March 3, 2014 by AP-Networks Leave a Comment While many process industry companies spend hundreds of millions of dollars each year on small plant-based projects, very few achieve value from these investments. In the worst cases, projects that never should have been started are executed perfectly, while high value projects are poorly implemented, or never selected in the first place. To rectify this situation, the process industry needs to change the performance measures for small, plant-based projects to emphasize project portfolio management. Much of the poor performance of small projects stems from a fundamental mistake: companies are using the same Key Performance Indicators (KPIs) for small capital projects that they are for large projects. Consequently, many site project organizations focus on optimizing individual small projects according to these unsuitable KPIs, rather than maximizing the overall business value of their small projects. The consequences of using inappropriate KPIs for small projects are many, and include excessive backlog of small project opportunities, inability to pursue market-driven project opportunities, idle or inoperable small projects, and frustrating interaction between the projects and operations teams. Additional consequences include excessively long, costly, and superseded front-end for some, and excessively short and insufficient front-end for many others. Most importantly, the use of incompatible KPIs is resulting in disappointing ROIs. The failure to employ sound management practices to the entire project portfolio is causing many companies to miss opportunities left and right and to invest in hardware with minimal returns. In future blog posts we’ll decompose the problem further, discuss solutions, and elaborate on appropriate KPIs for plant-based projects. Authored by Dr. Shawn Hansen – Manager, Capital Projects | AP-Networks To find out when new posts go live, follow us on LinkedIn.