Executive Briefings

Could Better Supply Chain Management Improve Productivity of Giant Capital Projects?

Around the world, ever-larger capital projects are being undertaken. Better project management and technological innovation can improve the chances of success.

Three factors are defining the future of large-scale capital projects. First, investment is growing fast. In 2013, global investment in energy, infrastructure, mining, and real-estate-related projects was about $6tr; by 2030, that could be $13tr, according to McKinsey research.

Second, billion-dollar-plus megaprojects will account for a greater share of these developments. Third, the industry does poorly completing megaprojects on time, on budget, and to specifications. Our research estimates that 98 percent of megaprojects suffer cost overruns of more than 30 percent; 77 percent are at least 40 percent late.

There are many reasons for this poor record. Start with productivity - or, rather, lack of it. Construction productivity has been flat for decades, according to McKinsey research. In manufacturing, by contrast, productivity has nearly doubled over the same period, and continuous improvement has been the norm.

Read Full Article

Three factors are defining the future of large-scale capital projects. First, investment is growing fast. In 2013, global investment in energy, infrastructure, mining, and real-estate-related projects was about $6tr; by 2030, that could be $13tr, according to McKinsey research.

Second, billion-dollar-plus megaprojects will account for a greater share of these developments. Third, the industry does poorly completing megaprojects on time, on budget, and to specifications. Our research estimates that 98 percent of megaprojects suffer cost overruns of more than 30 percent; 77 percent are at least 40 percent late.

There are many reasons for this poor record. Start with productivity - or, rather, lack of it. Construction productivity has been flat for decades, according to McKinsey research. In manufacturing, by contrast, productivity has nearly doubled over the same period, and continuous improvement has been the norm.

Read Full Article