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

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

July 23, 2015
McKinsey

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.

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Business Strategy Alignment Global Supply Chain Management Retail
KEYWORDS Business Strategy Alignment Construction Supply Chain Global Supply Chain Management McKinsey productivity gains Project Management Retail Supply Chain Analysis & Consulting Supply Chain Management Supply Chain Management: service industries
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