Successful Capex Projects Guidelines: How to have successful capital projects in the process industry

Author / Editor: Gert Müller* / Ahlam Rais

The Project Manager will fix it — really? If companies want to deliver successful capital projects in the future, a change in attitude is needed to build an inclusive culture to engage and motivate both employees and external partners.

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Successful capex projects require a departure from old paradigms.
Successful capex projects require a departure from old paradigms.
(Source: T.A. Cook)

Steve Jobs was once asked in a talk show about the secret of Apple’s success. He responded: “One of the key aspects is that we are an incredibly collaborative company. We have tremendous teamwork at the top of the company and that filters down throughout. Teamwork depends on trusting the folks to come through with their part without watching them all the time. Apple is run by ideas – not hierarchy. The best ideas have to win.”

To some it may seem too far-fetched to compare Apple with managing a capital project in the process industry – but there are certainly parallels. What is the new iPhone for one may be the next generation Analine plant for the other. The biggest commonality is probably that both — iPhone or process plant — are complex projects that can only be completed with a large number of brilliant people working together.

Successful capex projects require a departure from old paradigms

Many capital projects are still steered with a rather conservative management approach. They are often organized in a command-and-control structure and the management of the project is placed in one pair of hands – the hands of the Project Manager.

A common belief is that project success solely depends on that Project Manager. It is undisputed that the quality, experience and decision-making capabilities of that person as a leader play an important role. But it raises the question of whether an endeavor as complex as, for example, building that new Analine plant costing hundreds of millions of dollars, does not require a different, less patriarchic approach and culture. This becomes even more important in an increasingly and rapidly changing world.

Five reasons why things have to change

  • Shareholders and company management are no longer willing to accept that only one in three projects meets the objectives set at project authorization, that 40 % of projects fail by overrunning on cost or duration by more than 25 %, or that production targets are missed for more than 2 years after start-up.
  • The market for skilled employees and external partners who are able to deliver quality services and are required to run successful projects is consolidating due to demographic changes.
  • People are more prepared to leave their place of work. Employees who feel unhappy, micromanaged or strictly scrutinized by their managers are comfortable jumping ship and finding a new job where they have more autonomy, respect, and a sense of purpose and ownership.
  • Teams are becoming increasingly diverse. Nowadays it is common for engineering services to be delivered from somewhere in Eastern Europe or Asia or that the construction contractor company is based somewhere in western Europe but its employees reside in many different countries. Add the complexities of a corporate matrix organization and one has a team of geographically and culturally diverse people. People who at the start of the project don’t know each other, very often, naturally speak different languages.
  • After many years of talk about digitalization in capital projects but little change on the ground, it appears a critical mass may now have been reached with solutions like digital twins, BIM etc. taking hold and changing the way capital projects are run with expectations upon people adapted accordingly. Due to the current pandemic the majority of work is, by necessity, already being done remotely forcing diverse teams to interact and be managed in a virtual environment.

Five suggestions how to build a high-performance team

The effectiveness of a project team is not a given. In 1965, Bruce Tuckman described that a group of people need to run through the phases ‘Forming’, ‘Storming’ and ‘Norming’ to become a highly effective ‘Performing’ team. Many project teams never make it to the last phase. To put it differently, just running a project kick-off workshop is not enough to ensure that a team ‘gels’ and functions well.

So, what does it take to build an effective team that shares responsibility and ownership and can deliver successful and competitive projects?

  • Foster a project culture that encourages openness, ownership and feedback
  • Install a project communication structure that a) allows transparent and honest exchange across all levels of the project organization b) reaches each team member with information in his area of the project but also provides the ‘big picture’ as a basis for a shared common purpose and c) supports multi-directional communication and encourages team members to actively contribute to the exchange.
  • Equip team members with the necessary skills by training and coaching them to communicate and manage effectively. Capital projects are typically conducted by engineers and technically minded people – who are brilliant and focused on their core competence but not necessarily on things such as communication and project management.
  • Promote a diverse and inclusive project culture of continuous feedback and putting ‘people first’. Provide an engagement platform that automatically triggers all project team members to give voluntary, regular and anonymous feedback. It takes less than 5 minutes, say every two weeks, for each person to participate. The result is the ability to constantly feel the ‘pulse’ of the project and gain an insight into team sentiment, determine where to take action and through monitoring, ensure their effectiveness.
  • Go beyond simply providing a description of each project role. Give team members at the start of the project an opportunity to actively share with each other their understanding of their role and the expectations they place on one another. Provide a setting that allows them to jointly answer the questions “What will I deliver to you” and “What do I expect from you” to achieve maximum alignment, mutual understanding and functioning interfaces. Ideally this exercise is repeated during different project phases or whenever there are changes in team composition and roles.
  • Install opportunities for team members to have fun and learn a little more about each other beyond the day-to-day project work – irrespective if one is in a face-to-face or virtual setting. Good personal relationships are the foundation for trust, openness and successful collaboration.

Clearly all this requires energy, effort, time and for some it may be a departure from old paradigms, but for companies to deliver successful capital projects in the future, a change in attitude is needed to build an inclusive culture to engage and motivate both employees and external partners.

So, the Project Manager does not have to fix problems on his own if he builds and conducts a functioning team. There is a good reason why Steve Jobs did not answer the interviewer’s question to the secret of Apple’s success with “We have the best Project Managers…”.

* The author is Managing Partner, Consulting Europe Lead at T.A. Cook

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