Five Ways CAPEX Projects Go Wrong (and what to do about it)

Successful capital expenditure (CAPEX) projects demand strategic vision, preparation, and execution. A well-run CAPEX initiative also requires careful coordination of multiple components and shifting variables. Beyond overseeing tight construction deadlines, facility engineers are also often tasked with managing countless contractors, internal resources, and a diverse range of (often unsolicited) input - all while managing their recurring duties and responsibilities that also ramp up once construction begins.


Navigating through so many factors in a relatively short amount of time makes pre-launch planning mission-critical. Put simply: starting your projects with a strong foundation is essential to success. Go into your next CAPEX engagement knowing how to avoid these five common mistakes to keep your initiative on track.


Incomplete Scope of Work

Tasked with aggressive delivery dates, many plant engineers feel pressured to begin work as soon as possible. Circumstances beyond the engineer’s control can lead to bidding out the job with an incomplete or undefined scope of work (SOW). Unfortunately, buying out with an incomplete SOW can cause project interruptions and delays. Waiting until you have a full, clean scope of work effectively manages contractor expectations when pricing the job, gets all resources on the same page and can cause less unexpected disruptions once construction begins.


Lack of Coordination (aka Little to No Communication)

A successful CAPEX project doesn't just require consistent communication – it requires consistent over communication, particularly in the project's initial phases. Facility changes or surprises can quickly cause significant operational discord, ultimately causing unnecessary expenses and delays. As soon as possible, discuss what's ahead with both contractors and internal staff to help with planning and scheduling as well as minimize impact amongst both resource pools.


Unvetted Design

When developing a design, it’s critical to consult and collaborate with the people who will work in the area or with the equipment that the project will impact to avoid an unvetted final plan. Bring in key stakeholders as early as possible in the design phase to gather insight on the best way to complete tasks, maximize efficiencies, and identify what outside operators are needed for specific project milestones. Utilizing all relevant stakeholders identifies design flaws that may not be evident to an outside engineer as well as ensures the final vetted construction drawing functions with the operation of the facility before the scope is put out to bid.


Unqualified Contractors

Beyond a vetted design, an efficient CAPEX project must also utilize vetted contractors. When choosing a contractor, decision-makers are often required to keep costs as low as possible; however, it’s still essential to check contractor qualifications, even when making a selection based on price alone. Failing to thoroughly screen resources can have significant cost and schedule impact. Contractors that don't understand the SOW, industry, facility conditions, or plant-specific regulations can result in a project fail and six or seven-figure losses. Properly vetting outside resources can help pinpoint providers with the right qualifications for your specific engagement.


No Customer Engagement

CAPEX projects can (and often do) change on a minute-to-minute basis. Without a well-established plan to escalate issues, contractors may not recognize the best way to resolve conflict and drive change as needed. Before the start of the project, coordinate a daily, 15-30 minute meeting with key plant representatives, including operations, maintenance, safety, and sanitation to “run the traps” and avoid any potential pitfalls that may occur.


Contact Perry Construction Today

Perry Construction Management is a veteran-owned construction company that specializes in CAPEX projects across multiple industries. Our full suite of capabilities solve a diverse range of capital project challenges, including qualifying contractors, vetting construction drawings, and coordinating site resources. Contact us today to hear more about how we can keep your project moving forward on task, on time, and on budget.

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