Capital Efficiency – Pull All the Levers


By Bob Prieto

Fluor Corporation

Princeton, New Jersey, USA


“Speaking to investors today, new Shell CEO Ben van Beurden updated on the company’s priorities: improving Shell’s financial results and achieving better capital efficiency, as well as continuing to strengthen operational performance and project delivery.”….January 30, 2014

(Vale capital spending) “in 2014 will show a decline for the third year in a row. This reflects the greater focus on capital efficiency, which entails among other things pursuing shareholder value maximization through a smaller portfolio comprised of projects with a high risk-adjusted expected rate of return”.

(Rio Tinto) “to scale back capital spending to bolster economic returns…..Iron Ore growth pathway optimized at a lower capital intensity

(Dow) “Our focus on operating and capital efficiency gives us flexibility to respond to changing economic conditions while also enhancing our productivity and profitability.”

(Merrill Lynch on Exxon Mobile) “we view relative changes in capital efficiency and free cash flow as the key determinants of value”.

  1. What is Capital Efficiency?

In simplest terms capital efficiency (sometimes referred to as capital intensity) is about getting the biggest bang for the buck.

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About the Author

bob prietoflag-usaBob Prieto

Senior Vice President, Fluor

Princeton, NJ, USA 

Bob Prieto is a senior vice president of Fluor, one of the largest, publicly traded engineering and construction companies in the world. He focuses on the development and delivery of large, complex projects worldwide.. Bob consults with owners of large engineering & construction capital construction programs across all market sectors in the development of programmatic delivery strategies encompassing planning, engineering, procurement, construction and financing. He is author of “Strategic Program Management”, “The Giga Factor: Program Management in the Engineering and Construction Industry” and “Application of Life Cycle Analysis in the Capital Assets Industry” published by the Construction Management Association of America (CMAA) and “Topics in Strategic Program Management” as well as over 500 other papers and presentations.

Bob is a member of the ASCE Industry Leaders Council, National Academy of Construction and a Fellow of the Construction Management Association of America. Bob served until 2006 as one of three U.S. presidential appointees to the Asia Pacific Economic Cooperation (APEC) Business Advisory Council (ABAC), working with U.S. and Asia-Pacific business leaders to shape the framework for trade and economic growth and had previously served as both as Chairman of the Engineering and Construction Governors of the World Economic Forum and co-chair of the infrastructure task force formed after September 11th by the New York City Chamber of Commerce.  Previously, he served as Chairman at Parsons Brinckerhoff (PB), one of the world’s leading engineering companies.  Bob Prieto can be contacted at [email protected].

To see more works by Bob Prieto, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/bob-prieto/