Starting at the finish line
How to maximize investment benefits and reduce risk from your infrastructure mega-program
In today’s economy, we are increasingly seeing infrastructure mega-projects becoming large-scale programs as clients seek to increase efficiencies, reduce risk and realize the investment benefits. However, accompanying this rise in infrastructure mega programs is the increase in program failure.
Poor planning and delivery approach, unbalanced contract terms, inadequate controls, lack of proper risk identification and allocation, and failure to recognize critical interdependencies for delivery seem to pervade this developing approach. Add in fluctuating infrastructure investment flow and rapidly shifting commodity prices, political instability and unsteady currencies, and the difficulties in delivering mega-programs are magnified.
With these challenges in mind, how can program owners better define their projects to successfully achieve what they want? How can they ultimately deliver their mega-program in a more effective way, delivering an operation that truly realizes the people, planet and business benefits initially sought after?
Don’t let synergies lie dormant
Siloed methods and reactive approaches are traditionally responsible for unsuccessful delivery of a program. A systems-wide, integrated approach is a focused way to unlock synergies that otherwise stay dormant, and connect to the program’s larger vision. Front end planning is critical and by increasing connectivity and long-term visibility of the entire program, clients get a better sense of when and where their investment benefits will begin to materialize, where critical connections for synergy and integration need to be made, and most importantly, where risk should be most acutely managed or designated throughout project delivery. Together, these will help avoid improper risk allocation between the program owner and the supply chain.
Quite often, clients focus on the first stage of the program without properly addressing critical components of the pre-construction phases, such as feasibility studies and planning, supply chain strategy, asset life-cycle, or governance and benefits achieved. This approach often leads to poorly briefed and managed supply chains and logistics, undue contingencies and schedule delays that could have been avoided.
Strike the right balance
Striking the right allocation of risk between clients and contractors is also fundamental to success. Increasingly, we are seeing public entities take on risk management that is better managed by the supply chain, threatening both the value and quality delivered by that program. Proper risk allocation is a critical part of holistic governance, ensuring that the right party has been selected on their ability to manage the risks that generally threaten large infrastructure programs.
Delivering a successful program of significant size and scale means starting at the finishing line. Without the application of integrated delivery and the right assignment of risk, program owners cannot truly capitalize on the value of running a large infrastructure program. By taking those elements into consideration and accompanied by strength in strategy, careful interaction and commitment to holistic planning, large scale infrastructure programs can thrive rather than fail.
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