Reaching that investment decision - setting up for success
To set up a major programme, 'whole systems' thinking is needed - defining the culture, leadership, skills, capabilities, contract strategy, delivery strategy, performance measurement, management controls and assurance and ensuring they all work together.
The initial goal in setting up a major programme is to secure the investment decision as efficiently as possible. But in order to do that, the board needs to be assured that the programme will be a success.
“You want to remove enough of the complexity and uncertainty before you decide to invest. And you want to do that with as small a team and as little cost exposure as possible,” explains Ashley. “You have got to keep it small, slick and agile. But you also have to do enough to justify the investment, and – crucially – show that you are ready to deliver.”
The big question is: have all the major risks been considered? If the answer is no, the board may well ask for more work to be done before they can reach a decision. If the board says yes, despite risks still remaining, there may well be an unacceptable threat to successful delivery.
Beyond existing skill sets
It is rare that a company has all of the skills, leadership and capabilities to hand and is ready to act, so building an organisation is always part of the process
One of our natural resources clients faced a different challenge in managing a broad portfolio of capital projects. Though it was a successful mining company, it was struggling to accelerate capital investment decisions, taking more time than many of its competitors to move from viable discovery to investment decision.
The challenge faced by the board was that it was being bombarded by different projects, all presented in different ways, with different levels of detail and varying information. “They needed a much more robust capital development process aligned with the investment decision-making process,” explains Ashley.
The solution for that company was to create a capital programme management organisation sitting between the board and the new projects. This organisation ensures that all the projects meet minimum investment criteria before being submitted for approval, and makes recommendations to the board on which projects should be taken forward. This has significantly reduced the time to assess viable projects and make better investment decisions.
Bring in the project people
The teams working in the pre-investment decision phase of major programmes are by necessity lean. Typically, they are technical people, concentrating on defining what is being delivered, how much it will cost and how long it will take.
“If your team is working really hard on definition, it can be valuable to bring in an independent perspective to look at how you develop the required capability,” says Ashley. This could be a transient team, internal or external, looking at current and proposed capabilities, setting the right culture and leadership style, and defining the standards and systems the organisation will need to deliver.
“You need project-type people in that second team,” says Ashley. “People that understand the dynamics of the programme and the behaviour of projects. They need different skills to the technical people. Their focus is to set up the programme for success, based on their learning from the major programmes they have worked on in the past.”
Essentially, you need ‘whole systems’ thinking, says Ashley. “This means defining the culture, leadership, skills, capabilities, contract strategy, delivery strategy, performance measurement, management controls and assurance, and having co-location strategies in place – and ensuring that they all work together.