Many Companies Are Delaying or Putting Capital Projects on Hold Due to the Pandemic, Accenture Report Finds
January 12 2021 - 07:29AM
Business Wire
With economic pressure mounting and
digitization successes remaining elusive, capital projects
organizations stand to gain from data-driven digital transformation
that enables greater collaboration
New global research from Accenture (NYSE: ACN) shows that 61% of
owner-operators of factories, mines, refineries and public,
telecommunications and utility infrastructure organizations expect
new projects to be delayed or put indefinitely on hold because of
the COVID-19 pandemic. Additionally, 35% of engineering,
procurement and construction service providers (EPCs) surveyed
indicated that the scope of ongoing projects will likely be
adjusted. The report, titled “Building Value with Capital
Projects,” features a survey of more than 700 senior executives
globally and found that the pandemic impacted an industry that was
already challenged in using digital solutions to help deliver
project results on-time and on-budget.
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Capital project are being delayed or put
on hold due to the pandemic (Graphic: Business Wire)
“Compared to other industrial sectors, many owner-operators and
EPCs were already trailing behind in digital transformation when
sudden shutdowns and delays challenged their efficiency and
competitiveness even further,” said Tracey Countryman, global lead
for Digital Manufacturing & Operations, Accenture Industry X.
“To build greater resiliency, mitigate current and future
disruption, and drive more value from capital projects execution,
companies need to adopt greater data-driven digitization within and
across their value chains.”
The report shows that many companies haven’t achieved the
desired benefits from their digitization efforts:
- For example, 79% of the owner-operators use data analytics for
predictive project performance forecasting and real-time project
decision support. However, only 34% have reduced maintenance and
operations cost on recently completed projects; 38% have increased
construction productivity.
- Similarly, 79% of the EPCs deploy logistics control tower for
logistics tracking, materials management, warehousing and people
logistics; yet just 34% have been able to reduce equipment and
material cost.
Other findings paint a similar picture, with 75-89% of the
owner-operators and EPCs using data, data-driven insights and
digital applications to better mitigate risk and increase project
efficiency or execution, but only 32-44% achieving their set goals.
The reasons, the report notes, are a strategic failure to build the
right operating environment and incentives to create a data-centric
culture, and an inability to operationalize data and
technology.
“Data-driven insights play an integral role in creating digital
solutions like digital twins,” said Andy Webster, global lead for
Capital Projects, Accenture Industry X. “Generating, applying and
collaborating on these insights are crucial to enabling greater
value in productivity, efficiency, workforce safety and material
wastage.”
The research found that 24% of owner-operators and 14% of EPCs
exceeded their industry peers in terms of productivity and
efficiency. It then identified four differentiated actions that
these outperforming companies have taken and, if adopted by peers,
can drive an additional 6.6% return on capital investment for
owner-operators and grow EPCs’ operating margin by an additional
5.8%.
- A data-committed C-suite. Most outperforming
owner-operators (57%) and EPCs (60%) make a top senior executive
such as the CEO or COO responsible for data-driven digitization of
capital projects. They are also more likely to have infused a
culture of data-sharing for informed and insightful collaboration
within their organizations and across partners and value
chains.
- Data-sharing infrastructure and capabilities. Cloud
platforms, data lakes, drones and reality capture are top
technologies in which outperforming owner-operators invested in the
past five years. EPC outperformers spent heavily on, for example,
industrial IoT technologies to make supply chains more intelligent
and predictive.
- Data-centric talent. Owner-operators identified data
stewards to use data for addressing schedule management,
productivity and regulatory issues. Outperforming EPCs readied an
army of digital coaches who work closely with their workforce in
the field to help them execute projects and deliver outcomes with
more efficiency, safety and certainty.
- Incentive-based contracts: Over a fifth of all
outperformers engage in contracts that incentivize project
stakeholders to achieve financial, environmental and social
responsibility goals (owner-operators: 22%, EPCs: 27%). These
contracts foster collaboration on, and a more rigorous adoption of,
data-driven solutions and advanced analytics to drive joint
success.
“These actions are based on insights built from analyzing a
million data points, making this a unique analysis of the Capital
Projects industry,” said Raghav Narsalay, managing director and
global research lead for Accenture Industry X.
Collaboration, as well as a strong data foundation and data
culture have emerged as important value drivers in other recent
studies. These include Accenture’s “Together Makes Better: How To
Drive Cross-Function Collaboration” report published in June and
its 2019 study titled “AI: Built to Scale.”
About the study
Between June and August 2020, Accenture surveyed 710 senior
executives across owner-operators and EPCs in 13 industries and 20
countries with annual sales exceeding $1 billion. Respondents were
asked about planned and ongoing projects, and how they have used
digital applications and data-driven insights in recently completed
projects. The survey results were combined with publicly available
financial data and discussed with academic experts and senior
industry experts for further insights. A proprietary regression
model was built to use the collated data towards understanding the
impact of actions being taken by EPCs and owner-operators on their
key performance parameters such as operating margins and return on
capital employed respectively.
About Accenture
Accenture is a global professional services company with leading
capabilities in digital, cloud and security. Combining unmatched
experience and specialized skills across more than 40 industries,
we offer Strategy and Consulting, Interactive, Technology and
Operations services—all powered by the world’s largest network of
Advanced Technology and Intelligent Operations centers. Our 514,000
people deliver on the promise of technology and human ingenuity
every day, serving clients in more than 120 countries. We embrace
the power of change to create value and shared success for our
clients, people, shareholders, partners and communities. Visit us
at www.accenture.com.
Accenture Industry X embeds intelligence in how clients run
factories and plants, as well as design and engineer connected
products and services—making manufacturing and operations more
efficient, effective and safe; enabling companies to transform how
they make things, and the things they make, for sustainable growth.
To learn more, visit www.accenture.com/industryx.
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version on businesswire.com: https://www.businesswire.com/news/home/20210112005014/en/
Jens R. Derksen Accenture Industry X +49 175 5761393
jens.derksen@accenture.com
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