Capital projects - driving value from digital

Large capital projects in the Netherlands often appear on the front page of Dutch newspapers. Not due to the disrupting engineering solution, but due to budget and schedule overruns with all its societal consequences driven by the public funding of the majority of the Dutch capital projects. Project control is a complex activity to carry out, but with the right digital technology and the use of data in the correct way, this task will become much easier.

Accenture carried out a research study globally to identify the unlocked value potential of data during all stages of capital project execution. From both owner-operator and EPC-contractor (Engineering, Procurement, and Construction companies) points of view, we see multiple opportunities to improve project delivery results. Enabling digital and unlocking the value of data will not only have a positive impact on (often public) budgets and schedules but also a positive effect on safety performance and the environmental and societal impact.

A capital project is a journey rather than a sprint

The lifecycle of an industrial asset starts with designing and constructing the asset. Although this design and constructing phase – we call the asset a capital project – takes only a few years compared with the actual operational life of an asset, decisions are made during this phase that dictates the operations and maintenance activities in the rest of the asset life. Therefore, it is important to include data-driven decisions during a capital project considering its entire lifecycle, and not only during the capital project phase. This allows you to apply intelligent asset management solutions and to make data-driven decisions more effectively during the assets’ lifecycle. But for now, let’s focus on the birth of the asset – the capital project – and how this phase can use data to drive value from digital.

The path to working collaboratively and making data-driven decisions during Capital Projects is a journey, not a sprint. Our framework for the industry—Capital Projects Strategic and Operating Network—CAPSTONE—helps owner-operators and EPCs reinvent collaboration to effectively use data and unlock the full value of their digital transformation. CAPSTONE works on the network effect—the larger the number of people using data and analytics in capital projects, the greater the value released for owner-operators and EPCs. Our research, dedicated to private owner-operators, shows that integrating elements of the CAPSTONE framework can grow the operating margin of EPCs and can give owner-operators an incremental return on their capital investment.

• Data-committed C-suite: With abundant data now accessible, C-suite across owner-operators and EPCs must be committed to infusing a culture of data ownership, data-sharing, and data-driven decision-making with a focus on unlocking innovative and real-time value. Data needs to be part of the new way of working in project execution from the top down to the workers in the field.
• Data-sharing infrastructure and capabilities: Owner-operators and EPCs must align their investments across relevant technologies (such as drones, design automation, reality capture, IIoT), digital assets (such as data lakes and cloud-based platforms), and digital capabilities (such as intelligent estimation and cognitive supply analytics) for building contextual data-stacks and mutually beneficial solutions across the project lifecycle. For instance, building digital twins - often referred to as digital models during the design and construction phase - of capital projects can enable owner-operators and EPCs to collaborate and detect problems early on to minimize defects and delays.
• Data-centric talent: Data stewards within owner-operators must facilitate timely and intelligent use of data-driven insights toward addressing schedule management, productivity, and regulatory issues having the potential to distract EPCs from executing the plan. EPCs, on the other hand, must engage data coaches to upskill the on-ground workforce and to extinguish resistance within the workforce to on-site data use thereby driving improved project outcomes relevant to owner-operators.
• Incentive-based contracts: Both owner-operators and EPCs must structure contracts that incentivize project stakeholders (suppliers, sub-contractors) to make collaborative use of data-based insights, toward achieving their financial as well as non-financial goals (such as lower climate footprint, inclusion, and diversity). In the Dutch infrastructure market, a change in the way how to tender and collaborate in large capital projects is being implemented. More intensive collaboration between the Dutch government and EPCs should have a positive impact on controlling projects (design risks, budget, and planning).

We know that CAPSTONE works, as its first three elements are based on the differentiated actions undertaken by a larger proportion of “Outperforming” owner-operators and EPCs. And the fourth element—incentive-based contracts—with huge potential, has started gaining acceptance among outperformers. CAPSTONE is going to be a challenging experience. Yet, it signals a historic opportunity for owner-operators and EPCs to nurture symbiosis. Organizations that bravely orient with CAPSTONE will drive better data-driven engagement of their workforce and project stakeholders and increase shared rewards. And fortune favors the brave.

CAPSTONE is our framework to help owner-operators and EPCs reinvent their collaboration to cement greater trust and realize higher returns, for both partners, from data-driven digital transformation. It’s built on our research and thinking about the benefits of combining the decision-making power of data and analytics with the ingenuity of human collaboration. CAPSTONE works on the network effect—the larger the number of people using data and analytics in capital projects, the greater the value released for owner-operators, EPCs, and other stakeholders. As owner-operators and EPCs embrace CAPSTONE, they create operating environments that stimulate data-driven collaboration at scale across a network of stakeholders.

Reinvent collaboration to unlock value

Ensuring your capital project is completed on time and within budget is more critical now than ever before. Despite widespread agreement that data-driven insights are critical to achieving those business outcomes, owner-operators and EPCs have largely been unable to effectively generate and use them. Too often, they are stymied by organizational inertia, sliding into disengagement among employees as well as mismatched technology and business goals.

The CAPSTONE framework allows owner-operators and EPCs to understand how they can create a mutually beneficial and collaborative environment to effectively use data. This reinvented collaboration approach combines the decision-making power of data and technology with the ingenuity of human collaboration.

But the CAPSTONE journey isn’t easy; each step rests on a deep commitment to accepting and collectively managing change—both within and across stakeholders. Only those who boldly do so see the full benefit of their data-driven digital transformation. Let us show you an example of how you can put this into practice.

Putting the CAPSTONE framework into practice

Control Tower

Within a Capital Project, it is not just the data you “own” but also all data the EPC(s), OEM(s), and Contractors generate that is of vital importance when you aim to make the data beneficial and value-add to you and the other stakeholders whereby a centralized approach is the most successful.

Accenture has created a Capital Project Control Tower that does exactly that.
Planning and scheduling information, cost control, health and safety, opportunity and risk, 3D models, engineering data, and documents, all these pieces of information are gathered and used to create powerful actionable insights. This is done in an agnostic and holistic way so that multiple data sources can be used regardless of the solution provider.

From this information, lagging and leading, KPIs are generated, critical path on schedules are highlighted and root cause analysis and remedial actions are provided using AI and ML algorithms.

As all relevant data is available, potential issues can be found before they turn into real problems, and opportunities can be seized at the earliest moment maximizing the positive impact.

We have found that the clients that have adopted this Control Tower have found better reliability, predictability and maximized control on budget and schedule.

Learning from experience

We help our clients to learn from previous projects and project stages in a collaborative and data-driven way. Many times project teams have to re-invent the wheel or trap themselves in the same pitfall as their predecessors. The result of these missed learnings is increased costs, rework and schedule overruns.

Learning workshops can be done at the end of a project delivery phase to evaluate or in a light format immediately in case of an unexpected event if you have to understand the root cause.

Capturing these learnings is done via intensive workshops on-site with all teams (including procurement, Finance, HR and IT) involved in capital project delivery. Our advisors facilitate the process, from capturing lessons to discussing them with the team and deciding together how learnings will be fed back into the organization.

Enabled with digital assets, we capture best practices and lessons learned so that next time a project team can easily find these lessons and not make the same mistake (again). Ideally, lessons are pushed by the capital projects control tower into reports and daily meetings.

Do you have any questions about how to drive value from data during Capital Projects for your organizations? Please reach out to Johan Kroon and Wouter Knaack.

This publication is part of a series. The previous blog about Industry X explained the offering ‘Smart Connected Product Design and Development’ which is part of the Industry X domain ‘Product Engineering & Servicing’.