In the first post of the series we introduced the challenge of investing in renewable energy projects and managing their delivery through the many different business processes. In this piece we elaborate on some of these challenges by drawing on a recently published report by Accenture consulting called ‘Developing Strategies for the Effective Delivery of Capital Projects’.
The report is based on primary research and included interviews with executives in the energy and utilities sectors from around the world. The key findings from the analysis included:
- Utility companies are underperforming in relation to project delivery – only 39 per cent of respondents delivered to the approved budget for all projects and 47 per cent to the approved schedule for all projects.
- Size and complexity of projects are growing – nearly two-thirds of respondents expected that the portfolio size and complexity of projects would continue to increase over the next five years. This is due to factors such as increasing demand for renewable energy supplies and greater regulatory scrutiny and focus on asset protection.
- Delays and revisions are frequently caused by regulatory demands – more than half of respondents cited regulatory requirements as the most common challenge to getting projects over the line and also as the major cause of delays. Insufficient detail provided during the planning stage was another key contributory factor identified.
- Value is lost due to lack of integration from planning through delivery – only half of the respondents reported extensive involvement from operations in project design and delivery. This can result in designing and building an asset that may not be able to be operated efficiently.
- Deficiency of IT capabilities – another constraint on effective project delivery is the quality of the IT systems that support areas such as data capture, reporting and workflow. Nearly 29 per cent of respondents considered IT capabilities to be poor at supporting project delivery.
In the next post of the series we will look at the different approaches which can be taken to integrate these challenges into the decision-making and project delivery process.
Posted: July 17, 2012