Hey Reader,
Most capital programs are developed by adding projects to an ever growing list of ‘must do now’ initiatives. Some are urgent. Some are politically important. Others are routine end of life renewals. What is common with all projects, is that a sponsor has convinced someone that their project makes sense and that it must be done first.
Often the rationale for individual projects is moulded around the strategic risk framework, age of an asset or that increased reactive maintenance has surpassed a theoretical threshold.
Even if there is a sound process for justifying and ranking individual projects, the decisions that connect projects together into a program often resemble an auction. Make no mistake, whilst there’s often methodical processes in place for individual project justification, deciding the program is often more of an artform.
What is often not scrutinised when it comes to program selection is to question which of those projects jostling for attention are actually “must do now” projects?
What can be staged?
What could be deferred, and what are the consequences of deferral?
What will we not pursue unless there is funding, cost is reduced, or certain triggers are met?
We recently helped an organisation prioritise their capital program. Every project had a strong case behind it. Every project could be evaluated across projects. Every project to be delivered in the next five years was aligned with the objectives of the organisation and hadmeasurable KPIs directly linked to customer outcomes.
When key decisions are made visible, non negotiable investments become clearer. Staging, and sequencing decisions can be evaluated methodically and conversations around contributions, trade offs and outcomes can be based around evidence, not speculation.
A practical starting point
Focus on your 10–20 projects or 20% more value than last year's capital works budget.
Make explicit 3-5 outcomes that your organisations need to address in the next 3-5 years. This should come from the customer engagement, the strategic plan, incidents, service level obligations.
Rate each project against these outcomes and determine which has the greatest impact on the organisations outcomes. Categorise them as:
- Must do
- Stage
- Defer
- Contingent (with triggers)
Review your reasoning for each ‘must do’ project to make sure there is clear evidence across need, options, cost, delivery, and outcomes. If you can’t justify the project to your mother, then expect it to be challenged by the board, councillors, regulator or community.
This approach turns a collection of projects into a program that can be managed and communicated with confidence and delivers real customer outcomes.
We’ve set this out in more detail in our “Burden of Proof: A Manager’s Guide to Prudent & Efficient Capital Programs”. Reply to this email if you'd like a copy.
Cheers, Simon.