A Guide to Effective Capital Project Management

2/21/2024

In the dynamic field of facilities management, capital projects are essential for growth and efficiency, and facilities managers play a crucial role in steering these projects from concept to completion. Identifying the most appropriate projects, securing funding and ensuring meticulous execution are fundamental elements in enhancing facility operations. If done properly, these projects can achieve substantial organizational savings. 

A practical walk-through of one approach to capital programming can support facilities managers through the various phases of a capital program. It can offer an approach to effectively identifying projects that align with organizational goals, making persuasive cases for funding and managing projects to deliver on time and within budget. 

This walk-through is not intended to discuss managing facilities projects. Managers understand the way their organizations manage the execution of capital projects. But it should provide a sense of the steps organizations can take to realize the long-term benefits of effective capital programming across facilities portfolios that range from single-building owners to managers of thousand-building portfolios. 

Needs and goals 

The first step in this approach to capital programming is identifying initiatives that will significantly help a facility and an organization. This process is ultimately an analytical approach to evaluating the impact of specific projects on the organization as a whole. In that sense, it does not require decades of facility knowledge to perform well. Of course, the organization benefits from deep facilities experience that can identify potential improvements during this process. 

It is difficult to overemphasize the importance of a complete and accurate data set to this process. Too often, organizations have identified projects from an incomplete asset inventory, or a facilities condition assessment does not relate to a work breakdown structure. While projects certainly can be identified this way, it prohibits an organization-wide view of need. This means organizations often take a squeaky wheel approach to funding, which is almost never the most effective or efficient way to run a capital program. 

Managers can begin by conducting a thorough assessment of a facility's operations and infrastructure. The process does not stop at the condition. Facilities have three areas of need: capital renewal, operations and programming. Areas in which projects could enhance efficiency, safety or productivity need to be identified in the same effort as understanding when to replace a roof. Engaging with staff at all levels can provide valuable insights into the daily challenges and opportunities within the facility. Managers should not shy away from stakeholder engagement. 

Related Content: Making a Case for Capital Projects

Assessing facility needs is likely to be the largest single effort in the capital program. It takes a large amount of time to do well. Working at the right level of detail is a prerequisite for success here. Data used to run a CMMS might not have the same level of detail needed to successfully articulate the need for a particular project. 

Managers must ensure each potential project aligns with the organization's broader strategic goals. Whether the goal is reducing operational costs, improving sustainability, enhancing capacity or a direct relationship to the ability to perform the organization’s mission, each project should have a clear link to these overarching objectives. 

Evaluate and prioritize 

Managers also need to consider the financial implications of potential capital projects. This process involves not only looking at the initial investment but analyzing the projected return on investment (ROI) if one exists. Projects with a clear path to financial benefits, such as cost savings or revenue generation, often stand out in the decision-making process. 

Surprisingly, many organizations in the public space also have revenue generative projects linked to leasing programs, parking garages and housing facilities. Managers should not assume there are no potentially revenue generative projects in their backlogs. 

When considering the ways that the best organizations perform financial evaluations of projects, it often involves a key facilities metric. A facilities condition index is often used. It is also important to consider the cost of ownership extending beyond construction, including system and component renewal along with corrective and preventive maintenance. 

Once a manager has compiled a list of potential projects, the next step is to prioritize them based on their alignment with organizational drivers, financial impact and urgency. This prioritization will help focus resources and efforts on projects that promise the most significant benefits. This can be accomplished through a formulaic approach where weights are ascribed to categories and ratings from the assessment. However, the process is likely to be iterative, depending on the funding stream. 

Making the case for funding 

Identifying the right capital projects is a strategic exercise that sets the foundation for successful project execution. The next step involves building compelling cases for these projects, which is a critical step in securing funding and support. 

Securing funding is crucial in capital project management and involves presenting a compelling narrative to stakeholders. Managers can start by crafting a comprehensive business case that outlines the project's objectives, alignment with organizational drivers, and the tangible benefits it will bring. This should include the results of the detailed financial analysis, showcasing the cost-benefit breakdown. 

Managers can support the case with clear visuals and charts to articulate the narrative effectively. The ability to display patterns that are immediately recognizable is much more successful with a visual element than with a table of figures. Humans more quickly recognize patterns with well-designed visuals than they do with tables of figures. So long as the backup information is available when requested, displaying the narrative this way will not be an issue. 

Related Content: Project Management: Strategies for Success

In addition to financial details, managers can stress the way the project aligns with the broader strategic objectives of the organization, reinforcing its relevance and importance. They should present a well-thought-out risk assessment, highlighting potential challenges, strategies for which risks are present, and tactics for avoidance, mitigation and response. This dual focus demonstrates the project's alignment with organizational goals and the proactive approach to managing potential obstacles. 

Finally, managers should prepare to engage dynamically with stakeholders. This step  involves not just presenting the business case but actively listening to feedback, addressing concerns and answering questions. Being responsive and adaptive to stakeholder input can significantly enhance the persuasiveness of your proposal, and it facilitates the buy-in process. 

Project and program management 

Once a specific project is underway, meticulous management is crucial. This involves adhering to the budget and ensuring the project timeline and quality standards are met. Regular monitoring and clear communication channels are essential, allowing for prompt identification and resolution of issues that might arise. Effective delegation of project oversight for large organizations is critical to success. There is a limit to the number of projects one project manager can oversee. 

Once a project is completed, the underlying data set should be updated. This stage is where organizations most often run into problems. It is also a huge opportunity for organizations to improve their capital programs. When the planning cycle begins, managers should consider the following areas: 

• Projects accomplished in the prior period 
• Projects scheduled for the prior period that were not accomplished 
• Projects scheduled for the current period that should be delayed 
• Projects scheduled for future periods that should be accomplished sooner. 

As these adjustments are made, they iteratively inform the next planning cycle. When projects come to fruition, the benefits extend beyond the immediate improvements to the facilities. They contribute significantly to the bottom line of the organization, optimizing operations, enhancing efficiency and paving the way for future growth and success. 

The role of directors and managers in this process is not just about overseeing projects but about driving change, fostering innovation and steering their organizations toward a desired future. 

Ryan Small, FMVA, FMP, is vice president with FEA.