1Falling Short of ExpectationsHow Executives Struggle to Deliver the Value from Their Capital Projects
Executives often start out with high hopes for their capital projects, only to have them fall short of expectations. Capital projects are investments of substantial company resources to develop, to improve, or to refurbish an asset that is expected to generate cash flows for more than one year. Only 60 percent of finished projects actually meet all objectives after the project is complete and the asset was put into service.1 The success rate is not much better than a coin flip. The complaints about projects range from business cases ruined by cost overruns, to market windows missed because the project was late, to assets that did not perform as expected and that are expensive to operate.
As an executive responsible for capital, you do not have to accept these results. Success or failure is not random. I will show you what you can do to increase the probability of a successful project, make your project portfolio pay off as expected, and, critically, reduce the chances of the disaster project that loses all the capital investment and gets executives fired. The road to success starts with you. Success will require your active leadership and participation in the projects that you are sponsoring or that your organization has a major role in.
How do executives cause projects to fail? Here is a real example. A company initiated a small project to boost operating margins by consolidating ...
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