Author: Dennis Romak, Vice President of Food & Pharmaceuticals
June 18, 2015
As a lead project manager, or director of engineering, you may be responsible for assembling relevant data necessary to submit a Capital Request for project funding to senior management. It is critical to include factors such as: production forecasts, equipment & space utilization, cost estimates, and schedules to achieve Operational Excellence.
A phased approach has become mainstream in project execution plans by segregating large projects into smaller components. A scope of work and deliverables necessary to complete a project are developed in greater detail as the project moves from early phases to design completion. The phases also provide review time (project gates) by executive management to determine if the scope of work, schedules, and budgets are trending toward the project’s goals. Most phased approaches include early feasibility work that provides high-level review of cost, scope & schedule. Ideally, the feasibility effort provides you with a project gate to evaluate this data and determine if the project still meets the planning goals. What is the benchmark used to compare this data to stated goals? Many times, the benchmark is the Capital Request submitted to senior managers; this often times proves detrimental because the Capital Requests aren’t sufficiently accurate.
There are two main options to improved Capital Requests. First, through constant education in facility design, equipment, and construction costs by internal project managers and engineering departments. The second option is through third party consultants with the appropriate knowledge and experience. Either option is an investment, but the result is a superior execution process, a project that meets the planning goals, and no career-threatening conversations.
As an example, a recent project provided evidence of the challenges associated with Capital Requests. Based on the experience and planning provided by internal engineering and a management consultant, the Capital Request for the new building was generated and submitted to senior management. The project was approved and an E/A firm selected. During the conceptual phase of the design, major gaps were identified resulting in building size increase of over 30%, and budgets over 200%. As a result, the final building design was significantly different than the capital request and required additional funding requests of executive management.
