Two men in hard hats discussing an issue on a construction site.
A successful capital delivery program starts with adequate funding. People, processes, and tools follow the money.

The answer is somewhere between 5 to 18 percent of constructed project costs. And it is more complicated than simply the percentages.


If the top end of this range sounds high to you, then I will bet you are not delivering your annual constructed value goals. You have underfunded your supporting roles. And in most cases where I find the delivery is off the rails, no one in leadership can tell me quickly how much is being spent on the capital program management functions.


A recent example is a new $100 million capital delivery program that I was asked to improve. This new program was on top of a program whose three-year rolling average of constructed value delivered was 25 percent of the goal. The project controls function was a shared function between the engineering and finance department, and no one could tell me who was exactly leading the effort.


A starting point of $1 million can be used for project controls of the new $100 million program based on 1 percent of the constructed value for that aspect. Over four years of delivery, the full-time equivalent for project controls costs around $500,000. Add in the software support and a risk manager, and there was easily the other $500,000.


Can a project controls person, risk manager, and supporting software serve more than a $100M capital program? Yes, in this case, because most of the projects were large. However, the base program lacked good procurement policies and was strained in terms of personnel, so more help was needed from the new program to bolster the existing (failing) program.


Start with the money to develop the capital program delivery framework. Capital delivery is a system that includes many inputs, processes, people, feedback loops, and outputs. There is certainly much more to being successful than the money. Yet, successful programs can usually quickly tell you how much (and where) they are spending the administration money.

 

JD Solomon Inc provides services at the nexus of facilities, infrastructure, and the environment. Contact us for more information about project development, project risk management assessments, and third-party reviews of capital program delivery.




Woman pointing at you with money falling around her. Get your asset management program on track!
Determining replacement asset value (RAV) is just as important as performing condition assessments.

Asset management for facilities and infrastructure has fallen into the leadership realm of gearheads and data managers. The result is asset management programs that are years (or decades) and hundreds of thousands (or millions) of dollars into their programs and still cannot produce realistic replacement values for their assets.

Does it matter that we have spent most of our attention on data management systems, integrations with GIS, condition assessments, and preventative maintenance programs? You bet it does.


Asset management is fundamentally about the total cost of ownership. Regardless of how good your conditions are or how detailed your job plans are, there is no way to understand lifecycle costs if you do not know what your assets are worth.


The most meaningful asset management performance benchmarks are related to a percentage of replacement asset value (RAV). You are guessing at performance metrics and the total amount of resources dedicated to improving your program if you do not know your cumulative RAV. You are further lost in the wilderness if you do not know the difference between book value, insurance replacement value, and RAV as it is defined in reliability & maintenance practice.


The next time you review your asset management program, remember to spend equal time and money dedicated to establishing a consistent valuation of your assets. After all, the first three questions of asset management are related to understanding what you own, the value of what you own, and its condition. You are wasting your time if you do not understand all three equally.

 

JD Solomon Inc provides services at the nexus of facilities, infrastructure, and the environment. Contact us for more information on asset management planning, asset management implementation, and third-party program reviews.




jD Solomon in Cincinatti Reds jersey with Colorado mountains behind him.  JD is Communicating with FINESSE!
JD Solomon discusses "How Baseball Teaches Us Everything We Need to Know About Human Errors"

The 2022 CHOL conference greatly exceeded pre-pandemic attendance. A wider range of industries was represented, including a significant presence from the healthcare sector.


CHOL is where the physical sciences and social sciences integrate. This integration is related to safety, failure analysis, learning teams, operational performance, continual improvement, and high-reliability organizations.


The weeklong event included a full range of discussion and interactive environments including General Sessions, Rapid-Fire Sessions, Breakout Sessions, a Poster Session, Half-Day Workshops, and Full-Day Workshops. Some of the leading experts from around the world attended the event.


JD Solomon presented a breakout session on human error and a workshop on communicating issues with high levels of complexity and uncertainty.


The 2023 CHOL conference is in tidewater Virginia. Learn more about CHOL and what the community is doing throughout the year at its website.