Capital projects companies face a fast-moving mix of constraints and demands, both inside projects and across portfolios. In response, you need to understand all your assets — whether under consideration, under construction, at their prime or nearing retirement. You also need reliable, dynamic forecasts to help you make and change plans.
Tech-enabled portfolio management can give you and your firm these abilities and enable you to direct and adjust investments to help maximize return. If done well, this approach supports
Insights into your entire portfolio: Each asset’s current and expected status and needs, and how assets interact with each other and your constraints and needs.
Data-driven investment decisions for individual projects and your overall portfolio.
Faster regulatory approval, thanks to an improved ability to demonstrate economic viability and expected benefits.
Better risk management from continuously gathered and analyzed data.
Academic research has found that portfolio management optimization tools typically increase overall portfolio value by between 5% and 20%. To achieve this and other benefits, you’ll need the right data, the right technology and the right skills and processes.
Capital projects produce enormous amounts of data. Once generated, though, this data too often just sits unused on spreadsheets. To close this gap, we recommend putting together teams and building (or improving) processes to continually gather, analyze and use data. Software tools can automate much of the processing, while layering on analysis and reporting too.
Before you can fully utilize these tools, you may have some work to do.
There’s no shortage of vendors eager to sell you the latest, supposedly greatest portfolio management software, so be sure the software you settle on will make gathering, verifying, standardizing and analyzing your data easier. It should be able to help you answer key questions: Which parts of my existing portfolio are creating value — and which are detracting from it? In which segments and geographies is my portfolio’s value concentrated? Which parts of my portfolio should focus on growth? Which should focus on capital efficiency? What are my current and future opportunities to generate more value?
To answer these questions, portfolio management software must accomplish three key tasks.
Capital project companies have many strengths, but few make the most of cutting-edge digital tech. For most, a new approach to portfolio management that uses new technology will require new skills, new teams and new relationships among those teams.
Here are some common steps that we see successful companies taking:
With data-driven portfolio management, you can better manage cost and risks. You can identify key performance drivers and sources of value for individual projects, existing and planned, and for your overall portfolio. You can then build a roadmap to help maximize your return on investments, and you can keep adjusting that roadmap as conditions and priorities change.
By putting these recommendations in place, portfolio management will become a data-supported strategy that can help you meet your organization’s goals today and tomorrow.