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Addressing Project Capital Efficiency through a Business Basis of Design

FEATURED PAPER

By Bob Prieto

Fluor Corporation

Princeton, New Jersey, USA
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Large capital construction projects in both the industrial and infrastructure sectors are challenged today in three significant ways:

  • Capital efficiency of the project – this considers both first costs as well as life cycle costs
  • Capital certainty – reflecting execution efficiency, predictability and effective risk transfer through appropriate contracting strategies
  • Time to market – perhaps best thought of as schedule certainty but also accelerated delivery of projects, often an essential ingredient in capital efficiency

This paper focuses on achieving improved capital efficiency in large capital asset projects through the adoption of an expanded basis of design that considers all aspects of a capital asset’s life cycle. In many projects today the basis of design (BOD) largely encompasses the engineering parameters which are required to meet the owner’s project requirements.

Constructability and maintainability are often treated as review items to confirm that the developed design is both constructible and maintainable and to suggest improvements at the margins. Effective constructability and maintainability reviews add value to the project but do not fundamentally act to shape the design itself in most instances.

The premise of this paper is that more, much more, is required to develop effective designs that are developed with construction and maintenance as fundamental project requirements. In this sense construction and maintenance considerations are not items to be reviewed but rather fundamental requirements to be satisfied together with other project requirements established by the owner. The change suggested is about a shift in mindset and perspective as well as in our design work processes.

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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 is responsible for strategy for the firm’s Industrial & Infrastructure group which focuses on the development and delivery of large, complex projects worldwide. The group encompasses three major business lines including Infrastructure, with an emphasis on Public Private Partnerships; Mining; and Industrial Services. 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 450 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].