The role of the board in overseeing capital projects has taken on a new urgency. This comes in the wake of high-profile troubled projects, which have devastated corporate performance and stock price.
Our research shows that forward-thinking boards are taking on ever-increasing responsibility throughout the project lifecycle—from concept to commissioning and operations—to forestall project issues. They are also actively overseeing capital allocation strategy as part of their mandate to protect and expand shareholder value.
The disparate fates of the two companies described in "A tale of two businesses" illustrates the impact of troubled capital projects—as well as the importance of active board oversight—on share price.
“Boards need reliable metrics to be effective in their oversight responsibilities. When reporting to the board, management must ensure chain of custody from ‘(drill) bit to boardroom’ to maintain the integrity of the data.”