“My team members give different answers when I ask them what success for the project means.”
A project manager recently described a common problem: she was growing concerned that each member worked toward separate metrics and KPIs. This came across most clearly when trying to find alignment on key project decisions; it seemed the team was not all marching in the same direction.
Even the leadership had challenges with alignment.
The Directors of Development, Construction, Tailings and Regulatory Affairs all had different ideas about what the project needed.
Priorities weren't clear, and this was starting to impact progress.
The project manager started looking for one key, primary metric representing project success that the team could rally around.
This would help her team clarify which tasks were most important and enable quicker, more certain decision making.
Imagine picking a place to eat lunch with a friend —maybe the two of you choose by considering cuisine, speed and price.
What if you were instead organizing lunch for 20 people?
You may pick an entirely different venue because other factors are now more important, like restaurant size and reservation availability. New options also arise, like ordering a catered meal. What matters most now?
The same dilemma exists for capital project teams.
Selecting a primary metric that best reflects the business' objectives and external commitments is critical. A team with varied metrics across disciplines or silos will naturally seek out different priorities and opportunities. These metrics rarely align together and drive to one key priority for project success.
Here are some of the best primary metrics that I have seen used:
1) Capital Expenditure
A brownfield oil and gas expansion was looking to decrease its capital spending during the next two years.
They selected capital expenditure (CAPEX) was broken out by year as its primary value metric to reflect this cash-conscious period.
As a result, the team focused primarily on scope and execution improvements and deferrals that reduced spend during this period. A different team with a different primary metric (like schedule or field productivity) may have focused on different opportunities altogether.
2) Internal Rate of Return (IRR)
A natural gas field expansion selected IRR as its primary value metric.
Because IRR isn't directly related to project size (like NPV), the project team generated design scenarios ranging from <$10 million to >$1 billion.
As natural gas prices decreased, the business could pivot and shift because these smaller options were already identified.
3) Time (Number of Outage Days)
An offshore oil turnaround team selected the number of outage days as its primary metric.
For this team, spending an extra $1M to come back online a few days earlier was highly worth it.
By clarifying the truly schedule-driven nature of their work across all disciplines, the full team quickly aligned on opportunities and decisions that saved over a week without compromising the required work scope.
4) Mass (Kilogram)
A team was working to design a Mars settlement to be launched into space. Every additional kilogram in their design increased launch costs by nearly $1,000,000. The team quickly realized that mass outweighed other project costs and selected this as their primary metric.
Space agencies apply this very metric as they develop onboard recycling technologies that enable reduced launch mass, even though, at first glance, these systems may appear more expensive.
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