<   News

Why You Are Not Delivering On Your Capital Plan

Why You Are Not Delivering On Your Capital Plan
April 22, 2024

In the food manufacturing sector in Australasia, we have found that the effective delivery of capital plans is a cornerstone of sustained business growth and success. However, many organisations grapple with the challenge of bringing these plans to fruition. At TEG Projects, we’ve observed that the primary obstacle is often the scarcity of dedicated Project Manager resources—a predicament that is far from uncommon in today’s food manufacturing environment. In this blog we’ll cover the common challenges food manufacturers face when trying to deliver on their capital plan including a lack of thorough assessment, or appropriate prioritisation, bottlenecks due to over allocation of work to specific staff and more. 

The first step in overcoming this challenge is a thorough assessment of resource needs from the outset. It’s crucial for organisations to evaluate the scope and complexity of their capital plans well in advance of setting capital budgets. This assessment should identify the specific skills and expertise required to manage these projects effectively. Without this foresight, companies may find themselves ill-prepared to execute their strategic initiatives.

Once the needs are clearly defined, the next crucial step is prioritising projects. Organisations must focus on capital projects that not only align with their strategic goals but also offer the most significant potential benefits. Prioritisation ensures that resources are allocated efficiently and that projects with the greatest impact are advanced first. Such projects may involve plant upgrades, factory extensions, or relocations.

However, effective resource allocation extends beyond mere prioritisation. In many cases, Engineering Managers or Site Project Engineers attempt to oversee all projects on their site, regardless of the size of the capital portfolio. This approach can inadvertently create bottlenecks, hindering the progress of projects and, by extension, the growth and efficiency of the business itself. In their attempt to maintain control, these professionals may not realise the damage being done by delaying valuable projects that could enhance business profitability, safety, and efficiency.

To address these inefficiencies, strategic allocation of project management resources is essential. For some organisations, this might mean hiring additional contract project managers to handle the increased load. Moreover, investing in the training and development of existing staff can enhance their project management capabilities, thus increasing the pool of resources available. Cross-training employees is also beneficial, as it creates a more versatile team capable of managing diverse projects.

Hiring consultant project managers or outsourcing certain functions to experienced project managers can fill gaps and support internal teams. Although often perceived as costly, the truth is that the opportunity cost of not delivering on capital projects can far outweigh the expenses associated with using external resources. In fact, these costs can be capitalised, meaning the project itself can fund the necessary resources, with operational costs rising only at the depreciation rate. 

Furthermore, the implementation of modern project management tools can significantly enhance the efficiency of project execution. These tools help in managing timelines, resources, and communication more effectively, ensuring that projects proceed smoothly and according to plan. It is also crucial for organisations to maintain clear communication with all stakeholders, particularly senior management, to ensure there is a continuous understanding of the importance of capital plans and the impacts of resource limitations.

Lastly, on larger sites or across multiple sites, the establishment of a Project Management Office (PMO) can provide centralised support and ensure that project management practices are consistent and focused across the organisation. Coupled with clear performance metrics and continuous improvement processes, a PMO can drive significant advances in the organisation’s project management capabilities.

In our experience, we’ve observed that a significant factor in why some organisations struggle to deliver on their capital plans is the absence of robust performance metrics. Establishing key performance indicators (KPIs) is critical to effectively measure the success of project management efforts. These metrics provide a clear framework for assessing progress and pinpointing areas that require additional focus. Without such metrics, organisations often lack the necessary visibility into project performance, making it difficult to steer projects in the right direction and ensure that they align with strategic goals. Regular assessments and detailed reports on progress enable proactive management, ensuring that any deviations from the plan are addressed promptly.

Another pivotal element is the commitment to continuous improvement within the project management process. At TEG Projects we regularly conduct reviews to extract lessons learned and identify improvement areas. This iterative process of reviewing and refining project management practices is one of the reasons our client relationships tend to be long term, as our clients benefit from our enhanced project delivery capabilities over time. Without this commitment to adapt and improve, organisations may find themselves repeating the same mistakes, leading to project delays, budget overruns, and ultimately, the failure to meet key business objectives. By integrating these practices, organisations can significantly improve their ability to execute complex capital projects successfully.

By addressing these key areas, organisations can not only improve the management and execution of capital projects but also ensure these initiatives deliver their intended benefits. At TEG Projects, we believe that with the right resources, prioritisation, and tools, any organisation can overcome the hurdles of resource constraints and achieve successful capital plan delivery.

Are you an experienced Project Manager wanting to join a supportive team, helping clients to deliver on their Capital Projects? Reach out to us today.