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Measuring the cost of poor decisions


Leaders often struggle to align around common goals.  Where there are multiple delivery partners, they have to think and act as a single organisation.  Deloitte recently referenced this as a key issue for the renewable energy sector (Alternative Thinking 2011).  The nature and scale of decision making in energy companies is complex and multidimensional for many reasons.  There are so many inputs and variables that sometimes getting to one version of the truth can be challenging.  With key inputs areas of finance, forecasting, procurement, project management – where is the best place to make a decision?  For many companies, the time for decisions is normally when the finance team have to release money or to source capital for the progressing of projects.  I think the following items are key to understanding how poor decision making can impact your portfolio of projects.

 

The impact can be across several areas -

Costs of delay – every day that a decision is not made, the project delivery date is put at risk.  Where a project is delayed by a month or more, the loss of revenue for that project’s energy production could run to hundreds of thousands of euro/dollars.

 

Risk of miscommunication – getting the story wrong.  With a continually changing business landscape, miscommunication can have detrimental effect.  Getting the timing of funding incorrect can impact the interest rates or cost of debt – thereby impacting the return on investment of the project.  Other areas of miscommunication can impact on Health & Safety, Permitting or any other area of the business.  Health and Safety can have a direct impact on your ability to actually operate as a business, not just on a project.

 

Agility – decisions need to made in a timely and efficient manner – does your organisation have access to all the information it needs to make decisions every day?  Agile companies have been characterised by having access to the right information at the right time.  A structured and process based approach to information gathering and sharing are key to delivering agile decisions that are well informed and timely.

 

Focus on the big picture – this is the main message.  Centralised decision making enables companies to focus on what is important and ensure all areas of the business have a voice.  With common purpose and clear communication lines, the right decisions are made by the best people.  At Enverian, we have developed our solution to deliver against the challenges outlined above.  We gather information from around an organisation in a quick and efficient way so that decision makers can track, rank and value opportunities in real time.

 

Posted: April 19, 2013

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    Enverian was established in 2011 to provide innovative, complex and flexible business solutions to the energy sector. The company is led by a Board of former CIO's of Bluechip companies and a Senior Management team with extensive experience of delivering key strategic initiatives in Renewable Energy, Biotechnology, Financial, Utilities and IT environments. Read More...