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Capital Projects

Book Description

A real-world framework for driving capital project success

Capital Projects provides an empirically-based framework for capital project strategy and implementation, based on the histories of over 20,000 capital projects ranging from $50,000 to $40 billion. Derived from the detailed, carefully normalized database at preeminent project consultancy IPA, this solid framework is applicable to all types of capital investment projects large and small, in any sector, including technology, life sciences, petroleum, consumer products, and more. Although grounded in empirical research and rigorous data analysis, this book is not an academic discussion or a conceptual dissertation; it's a practical, actionable, on-the-ground guide to making your project succeed. Clear discussion tackles the challenges that cause capital projects to fail or underperform, and lays out exactly what it takes to successfully manage a project using real-world methods that apply at any level.

Businesses report that 60 percent of their projects fail to meet all business objectives, and IPA's database shows that projects' final average net present  value undershoots initial estimates by 28 percent. This book provides concrete, actionable solutions to help you avoid the pitfalls and lead the way toward a more positive outcome.

  • Avoid the missteps that make capital projects fail
  • Learn the specific practices that drive project success
  • Understand what effective capital project management entails
  • Discover real-world best practices that generate more value from capital

When capital projects fail, it is almost always preventable. Inefficiency, underestimated timelines, and unforeseen costs are the primary weights that drag a project down—and they are all avoidable with good management. Capital Projects gives you the insight and practical tools you need to drive a successful project.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Acknowledgments
  5. Chapter 1: Falling Short of Expectations: How Executives Struggle to Deliver the Value from Their Capital Projects
    1. Background and Basis for the Book
    2. Capital Projects Create Value
    3. Most Projects Create Less Value than Expected
    4. Results Apply to All Types of Projects
    5. Sources of Value Erosion are Not Limited to Cost and Schedule Overruns
    6. How to Deliver the Value Promised
  6. Chapter 2: Why the Stage-Gate Process Is the Best Tool Executives Can Use to Get the Most Value from Their Capital Projects
    1. A Necessary Process
    2. How Does the Process Work?
    3. What Is the Role of Executives in the Process?
    4. Stage-Gates and Executive Control
  7. Chapter 3: The Project Frame: Understand the Opportunity before Starting a Project
    1. Typical Contents of a Project Frame
    2. Unlock Value by Finding a Better Option
    3. How to Develop a Project Frame
    4. Use the Frame for Executive Alignment and Endorsement
  8. Chapter 4: The Critical Project Sponsor Role
    1. Who is the Project Sponsor?
    2. Overview of Project Sponsor Role
    3. Assign a Project Sponsor as the Initial Business Case is Developed
    4. Requirements for a Strong Project Sponsor
    5. Choosing the Right Project Sponsor
  9. Chapter 5: The Single Most Important Thing an Executive Can Do to Make Any Capital Project Succeed: Define Clear Objectives
    1. Business Objectives Versus Project Objectives
    2. Developing Clear Objectives
    3. Communicating the Objectives
    4. Prioritizing the Objectives
  10. Chapter 6: The Executive's Role in Building and Supporting High-Performing Project Teams
    1. Executive Leaders Lead
    2. Invest in a Strong Owner Project Team
    3. Why You Need a Functionally Integrated Team
    4. Help the Project Manager Get the Resources for a Functionally Integrated Team
    5. Do Not Outsource the Owner Team Role
    6. More Experienced Project Teams Do Better Projects
    7. Strategies for Coping with Staffing Shortages
    8. Executives Working Together to Support the Project
  11. Chapter 7: Project Definition: The Fundamental Capital Project Concept Every Executive Must Understand
    1. Strong Project Definition Preserves Value and Produces Better Assets
    2. Executives Control the Quality of Project Definition
    3. Understand the Cost of Weak Project Definition
    4. Be Careful When Trading Fast Schedule for Strong Project Definition
    5. Reduce the Number of Schedule-Driven Projects
    6. More Project Definition is Not Necessarily Better
  12. Chapter 8: It's Going to Cost How Much!?! A Guide to Help Executives Avoid Capital Cost Surprises
    1. Key Concepts to Understand about Capital Cost Estimate Accuracy
    2. Factor the Cost Estimate Range into Decision Making
    3. Improve Project Definition to Narrow the Cost Estimate Range
    4. Follow These Rules to Get Contingency Right
  13. Chapter 9: Using a Project Steering Committee to Improve Executive Decision Making
    1. How to Build a Strong Steering Committee
    2. Who to Include in the Steering Committee
    3. Run the Steering Committee Efficiently
    4. Make Decisions at the Right Level
    5. Do Not Dilute Project Sponsor Accountability
  14. Chapter 10: Risk Management: A Mechanism to Understand Project Risk and Decide What to Do
    1. Risk Management: Identify, Analyze, and Manage Individual Risks
    2. Practices for Getting the Most from Risk Management
    3. Scrutinize Risks to Decide Whether They are Worth Taking
    4. Understand that the Estimate of the Risk is Probably Too Low
    5. Be Careful with Making Late Changes in Response to Business Risk
    6. Strong Risk Management Does Not Substitute for Strong Project Definition
  15. Chapter 11: Approve, Recycle, Cancel, or Hold: Making Good Stage-Gate Decisions
    1. Capital Investment Decisions are Made at the Stage-Gates
    2. Three Gates Provide Adequate Control
    3. The Business Question Asked and Answered at Each Stage-Gate
    4. Use Your Early Stage-Gates Better
    5. Four Choices for the Stage-Gate Decision
    6. Information Used in an Investment Decision
    7. Rules for Strong Gates
    8. The Slippery Slope of Granting Exceptions to Stage-Gate Deliverables
  16. Chapter 12: Executive Role, Executive Control: 12 Essential Rules
    1. Rule 1: Use the Stage-Gate Process
    2. Rule 2: Start by Framing the Project
    3. Rule 3: Ensure Project Sponsor Involvement
    4. Rule 4: Develop Clear Objectives
    5. Rule 5: Invest in Owner Teams and Provide the Support They Need
    6. Rule 6: Reach a Strong Level of Project Definition
    7. Rule 7: Factor the Accuracy of the Capital Cost Estimate into Decision Making
    8. Rule 8: Set Contingency in Accordance with Project Risk
    9. Rule 9: Build an Effective Steering Committee
    10. Rule 10: Use a Robust Risk Management Process
    11. Rule 11: Keep the Stage-Gates Strong
    12. Rule 12: Be Coachable
  17. Glossary
  18. Index
  19. End User License Agreement