Energy & Resources

Driving productivity through digital transformation and innovative project leadership

In the energy and resources sectors, a new wave of major projects is approaching. There was widespread acknowledgement from participants that these megaprojects, among the most complex and costly on the planet, will have to:

  • embrace new technology-enabled ways of working to ensure safe and productive project delivery,
  • understand how best to use this technology to operate these assets once constructed, and
  • consider how to balance the demand for high capability megaproject leaders with the comparatively meager supply of these leaders (particularly within the skill set that constitutes what McKinsey calls the “Art of Project Leadership.”)
The art of project leadership: Delivering the world’s largest projects

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Under this broad umbrella of topics, roundtable participants considered the following questions: what role will engineering, procurement, and construction contractors (EPCs) play in adopting the digitization of construction, and how will this affect the competitive landscape? What is the root cause for a lack of a SAP-like industry standard for digitizing construction? How can we best teach people the elements that constitute the “Art of Project Leadership?”

Highlights of the discussion include:

The age of the digital twin is upon us.

Energy and resources assets often require optimization across highly complex processes with nonlinear relationships between inputs and outputs. The ability to effectively simulate, optimize, and schedule these processes in a nimble, pragmatic, and digital way will improve operations dramatically. It is a question of when, and not if, the industry will embrace digital twins. Two opportunities for widespread adoption stand out in particular—forecasting optimization in liquefied natural gas (LNG) production and simulating power plant energy efficiency.

Despite higher rates of digitization in operations, construction and project delivery still lag—but this will change soon.

In contracting, it is not uncommon that companies are “too busy” and operate on too tight a margin to recruit the right talent and truly adopt digitization. Any EPCs that continue down this path will soon find themselves unable to compete globally. Owners are generally more progressive than EPCs when it comes to digital adoption—for example, owners have led in the use of mobile technology in operational assets—and they must drive the step change through levers such as outcome-based contracts that include or require use of digital tools.

Increased industry collaboration will generate mutual benefits for owners and contractors.

EPCs are consistently striving for new ways to deliver high quality, simple, and cost-effective solutions, supporting project execution through economies of scale and fit-for-purpose solutions. Given the high repeatability of assets within energy and resources, the “majors” have a role to play in aligning on collaboration standards among them. Technology providers also have a role to play in standardization and collaboration—making data open source will support project delivery globally and counteract the age-old problem of the data-free construction site. For instance, it can create transparency on safety impediments and field team productivity at the task level.

Capable and experienced project leaders are a rare breed; this paucity will influence the growth of energy and resources sector.

Apprenticeship is important, as is structured training for the project leaders of the future. The culture of the industry needs to allow higher levels of experimentation and risk taking. Fundamentally, the right mind-set trumps the right background, so organizations should look to develop talent quickly and embed the right mind-set in all emergent leaders: open, collaborative, values-driven, and ready to take full ownership of outcomes. One idea that surfaced during the roundtable discussion was to build project simulators that would allow teams to test themselves against various scenarios, evaluate their responses, and identify skills that need to be developed to improve outcomes in a real-life situation.