Fundamentals Of A Capital Project

Every capital project is different, yet every capital project has similar components that are the fundamentals to excellent execution.


Every project should have a measurable return. Most of the time, this will be a return on capital. However, there are exceptions that focus on safety and quality. It is important that as a project manager you have a clear understanding as to why the company is making an investment in the first place. When you know why, you can make certain to align expectations and communications accordingly.


Developing an Executive Summary for the project saves time and becomes a reference point throughout the project. The executive summary is a roll-up of all the major aspects of the project including justification, timing, cycle times (if applicable), budget, stakeholder commitments, and other key aspects worth noting in one spot.


The Ideal Partner Summary defines the ideal partner for your company. The ideal partner should be clearly articulated ahead of the vendor selection process. Hiring the right partner is one of the most important components to ensuring project success. It is helpful to view this process in the same way you would view hiring a new team member. When we hire a new employee, we get clear on the person that would best fill that role and match them up through a hiring process. Selecting the right vendor is no different and deserves equal consideration. The IPS is a series of questions that allow you to get clear on the type of partner that best suits your company and fits this project. Remember that just because they have relevant experience does not mean they are a good organizational fit. If the culture or core values are not in alignment, there will be issues.


Request for Appropriations (RFA) is a financial justification provided to management for securing the capital needed for the project. Each company will generally have a format that is acceptable and defined. If your company does not have a standard format, contact me for a sample. It is helpful to also submit the executive summary and expected scorecard with the RFA. In my 24 years of experience, the RFA process for funding approval is the most frustrating aspect of the capital project process. This is due to the lack of urgency demonstrated by executives in approving the funds. The timeline is ticking but no one seems to care until it is about to explode and that is when they throw it back into your lap.


Checklists are a key to a successful project. There are several standard checklists that allow you and your organization to perform at a consistently high level when executing a project. Checklists are used in many different situations including operating rooms, construction projects, flying an airplane, and capital projects. The use of a checklist is underestimated and underutilized in the engineering community, but most steps in the work are repeated time and again. The checklist we recommend includes overall project steps, runoff, safety, quality, facilities, utilities, maintenance, controls, design, and financial.

Communication above all else can ensure a successful project. The lack of consistent and open communication is the number one cause for failure in the launch of capital projects. We recommend weekly calls with a set agenda to ensure consistent and open dialogue is taking place between you and your vendors. During the call it is important to review the open issues list, current schedule, part availability status, any major component delivery concerns, controls/programming percentage of completion, and update the status of all risk concerns. These meetings are all about communication but there should also be an element of accountability. If the tasks are not getting completed or progressing from meeting to meeting, it might be time to reevaluate.


Below is a snapshot of the fundamentals for all capital projects:


  1. Project Scorecard – The scorecard is a single-page snapshot of the project in comparison with the initial targets. This tool provides the CPM and stakeholders a quick view of the health of the project. Items typically found on the scorecard include actual versus budget, schedule/timeframe, percentage of project progress, top three risks, milestone checklist, programming percent complete, and debug/runoff part status.
  2. Executive Summary – The ES is used as an initial summary of the major aspects of the project including justification, timing, risks or concerns, funding, deliverables, and necessary support for project success. The goal of this document is management commitment. In my experience, when management is not fully invested in the project it is an everyday battle to get the support necessary to execute at a high level.
  3. Ideal Partner Summary – The single biggest mistake you can make is choosing the wrong partner. The relationship truly parallels that of a marriage. In the beginning (honeymoon) everyone is excited about the opportunity and eager to get along. When we finally realize the core values are not in alignment or the project was woefully under quoted, it is too late. It takes all your energy and effort to get the project across the finish line. It gets there, but quality sucks and the timeline was totally missed. I have seen this happen countless times to customers forced by management or purchasing to select the lowest bid. The IPS can help you avoid this issue from the beginning by clearly identifying your company’s ideal partner. The more work you do up front, the greater the chances of a successful project.
  4.  Vendor Selection Matrix – After you have completed the IPS, it is easy to develop a vendor selection matrix. This tool is used to help balance the emotion and logic that are naturally present in every decision we make. It is not necessary to eliminate all preference, but it is helpful to weigh the criteria appropriately.
  5.  Checklists – If they help prevent plane crashes, they will surely help avoid a project crash.  They are so simple and easy to create there should be no excuse to avoid them. In my experience only 20% of CPM’s use them. What is easy to do is also easy not to do. The most successful project managers are masters at using simple tools for success and checklists are the simplest to implement. Work with your team to develop these lists and use the same list on every project. They will be applicable with only a few tweaks likely required.
  6. Communication – The most successful CPM’s use the tools above along with regular communication for consistent, world class project execution. Poor partner selection is the number one cause of project failure and number two cause is poor communication. The basics of communication include weekly calls to review the open issues list and address concerns, immediate communication of major scope changes (design, timing etc.), regular face-to-face meetings with the internal team to make certain they are on time with their deliverables (once a month), and regular scorecard updates provided to stakeholders to keep them up to speed with the project. For more detail and a sample of any of the documents listed above, please contact me.


Capital projects are often dynamic because there are so many moving pieces. If you stick with the execution and implementation of the fundamentals outlined in this article, you will be a sought-after top performer. It does not matter how smart or educated you are, what matters is your use of the tools available and the lessons learned in this implementation.


If you want to become a top-performing Capital Project Manager, we have developed a course just for you. Capital Project Mastery is a 5-week online course built on 25 years of project management experience. We teach the fundamentals and then more advanced strategies for managing all aspects of capital projects. The trainer has been involved in over 500 capital projects and shares many real-world examples. Students receive access to a library of tools designed to ensure project success.  Click here to reserve your spot.

Stay connected with news and updates!

Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.


Sign Up Ends May 31, 2023


Want to avoid the most common capital project mistakes? Simply let us know where to send the Capital Disaster eBook, and it will be on its way! Also, we will add you to the CPM Course waitlist. Launches Fall 2023!