Capital project excellence: getting your project back on track

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Whatever your capital projects may be, odds are that they’ve been facing a COVID-19-driven disruption. And, while tremendous uncertainty remains, there is a path forward for capital project owners. A structured, centralized and data-driven approach—which changes as the data does—can help mitigate impact, support your workforce, stress test your portfolio, stabilize your finances and adapt your supply chain. By continually inputting new data, this approach enables you to account for ongoing uncertainty, gain better insights and take immediate action. It will also likely serve for other disruptions, of any size, that may occur.

Give the right data and structure.

When COVID-19 hammers your project on multiple fronts, you cannot afford a slow or disjointed approach. So, create a “tiger team”: a small group of specialists to gather data, analyze it and help lead coordinated action across every part of the project. Include specialists on health and workforce safety, costs and schedules, finance, engineering, supply chains and legal, workforce, tax and regulatory matters. Include representatives from key suppliers as needed. Assign a single lead and make him or her accountable for the whole team.

Your tiger team should be distinct from your project team, but to make sure you’re not just adding a new layer of bureaucracy, let it work with the project team’s existing processes. Keep its governance and reporting aligned with the existing project and organizational structure.

The tiger team should first set up lines of communication with stakeholders and start gathering, analyzing and sharing data. To make sure that data flows freely, establish as needed new digital protocols and project-wide standards for analysis reports—which should be suitable for a variety of consumers including leadership, regulators, staff and contractors.

Remember that the team will be collecting information not just to manage the disruption today, but also to make adjustments to execution strategy, budget, performance factors, and workforce cadence and density planning for the future. These adjustments will help enable them to avoid surprises, level set baselines and forecasts to the costs of doing business in the new work environment. The team should also have to gather and store information in case there are legal and contractual disputes regarding the costs related to COVID and other potential inefficiencies and disruptions that might occur.

Next, scenario analysis: Based on the data, the team should provide your decision makers with a set of likely project outcomes, depending on different scenarios for COVID-19 and your company’s possible responses. Advanced data analytics and machine learning tools can make this analysis more rapid and accurate, and you can continually modify it as more data comes in. Since these reports are more frequent and detailed than typical project reporting, you may need to update systems, processes and governance to keep up.

With data-driven insights, your tiger team and project leadership can swiftly move to help maintain project continuity—and help reduce balance sheet damage—by acting on three fronts: workforce, finances and operations and supply chains.

1. Leverage new workforce tactics

With COVID-19 being an ongoing challenge, you need to keep your workforce safe—and you may need to decide who has to remain on payroll. You also need to ensure your workers—even those who are currently or may need to be furloughed—remain engaged with the project and keep their skills up to date.

Your tiger team’s scenario analysis can help you here, too, guiding your choice among options for furloughing workers, keeping them on payroll and outsourcing more work. This analysis can also help guide decisions as to who must remain on site and how you can keep them healthy. Aside from protective equipment and training, options include staggered shifts and apps that enable you to track your workers’ location within your organization—and for them to communicate with you—while respecting privacy rights.

Your options for increasing off-site work will likely go beyond office workers telecommuting. Both long-standing technologies (such as modularization) and emerging technologies (such as augmented reality) can enable engineers and construction workers to perform more work from afar. Just be sure that as more and more sensitive data travels through the internet—often to employees’ home computers—you ramp up cybersecurity and privacy safeguards to match.

These new virtual workers may need retraining. The many furloughed workers whom you hope to bring back later will also need to keep in touch and may need new skills as well. Here, too, apps can help, supporting both regular communications and continual upskilling.

An added bonus: With a little preparation, these new virtual workers and apps will help provide you with a constant stream of data, which can help you further rightsize and utilize your workforce as the scenario evolves.

2. Strengthen with data-driven decisions

As you look up from a project plan thrown off-kilter by COVID-19, the options to stabilize your finances and operations may seem both too few and too many. On the one hand, the immediate situation may be dire and the obvious solutions inadequate. On the other hand, there are so many tools at your disposal, it can be hard to pick the right mix of potential workforce reductions, schedule delays, contract or debt renegotiations and alternative financing mechanisms that include (among others) bridge financing and government stabilization and stimulus programs.

How to choose among a dizzying array of options, when you can’t know if normalcy will return in six months or two years—or even if the future workplace will be the same as the old?

Let your tiger team’s scenario analysis—continually updated as more data comes in—be your guide to choosing the right mix of financial and operational adjustments. Add to this analysis a close look at contracts with vendors and insurers for implications of force majeure, changes in laws or other claims. Scenario analysis should also help you decide early on if you need to pull the plug, cut your losses and cancel the project.

As you make your decisions, communicate with local, state and federal officials and with community leaders. You’ll likely want to keep lines of communications open on topics such as existing or potential financing agreements (such as loan guarantees), contracts, regulatory forbearance and the possible impact of project disruption on local communities and workforces.

3. Create a future-ready supply chain

COVID-19 isn’t just threatening you. It’s threatening your suppliers, too. Some won’t be able to make deliveries on time. Some won’t make it through this crisis at all. Before you can act, you need visibility: Have your tiger team reach out to suppliers to find out where they stand—and aim to learn, too, what their own suppliers are facing. If you don’t already have tools in place to input supplier data, create these tools now, starting with tier-one suppliers.

With the help of this data, constantly updated as COVID-19 evolves, your tiger team’s scenario analysis can help guide your supply chain strategy. With some suppliers, you may need to pivot to alternative sources as contracts permit. With others facing temporary difficulties, you may want to consider contractual forbearance or “paying forward” some work. If you do shift suppliers, pay attention to the tax and trade impacts. To take just one example, transfer-pricing considerations may become relevant if you start to internally source substitute components or materials.

Start strategizing for the future of your supply chain as well. COVID-19 has likely revealed vulnerabilities that you hadn’t dreamed of before, so act now to eliminate them. As you look to source projects in the future and build long-term relationships with suppliers, factor in their resilience both to possible future pandemics and other potential disruptions.

Apply today’s lessons to tomorrow’s world

When disruption such as COVID-19 occurs, everyone’s first impulse is to manage day-to-day operations. That’s certainly necessary, especially when a disruption threatens everything, from your employees’ health to the project’s immediate financial stability.

But beyond putting out fires, it’s also critical that you prepare now for the day after, by laying the groundwork to help reduce the potential long-term impact on the project and your organization.

An effective tiger team, with the right organizational structure, data and data analytics, can cover your bases. It will help support swift decisions on workforce, finances and supply chains, while helping you tailor your response as circumstances evolve. Moreover, this agile, data-driven approach can keep working for you even after COVID-19 has passed: Your experience with gathering, analyzing and acting on data today will help guide your company through other projects—and potential project disruptions—tomorrow.

Check-In is a platform built with your people’s privacy in mind. It consists of two products:

  • Status Connect keeps you connected to your people, empowering them to quickly report changing work conditions and verify their health status, so you can identify potential risks. 
  • Automatic Contact Tracing helps employers aid their people in feeling safer by identifying employees’ risk of exposure, so leaders can quickly communicate potential exposure to their workforce.

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Daryl  Walcroft

Daryl Walcroft

Principal, Capital Projects & Infrastructure Leader, PwC US

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