You, an executive responsible for a capital project, may be in a tough position. Your decisions and actions have an enormous influence on the value delivered by the capital project; yet, you may not have much understanding of how capital projects are developed and executed, what your role is in the whole activity, and how you should perform it.
In this book, I have laid out the essential concepts you need to know and given some practical advice on what you need to do. In this chapter, I summarize the rules you can use to avoid costly mistakes and make your projects pay off.
Rule 1: Use the Stage-Gate Process
Ask yourself a few questions: Do I want the best chance at identifying and delivering the maximum value from a capital project? Do I want to make good decisions that prudently balance risk and reward, cost and benefit? Of course you do. Projects that adhere to the principles of a well-designed stage-gate process, on average, deliver the value expected at authorization. Projects that do not, on average, lose about half the promised value.
Executives provide the leadership, discipline, timely input, resources, and time needed to complete the work that is part of the process.
Rule 2: Start by Framing the Project
The project frame forces a disciplined approach to defining the opportunity or problem to be solved and a comprehensive look at all the things a business wants to accomplish with a project. It is the foundation ...