With the International Energy Agency World Energy Outlook 2016 — New Policies Scenario report forecasting that global electrical power demand will increase by almost 70% between 2014 and 2040, and that investment in power sector infrastructure will be close to US$20bn from 2016 to 2040, it has never been more important to ensure that these funds are invested in projects which use the most up-to-date, best industry practice to maximise value.
In light of this, a recently published EY report has highlighted how important effective budget and schedule management. Focused on the industries 100 largest projects- known as “megaprojects”- the study, Spotlight on power and utility megaprojects — formulas for success, showed that even the largest projects can have very significant budget and project milestone completion overshoots.
“The new wave of investment should transform our energy future, stimulate economies, create societal benefits and support long-term growth. But these projects often run significantly over budget and over schedule – putting all those energy, business and societal benefits under threat.”
– Safia Limousin, Global Power and Utilities Capital and Infrastructure Leader, EY
Interestingly, though, the report also showed that gas powered generation projects had much lower levels of budget overshoots and project delays.
As the name suggests, the report details how a EY global survey of more than 200 top sector executives identified three key challenges for the sector: Financeability, Deliverability and Asset management. The EY research also identified some of the key issues within these areas which together can lead to significant project problems, and the approaches which can guard against them by creating a holistic view of the full project life cycle.
These approaches center around the rethinking of program management and use of digital big data innovations to enable rigorous up-front assessment of project fitness to address financial structuring and boost investment attractiveness, the use of digital assets to address complexity and risk in design interfaces and construction planning and the active use of digitally connected holistic and independent performance reporting.
The study also discusses methods to reduce the risk of these delays and overspends- most notably utilizing digital innovation is an important step toward more effective control and enhanced project performance. Embracing innovations in project fitness assessment, big data management and decision support management methods, for instance, can improve power and utilities companies’ ability to formulate a holistic view of projects and accurately anticipate and address time and cost overruns to keep them on track.
This need to a cutting edge approach to every aspect of a project, from plant design to project management methodology, is at the core of GLE ethos, and we welcome everything which can help improve industry wide best practice.