Setting Up Infrastructure Projects for Success

Author
Greg Ray

Infrastructure projects are once again gaining attention in the news as opportunities arise for governments at all levels to improve and expand transportation assets, energy grids, and public services, all of which can result in new jobs, stronger economies, and larger tax revenues. However, setting up infrastructure projects for success in today’s environment requires owner companies, government agencies, and investors to fully understand the challenges that lie ahead.

Current Challenges

The COVID-19 pandemic disrupted many infrastructure projects, raising questions about how and when they might restart again—and even questions about their need as the public’s habits may be different in the post-COVID-19 environment. But the promised benefits of new infrastructure investments and the risks associated with canceling ongoing projects are tough for governments to ignore. Although the prospect of massive U.S. government spending on infrastructure projects remains murky ahead of the next presidential election, congressional legislation has been introduced to spend over $300 billion for infrastructure improvements across the country.

These potential infrastructure and transportation projects in the United States and across the globe would create much needed demand on the supply chain required to build and improve highways, bridges, ports, airports, public transportation systems, Internet and IT facilities, and electricity grids. Understanding how much these projects should cost—both at an aggregate and detailed cost basis—remains crucial for setting budgets and for responsible use of tax payer money. In addition, the nature and speed of the funding (with the objective of employing as many people as fast as possible) will certainly increase the importance of setting up the projects quickly and correctly right from the start to optimize use of the available supply chain.

Organizations will recruit and hire experienced project managers from the processing industries (oil, gas, chemicals, mining, etc.) and these project managers will be put into positions within organizations that likely will have no formal stage-gated or assurance processes and limited experienced resources to support their efforts.

Organizational structure, stakeholder management, integrated teams, detailed roles and responsibilities, deliverables that follow a stage-gated system, and good governance all become critical factors that enable infrastructure projects to set competitive targets and achieve them.

IPA’s History With Infrastructure Projects

IPA is recognized globally for its expertise in evaluating execution risk of industrial sector capital projects. The foundation of this capital projects knowledge base is our research into the drivers of performance of large and complex infrastructure projects. Prior to forming IPA in 1987, some of the very first large projects IPA Founder and President Edward Merrow analyzed were major infrastructure projects, including the construction of airports, hydroelectric dams, pipelines, and nuclear power plants. Merrow developed quantitative models that incorporated the critical project framing factors needed to achieve project success. IPA has since built on those models and that initial research with over three decades of project evaluations and developed a database of over 20,000 completed projects.

Owner companies, government agencies, and investors—with projects located in the United States, United Kingdom, Brazil, Canada, Australia, and many other countries—continue to turn to IPA for a wide range of infrastructure project consulting and analysis services. We have evaluated hundreds of infrastructure projects with diverse scopes, including buildings (labs, airport hangars, warehouses, residential complexes, hospitals, and university buildings); transportation assets (airports, terminals, ports, jetties, pipelines, and rail); and utilities/power/public service assets (gas/coal/nuclear plants, electrical distribution, offshore and onshore wind, solar, waste management, and fire prevention/fighting). In addition, IPA has worked extensively with the U.S. Department of Energy to benchmark and reduce risk in the DOE-supported biofuels projects.

For infrastructure projects, holding IPA workshops very early on in the project life cycle has proven to be one of the most effective methods of assisting infrastructure project management with project risk reduction, organization, and planning for execution. Incorporating IPA research into these workshops on areas such as contracting strategies and sustainability Best Practices has enabled project managers to make key decisions early on for their projects. For example, IPA has identified stakeholder alignment Best Practices for capital projects. Stakeholder alignment is crucial to infrastructure projects as they typically have a diverse group of stakeholders such as landowners, financial backers, community leaders, governments, and non-government organizations (NGOs). The overall objective of these early workshops is to bring to bear the lessons learned from similar projects, to establish project priorities and trade-offs, and to set the fundamental basic building blocks for incorporating Best Practices to ensure project success.

In addition to workshopping and project benchmarking, IPA’s Organizations & Teams (O&T) group has been asked to assist with a variety of public projects. The IPA O&T group—which concentrates on the organizational structure, size, experience, roles, and responsibilities for projects and organizations—has helped reduce risks to public projects through analyzing and assessing the people, resources, and structures required to achieve project success.

As we enter into this environment of a very large number of publicly funded infrastructure projects, the fundamentals of project management Best Practices remain: projects need to be established, staffed, organized, and set up properly from the very beginning, and reasonable and achievable targets need to be set for the projects prior to authorization. Failure in any of these factors may lead to difficulties achieving the project (and taxpayer) objectives.

Contact IPA to learn more about setting up infrastructure projects for success in today’s environment.

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