Capital projects: Driving value from digital

Digital, yes. But valuable?

Digital capital projects aren't exactly a new concept. But many companies are still struggling with putting it into practice—and that's despite their significant investments in the digitalization of the project value chain.

Almost all the owner-operators and engineering, procurement and construction companies ("EPCs") we surveyed for our research have spent the past years building digital and data capabilities to improve time to completion, project cost and returns on investment.

But only a third of them said they were actually realizing these benefits.

Which begs the question: Why the other 66 percent can't get similar results. And, couldn't they learn some things from their peers in order to drive higher value from digital, too?

The two keys to digital success

While few executives would dispute the immense value digital can bring to capital projects, they might differ in how they strategize and execute around them.

In theory, capabilities like the cloud, mobile and data analytics can enable and improve the collaborative decision-making in every company. In practice, however, such enablement can only happen if companies:

Driving either one of these isn't exactly easy of course—it'll almost always be a journey rather than a sprint. And that journey will require some clear strategy and planning if it is to be successful.

So how can executives ensure both?

Why do digital initiatives in capital projects fail?

Accenture's Andy Webster explains at SupplyChainBrain

Introducing "CAPSTONE"

The findings from our survey offer an answer to this very question because they point to certain best practices that all the successful "digital" companies in our sample employed.

And we have spent some time improving this answer even further, by compiling these practices into our framework called "CAPSTONE". This framework can grow the operating margin of EPCs by an additional 5.8 percent, and give owner-operators an incremental 6.6 percent return on their capital investments through four building blocks:

About the research

Our latest Capital Projects research examines where owner-operators and EPCs are in their journey of data-driven digital transformation, their challenges and the differentiated actions adopted by some of the most progressive companies during 2015-2019.

The insights, derived from around a million data-points, are based on:

• Analysis of Accenture’s Capital Projects 2020 survey of 570 executives from large owner-operators (exceeding revenues of USD1 billion), located across 20 countries, spanning asset-heavy industries such as Aerospace & Defense, Chemicals, Industrial Equipment, Metals & Mining and Oil & Gas, as well as the Public Infrastructure sector, amongst others. The remaining 140 are senior executives from global EPCs with combined 2019 revenues of over US$1 trillion.
• In-depth discussions with nearly a dozen academic experts and senior industry experts representing owner-operators as well as EPCs.
• Analysis of publicly available financial data of surveyed companies towards identifying progressive companies amongst the cohort of owner-operators and EPCs.
• Regression analysis for determining the potential impact of differentiated actions being undertaken by progressive companies on financial performance of owner-operators and EPCs.