Is your capital project ready for the next phase?

Determining whether a capital project is ready to proceed to the next phase has often been contentious. The most commonly used criteria for proceeding or not has been the cost estimate accuracy. Various organisations such AACE (USA), ANSI (USA), ACostE (UK), NFP (Norway), ASPE (USA), Consumer and Oil Companies and individual authors have published their criteria for the different classes of cost estimate accuracy. In AACE, for example, has five Classes of cost estimation accuracy based on project definition across the project life-cycle. The lowest definition will be Class 5 with a cost accuracy range of -50% to +100% followed by Class 4 with -30% to +50%, Class 3 with -20% to +30%, Class 2 with -15% to +20% and Class 1 with -10% to +15%. Although guidance is also provided to help qualify the cost accuracy, the decision to proceed remains subjected to individual perceptions and beliefs, accuracy of input data and validity of assumptions.

To assist with consolidating the accuracy and validity of the input project information and the subsequent decision-making process, ProjectWay utilises qualitative and quantitative tools to assess the readiness of projects to proceed to the next phases. Such a tool is the Construction Industry Institute’s (CII) Project Definition Readiness Index (PDRI) developed by research teams represented by consultants, contractors, owners and academics. The PDRI tools are industry specific and covers major projects in industrial, infrastructure, building, mining, manufacturing and life sciences as well as smaller projects in these sectors.

Through a structured and facilitated process the PDRIs variables are populated as per the current project phase and the quantified result provides more objectivity in the decision process.

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