates of the capital project life cycle

Stage gates of the capital project life cycle

The best opportunity to make a positive impact on the life cycle of a major capital project is during early planning, even before the capital outlay occurs.

Summary: Managing the complexity of major capital projects has never been more critical. Today's oil and gas landscape demands a holistic approach.

The rules have changed

Against the backdrop of a decline in both global economic conditions and corporate revenues, the rules for capital projects have changed. Stakeholders and companies have their own sets of demands.

Stakeholders demand:

      • Improved return on investment (ROI)
      • Reduced risk and exposure
      • Greater transparency

Companies demand:

  • Focus on predictability
  • Transparency and reliability
  • Controlling and reducing the costs associated with these projects
  • Focus on managing joint venture relationships and overall project risk as it relates to
  1. Safety
  2. Budget
  3. Schedule
  4. Reputation

Focus on the life cycle of capital projects

For many years, the leading practice in planning for and executing major capital projects was based on building or spending one's way into the market. However, there is a renewed focus on the complete life cycle of a capital project.

That focus enables a holistic approach; one that is more balanced and inclusive of well-planned handoffs, healthy asset management in the areas of operations and maintenance and balanced project portfolios — always with an eye on the potentially conflicting requirements of risk, cost and schedule.

Despite a host of research, benchmarks and project guidelines, oil and gas companies continue to struggle with the same complex issues:

  • Budgets
  • Schedules
  • Execution

Managing these issues poorly can cause dramatic losses in project value and prolonged disputes with vendors. Failure to consider design, construction, commissioning and operational issues during the planning phases of the project reduces the ability to positively affect project performance and value.

The stage-gate model

Taking a holistic approach of a stage-gate model is one of the most proven and effective ways to manage capital projects in the oil and gas industry. This approach encourages collaboration across the stages and underpins the processes with the appropriate systems support.

Ultimately the benefits can include:

  • Less rework in front-end engineering and design
  • Improved cycle time for certain stages
  • Reduced impact of punch lists from handoff to maintenance

Each stage includes a clear set of deliverables that will enable the realization of opportunities and more effective long term risk management.

The best opportunity to make a positive impact on the life cycle of a major capital project is during early planning, even before the capital outlay occurs.

Stage gates of the capital project
life cycle

By considering the long-term effect of the entire project during the conceptual and planning stages, project owners can better predict future risks. This allows them to appropriately allocate risk and control the project's value chain. The forward-thinking company will spend more time on strategic issues and the strategic development of a project management approach that aims for the balance between risk allocation and value retention.

To help guide your thinking on this topic, we take a closer look at the following themes:

  1. The pitfalls between concept and commissioning
  2. Dealing with risk
  3. Focus areas for effective capital project life cycle management
  4. How we can help

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Contact us

For more information on capital project management contact:

United States:
Jason Brown
 +1 312 879 4377

Mark Costello
 +1 212 773 0142

Bill Hale
 +1 713 750 8383

David Blanc
 +1 713 750 5129

Bradley Farrell
 +61 8 9429 2336

Doug Burcham
 +1 403 206 5304

Great Britain:
Paul Allison
 +44 20 7951 3654

Malcolm Bairstow
 +44 20 7951 3685

Peter Spaans
 +31 88 40 78810



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