[miningmx.com] – LESS than a third of the world’s large capital projects
in the energy and utilities sector had delivered to within 25% of approved budgets,
and even less had built their projects on time.
This is the eye-opening finding of an independent study conducted by consulting group
Accenture, which interviewed key executives about their capital project delivery in
countries as disparate as Brazil, Greece, Hong Kong and Denmark.
John Downie, senior partner in Accenture’s London office, speaking at a round-table
seminar conducted by Finweek and Accenture, said on October 9 that Eskom’s project
budget and scheduling challenges were not unusual.
“In reality, you’re not alone,’ said Downie. “A surprisingly small group are getting it
right.’
Eskom has been criticised for failing to deliver its Medupi project on time. According
to the Free Market Foundation, which was quoted in an article by Business Times,
Eskom in 2007 budgeted R52bn for a 4,500MW power station, with the first unit to be
commissioned in mid-2011. Medupi is expected to cost R91bn with first production in
late 2013. Another power station, Kusile, was first expected to be operational in 2016.
This has been rescheduled to March 2019.
According to Accenture’s research, which embraced projects in upstream distribution
networks, pipelines, refining and nuclear industries, only 30% of respondents
delivered to within 25% of the approved budget of their projects between November
2011 and February 2012.
Only 15% had delivered to within 25% of the approved schedule for the projects,
while 31% of survey respondents were able to deliver reliable production capability.
Downie added that executives tended to be optimistic about their projects when
completing the survey.
Downie estimated there had been $5 trillion of wasted money in implementation of
capital projects over the period of the study.
