Four areas to ensure your capital programme withstands COVID-19

Jon Poore

Director, Consulting and Advisory Services

Australia and New Zealand

The sudden spread of COVID-19 across the globe has taken the world’s decision-makers by surprise. The impact of the virus is significant in terms of the loss of life and economic uncertainty but what is the impact on a capital investment programme and what can you do to minimise the impact?

COVID-19 is extremely dangerous for individuals with underlying health conditions and the vulnerable. Health professionals are striving for a cure as well as advising on prevention safeguards that should be undertaken to protect communities.

Similarly, the virus is spreading to capital programmes that have not fully implemented robust governance and assurance arrangements or do not have full control and oversight across supply chains. By having oversight on governance and control, assurance, the supply chain and digital will help ensure your capital programme withstands the crisis and remains in a strong position.

Governance and control

It is important that during any period of uncertainty, decisions are made based on accurate data and information. Solid reporting on programme and project performance in terms of cost, schedule, risk and quality should inform decisions. 

Assumptions made around the impact of the virus must be tested through scenarios using real-time data.

Recommendations need to be provided for consideration on a regular basis within a governance rhythm that is dependable and timely. 

Assurance

Using an appropriate assurance framework is essential to provide an independent assessment of project health. The project may self-diagnose but independence from a subject matter expert is required to fully understand where issues may lie. 

Consider gateway reviews to validate the state of the project and link the successful “passing” of that health check to the release of funding for future phases. Many organisations will have a gateway framework but they can sometimes be more of a guideline than a requirement.

To manage risk during this period, the mandating of the gateway approval process and perhaps extension to smaller projects may be required.

The results of the reviews should also be shared at the portfolio or programme level of governance so that business leaders fully understand the level of risk inherent with continuing the project at this stage.

Supply chain

COVID-19 puts pressure on relationships and it is important to lean on partners for support and insight during this challenging period. If the supply chain relationships to this point have been transactional in nature, this creates additional risk. However, a strong historical partnership will reap rewards and it is essential that clear communication channels remain open at all times. 

The supply chain requires certainty so that alternative solutions can be investigated safely and in the knowledge that the programme remains a corporate priority.

Partners should be included in appropriate governance sessions enabling full program risk to understood and shared. Innovation and solutions should be encouraged by the supply chain. Also, challenge existing standards and policies to find better client outcomes.

There is no doubt that the sourcing of materials and equipment from China and other virus-impacted countries, will add risk to the successful on-time and on-budget completion of projects. There should be open discussions around alternatives and mitigating damage. Again, using robust project data, re-baselining of project costs and time may be required. This should be completed in partnership and with a view to achieving the project outcomes in the most effective way.

Digital

As travel is increasingly problematic, alternative solutions are needed such as video-conferencing and collaboration technologies to remain productive. Project teams will need to share documents and information in the ‘cloud’ without the need for physical interactions.

Digital twins and virtual reality will replace site meetings and used for progress updates.

The above solutions are not necessarily easy solutions to implement quickly but they are investments that will be valuable in the future. This could be a catalyst to a more effective and efficient way of delivering construction projects that also has less impact on the environment in which we work.

Staying healthy

The four areas to consider in response to the impact of COVID-19 on capital programmes are not new. The advice provided here is what best practice organisations will implement however, the necessity is now heightened if the impact of the virus is not minimised.

If a capital programme is vulnerable and has underlying issues; it will be more at risk.

A capital programme that has best practice basics in place, with good control and oversight of project health, will be able to withstand the impact, work in partnership with stakeholders and emerge from this crisis in strong position. 

For further information contact:

Jon Poore
Director, Consulting and Advisory Services

t: +61 3 9529 8000
e: