Between data center development, transportation projects, energy projects, electrification initiatives, large-scale utility plants, major-scale manufacturing plants and industrial projects, contractors are bidding on large, complex capital projects more often than ever before.
While megaprojects are often defined in terms of dollars, they can also be defined in terms of complexity. Consider a data center, where a single phase might not meet the specific financial threshold, but the multiple phases and the rapid speed at which these phases are being deployed, plus the amount of information that is applicable to each of the separate builds, catapults that project to the next level.
Knowing that many of the projects being bid on today fall into this category, there are important and necessary first steps to take before diving in to ensure efficient and successful project execution. Here are the top considerations for contractors to review before embarking on a large, complex capital project to maximize resources, minimize risk and ensure operational efficiency.
This checklist walks through key considerations in three main buckets—the financial, operational and risk-management items that contractors should walk through before deciding if a megaproject will be a good fit.
Financial:
- Does the customer need funding for the project? What does the interest rate environment look like?
- How will cost overruns, cash flow and payment delays be handled?
- Have tax incentives or available government funds been vetted for this project?
- How can the financial risks associated with scrap, excess and obsolete materials be managed?
- How will the current market trends and lead times on certain products impact pricing and availability?
Risk Management:
- Does the customer’s cash flow and financial capabilities allow them to sign a surety bond in the project prequalification process?
- Have the project terms and conditions, master service agreement and rebates all been carefully reviewed, and any considerations or concerns ironed out?
- How can you manage the risk of commodity fluctuations, especially over a long project cycle? Does the project require a programmatic distribution partner?
- Is there risk of regulatory changes impacting the project’s viability if it’s being executed in a region with potential political change?
- Have you vetted all your general and subcontractors, and analyzed their safety performance to ensure the safest jobsite possible?
- How do you forecast and develop an inventory plan that supports the construction schedule, but is also flexible enough to manage unforeseen disruptions or challenges?
Operational:
- Where is the project site? Is it remote or difficult to access, and does its location pose an issue for any other existing projects or clients?
- Does the land or warehouse space allow enough room for the management of project materials?
- What does the power availability look like? What alternative power options exist? Is power consumption monitored and optimized?
- Are you confident in the project management team to coordinate amongst the many stakeholders involved and ensure that the project will stay on track?
- Your distribution partners should do more than help you procure products. What time- or labor-saving services are they offering?
- Who will manage onsite materials to ensure product is received, secure and available or delivered as needed across the site?
- Do you have enough skilled labor to get the job done?
- What pre-delivery kitting or assembly can be done to save time on installation?
- When it comes to keeping large, complex capital projects on track, this checklist is a helpful start, but given continued supply-chain disruption, there are often factors you can’t control, like long lead times on materials, potentially negatively impacting the job—from missed deadlines to increased costs.
The Checklist in Practice
An EV manufacturer recently faced this exact scenario due to difficulty obtaining cable. In situations like this, a global supply-chain solutions partner can be critical. In this case, the manufacturer teamed up to tap their partner’s broad supplier network and develop a procurement plan to meet critical project deadlines. The team executed orders, and combined with installation enhancement services, ensured the cable was optimized for use, which reduced the labor required and helped ensure project delivery on time and on budget.
The new procurement plan saved the EV manufacturer 26 to 30 weeks of lead time and an estimated $8 to $10 million. With less time spent on procurement, the company had more time to spend innovating and optimizing its manufacturing processes and new EV facilities to best serve its customers.
Embarking on large, complex projects can be daunting, particularly as industry challenges persist—from supply-chain issues to a skilled-labor shortage. For many megaprojects, there is value in engaging with trusted industry partners from the start, before problems arise and the project is in crisis mode. Together, you are better equipped to navigate complexities and meet customer expectations, laying the foundation for continued success in executing megaprojects for years to come.
SEE ALSO: HOW DATA-CENTER PROJECTS WILL PAVE THE WAY FOR JOBSITE INNOVATION
