Capital project excellence (part 3): Why a data-rich world means project controls must evolve – and can no longer be one-size-fits-all

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In this seven-part series of blogs, Daryl Walcroft discusses PwC’s “Project Excellence System” – beginning by providing an overview of the framework as whole, and then drilling down into each of its six capabilities in turn. With US capital projects poised to experience a renewed infusion of spending, Daryl says the framework can play a crucial role in keeping projects on track, and help ensure they deliver successful outcomes.

In my first two blogs on PwC’s Project Excellence System, I kicked off by describing the objectives, capabilities and benefits of the system, and then examined one of its key components, integrated project technology.

In this third blog, I turn the spotlight onto another – equally critical – capability within the framework: capital project controls and governance.

A few years ago, any discussion on project controls would usually start with a weighty book of standards and guidelines providing those delivering capital projects with some of the tools and knowledge they need to manage projects. But the world of controls is changing beyond recognition.

Why? Because of the huge transformation in the information and insight we can have into every aspect of our projects.

Take drone technology. These days, we can fly a drone all round a construction site and – within minutes – have complete, detailed, real-time visibility of the project’s current status. No matter how hazardous or hard-to-access an area of the site may be, we can see exactly what’s happening there.

Meanwhile, sensor technology for project sites is advancing every bit as fast as drones: at PwC, we’re currently working with partners in the Techstars innovation ecosystem, supporting the development of a new generation of multi-function sensors from start-up innovator Pillar Technologies.

Part of the Techstars IoT Accelerator program, the Pillar sensors can gather and communicate a mass of data points on the surrounding environment – temperature, movement, humidity, vibration, air quality, and myriad more – with complete accuracy 24x7.

What’s more, that’s just one sensor-focused initiative among many thousands happening worldwide. The author Jeremy Rifkin has projected that by 2030 there will be more than 100 trillion sensors connecting the human and natural environments in an intelligent network spanning the globe. Given the ubiquitous real-time environmental monitoring that this network will enable, and the expanding mass and diversity of data available for analytics, there’s a very real prospect that we could deliver construction projects the way we fly a plane – with real-time adjustments fed by real-time inputs from the field. This may sound a little like science fiction, but it’s coming. The only question is when.

Even if we lower our sights to an operational level on projects, the power that the expanding array of sensors can bring is breathtaking: attach sensors around the project site, and you’ll get a comprehensive real-time view of what’s happening everywhere on the facility. We’re figuring out the analytics that will fit around these sensors, taking the mass of data they produce and feeding back intelligence to project management.

And this is where I get back to controls, because the advances I’ve described raise one obvious question: what happens when this dynamic, ever-changing flood of real-time data and insight hits a traditional project controls environment based on dated standards and rigid systems? The answer is, it can’t respond quickly enough. In maritime terms, it’s like a super tanker trying to turn to chase a yacht.

Don’t get me wrong: the basic core controls for any project are still fundamental and vital to successful delivery. Our approach to these is captured in PwC’s capital project procedural framework, shown in the schematic below. By separating the project into distinct elements, the framework helps capital project teams ensure they review all key aspects of the controls environment, and then implement and maintain appropriate controls for each.

However, as the framework also makes clear, the risks facing a project don’t stay constant throughout the project lifecycle. Far from it. They change at every stage, meaning the related controls have to change, too. Sure, elements like cost, schedule, change, and contract management have to be controlled throughout – but the way this is done needs to reflect the shifting risks at each phase.

While none of this is easy, it’s not rocket science either. The real challenge is that advancing technology has added a further layer of complexity and change. Because in parallel with risks and controls evolving on each project, the entire discipline of project control and governance is also undergoing a transformational evolution, as the data explosion opens up previously undreamt-off possibilities.

The result is that we need to throw our well-thumbed books of controls out the window, as the world of project controls becomes more fluid and organic than ever before. Based on a wealth of data on past and current projects, we can create a controls environment from day one that’s individually tailored to the specific risks our project will face. And then we can use the flow of real-time event data to evolve those controls dynamically through the lifecycle.

Which brings me to the aspect of capital project controls and governance that I haven’t talked about yet: the governance component. And the changes underway in this area are every bit as profound as on the controls side. Some great insights into these changes have been revealed by recent PwC research into boards’ evolving role in driving the success of capital projects of all types.

What did our study show? That recent high-profile troubled projects have brought greater urgency to boards’ efforts and involvement around overseeing capital projects. And that forward-thinking boards are taking on ever greater responsibility throughout the project lifecycle – all the way from initial concept to commissioning and ultimately operations – to anticipate and head off any issues before they arise. At the same time, they’re taking a more active role in overseeing the capital allocation strategy as part of their mandate to protect and grow value for shareholders.

Overlay this rising scrutiny and accountability from boards onto the move towards more dynamic project controls, and where does it take you? In the not too distant future, I think we’ll able to gather data from a mass of projects across the world, put it through analytics and machine learning algorithms, and effectively gain the ability to predict the future of any project – including what controls it’ll need at each stage. And, as the ultimate guardians of shareholder value, the board will take a keen interest in that evolution throughout the project lifecycle.

For example, imagine you’re planning to build a power plant in Texas. You tell us about the type of contract, project team, design, anticipated contractors, location, materials, budgeting and numerous other parameters. And after crunching the numbers, we’ll be able to tell you the type of controls you’ll need at every step along the way to have the best chance of success. Scheduling, cost, change, safety, wherever: we – including the board – will know in advance where, when and how you’ll need to focus your controls to the greatest benefit.

Capabilities like this are very close to reality. Combine them with the constant real-time insight made available by drones, sensors and other technologies, and it’s clear that our ability to control and govern projects is heading to whole new level. Given the surge in projects now, in light of the current political climate, rising interest in infrastructure investment and the announcement of the Trump Administration’s Infrastructure Plan, the timing couldn’t be better.

Read my next blog on Capital Projects Assurance.

 

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Daryl Walcroft

Principal, US Capital Projects & Infrastructure Leader, PwC US

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