Improving the Capital Competitiveness of Site-Based Projects—IPA’s Site Portfolio Tool

The capital projects industry has witnessed significant erosion in capital effectiveness in site and sustaining capital (SSC) projects during the past decade. Cost overestimating is a key contributor to this weakening performance. Owner companies’ SSC project organizations frequently lack sufficient owner cost engineering and estimating resources—estimating databases among them—plus other critical infrastructure to effectively support project portfolios.

A prevalent Key Performance Indicator (KPI) Industry uses to track cost performance is cost deviation, the change from estimated to actual costs. Not long ago, IPA examined this KPI for SSC projects. Based on data from its proprietary capital projects databases, IPA found that 75 percent of industry SSC projects authorized in 2015-2016 underran their final investment decision estimates. Projects that set less competitive (overestimated) targets at authorization are responsible for driving this trend towards underruns.

For project organizations to improve the competitiveness of SSC projects, they must have access to reliable predictability measures of project cost and schedule performance. IPA has developed a web-based tool that strengthens the statistical quality control of their SSC project portfolios. The Site Portfolio Tool (SPT) provides companies with a comprehensive view of SSC portfolio projects cost and schedule performance that provides owner leadership with the necessary and timely information to make data-backed decisions and drive continuous improvement.

The SPT incorporates data from IPA’s database of more than 8,000 site-based and sustaining capital projects. It is designed for ease of use and features dashboards that report a suite of cost and schedule KPIs at the project and portfolio levels. Basic scope information, summary costs, and schedule data are required as inputs for each project phase. The SPT provides indicative project-specific cost and schedule KPIs based on IPA’s databases and proprietary models. Key project information can be displayed on a portfolio-level dashboard to allow the users to break down the performance metrics by various project characteristics, and then identify patterns and trends in the overall portfolio performance.

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