New research from Accenture paints a pretty grim picture for capital project investments for utility and oil and gas industries over the next several years: delays and budget overruns are expected to cost them trillions of dollars.

Accenture surveyed 61 energy executives from 21 countries who are responsible for capital projects worth at least $1 billion. The survey yielded some sobering numbers:

·         Only 34% of survey participants said they had delivered within 25% of their approved budgets for all projects

·         Less than a third (32%) said they had delivered on schedule

·         Major obstacles identified were regulatory requirements (49%) and work force/skills availability (25%)

"The increasing size and complexity of today's major projects has added to the scale of challenges for energy companies globally," said Jean-Marc Ollagnier, group chief executive for Accenture's Resources operating group. "But companies can improve their success in delivering capital projects by broadening their focus on project management beyond engineering and procurements to include human capital strategy, stakeholder and supplier relations and defining and measuring success."

Accenture makes several recommendations based on the research results and analysis, and on its experience with energy sector clients. A partial listing includes:

Risk management: Risks are not usually isolated; an problem in one area frequently affects others. Companies need a "rigorous approach to assessing risks" at both the project and portfolio levels, as well as monitoring and mitigating capabilities.

Improved collaboration with suppliers: Companies are using engineering, procurement and construction companies for turnkey project execution because rising asset construction costs are turning up the pressure for operational excellence. Accenture says "Regardless of the number of contractors and suppliers, better methods of collaboration and data transfer need to be agreed upon in upfront planning."

Data and analytics: Companies need to be able to collect data at all levels and take advantage of advanced analytics to learn from that data. At the basic level, this includes comparing past project estimates, reviewing variances and identifying the reasons for the variances so they can be avoided in the future.

Other recommendations focus on project lifecycle and developing a talent strategy to ensure that a skilled work force is readily available.

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