Introduction:
This is the final edition of our five-part series of blogs, where our Capital Projects and Infrastructure (CP&I) team has discussed PwC Middle East’s Capital Project Controls managed service - a part of the firm’s Infrastructure Managed Services platform. It offers enhanced project management and project controls capabilities to help drive better outcomes on capital projects, programmes and portfolios for clients.
In the first of our five-part blog series, we discussed challenges faced in delivering large-scale projects, drawing insights from our 2022 Capital Projects & Infrastructure survey. Here we explained the need for a different approach to project controls. Part 2 of the series explored the technology-powered component of our solution, Part 3 looked at our human-led approach and the benefits of an onsite/offsite resource model, while Part 4 explained how we collaborate with our trusted alliance partners to deliver enhanced capabilities within our project controls managed services.
In this final part of our series we explore the need for new, value enhancing commercial models when client and owner organisations contract Project Controls or Programme Management Consultant (PMC) services. All too often in the region, project control and project delivery services are contracted using traditional time and materials based approaches. But we’ve seen first hand that these traditional approaches provide limited incentives to suppliers and do not lead to optimal results. A better approach would be to contract project controls services,based on outcomes, with payments linked to KPIs, performance and results. Not only will this drive value for money, but outcome focused commercial mechanisms are also proven to deliver better results.
So how can these services be procured and contracted more efficiently and what are the benefits?
Due to their scale and complexity, capital projects require advanced project management, project controls and the latest technology. To meet these needs, commercial models for Project Controls and PMC services, therefore, need to incentivise consultants to leverage their full organisational capability to deliver on this, incentivising delivery efficiency rather than resource maximisation. At PwC Middle East, we ensure these elements are incorporated into our project controls managed services commercial models:
Payments linked to outputs not resource inputs. We link our payments to the outputs provided, not the input of the resource time used to provide our service. Working with our clients we agree on a priced schedule of monthly activities and outputs that drives our fee. This drives us to continuously innovate, improve delivery efficiency and maximise our use of the latest technology.
Incentivised outcomes. We use Key Performance Indicators (KPIs) within the payment mechanism to ensure client outcomes are fully incentivised. Working with our clients we agree on relevant KPIs measuring outcomes and link them to our monthly payments to ensure that under and over performance is reflected in payments. This further reinforces the consultant incentive for innovation and continuous improvement.
Baked in technology costs. Our clients buy a full-wrap managed service, not just resources. Our commercial model therefore provides clients with an all-inclusive cost for delivery of the managed service including the latest technology from us and our alliance partners. Rather than relying on a one off ‘point’ technology solution build, our clients therefore benefit from the ongoing technology developments and improvements made by us and our partners over the life of the projects. Given the pace of change and the advent of technologies, such as Artificial Intelligence, we believe this approach to technology costs is vital.
The above will require a mindset shift from the ever present need to see consultant resources onsite, with ‘bums on seats’ used as a means of measuring value for money, to an understanding that outputs and outcomes are what is important. Understanding this and moving to this type of model can only lead to better consultant value for money.
Case study: Strategic Project Control Managed Services for a US$2bn mixed wind and solar renewables generation project
We are delivering project controls managed services for a US$2bn mixed wind and solar renewable generation project in the Middle East. Given the profile of the project our client identified the need to procure a strategic project controls service on top of the usual Engineering Procurement and Construction (EPC) and Owners’ Engineer (OE) parties to drive outcomes and value. The service we are providing covers many of the components of best practice set out in this blog series: (1) Tech-Powered, (2) Human-Led, (3) Supported by our Trusted Alliances, and (4) Outcome-Focused, see the below diagram for details:
Conclusion: The time is now
At PwC Middle East, we have successfully implemented the strategies discussed throughout this five-part blog series across several projects in the region. This work has been the foundation of much of the content shared, and we hope you’ve found the insights valuable.
This is the era of the giga-project, and these developments are bringing investment and an unprecedented project pipeline to the sector. But such projects are big enough and complex enough to demand integrated, data-driven insights for delivery certainty and investor confidence across large scale capital infrastructure projects, extending traditional services into delivery and run. The time is now to do things differently and improve project outcomes.
