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More than a dashboard: How tech is changing capital project portfolio management

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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.

You’ve got the data. Make it work for you

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.

  • Find what you need. Examine projects and programs to determine what data they produce, when they produce it and who should have access to it. Set up processes to digitize and standardize data to enable apples-to-apples comparisons.
  • Put a number to it. Some data will need to be quantified before you can use it. Calculate the likely financial benefits, resource requirements and risk mitigation costs for proposed and ongoing projects.
  • Consider constraints. On both a project and program level, identify financial targets and your resource capacity: equipment, raw materials, workforce and management capabilities. Include options for alternate suppliers and third-party support.

Before you choose your tech tools, consider this

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.

  • Scenario planning. Capital projects and the contexts in which they operate have many moving parts that may extend over decades. Your software must have algorithms to quickly and dynamically generate actionable what-if scenarios.
  • Sensitivity analysis. Producing what-if scenarios is just the start. Your software must be able to compare these scenarios based on different (and changing) constraints, goals and assumptions. One major energy company did just that — and reduced its capital expenditures by 50%.
  • Socialize results. Output must be clear and generate actionable plans with interactive analysis and visualizations. Internal and external stakeholders (such as regulators) can then understand the likely risks, benefits and outcomes for different options.

Get them onboard: managing the change

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:

  • Build a team. If you don’t have a specialized portfolio management team, set one up. If you have one already but it currently resides across multiple functions, centralize it. Give the team access to key data — and make sure team members have the skills to interpret that data.
  • Clarify roles and benefits. A new team shouldn’t create new confusion — or new resentment. Assign project managers precise responsibilities for interacting with the new team. Be clear about how these managers and their projects will benefit.
  • Fill skills gaps. You shouldn’t have to hire significant new talent for tech-enabled portfolio management. But your project managers and other stakeholders will probably need training on how to prepare data for the new software and how to use its results.
  • Help decision-makers decide. The software will not say do this. Instead, it will offer data-supported scenarios and options. Many decision-makers, accustomed to more manual processes, will need support to use these insights for true portfolio optimization.

A competitive edge awaits

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.

Contact us

Daryl  Walcroft

Daryl Walcroft

Principal, Capital Projects & Infrastructure Leader, PwC US

Reza Jenab

Reza Jenab

Principal, Capital Projects & Infrastructure, Capital Projects Technology, PwC US

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