It’s no secret that cost overruns and delays run rampant in large capital projects. Research points the finger at decision biases, which often play an important role in skewing the forecasting of costs and timing as projects are being planned. But a lack of internal discipline, in both the proposal and management stages of a project, further raises costs—both of individual projects and entire portfolios of investment.

It’s a drain on the bottom line even when times are good, but it also leaves companies less prepared for capital constraints prompted by external events such as the recent swoon in oil prices. By our reckoning, for example, energy and petroleum companies have already had to trim between 20 and 50 percent off their current year’s capital budget over last year. And when the capital budget consumes around two-thirds of cash flows, as it does in upstream oil and gas, cuts of that magnitude can force companies into painful trade-offs between cutting exploration, which imperils future growth, and reducing existing production at the risk of cash shortfalls and liquidity issues. Such decisions are especially difficult when projects can’t be easily compared, when managers resist change to their budgets, and when efforts to review them are ad hoc...

More:

FY360° by Finyear, la revue de presse à 360° en finance-gestion d'entreprise & finance d'affaires.

FY360° by Finyear a pour mission de vous faire gagner du temps et de vous tenir informés. Notre équipe suit les actus pertinentes, les organise, créé un lien vers les sources originales et vous les communique sur le site Finyear et dans la newsletter quotidienne.
FY360° by Finyear n'est pas un produit fini : faites-nous savoir ce que vous en pensez et si vous avez une suggestion, une remarque, ou une source que nous devrions suivre, écrivez-nous.

FY360° by Finyear (ex Financial Year Links) is a Finyear service on a mission to save you time and keep you smart. Our team follows the relevant news, summarize it, link to the original sources and deliver it on the Finyear website and in the daily newsletter.
FY360° by Finyear is not a finished product: please let us know what you think and if you have a suggestion, a complaint, or something we should link to, email us.

Lisez gratuitement :

Le quotidien Finyear :
- Finyear Quotidien

La newsletter quotidienne :
- Finyear Newsletter
Recevez chaque matin par mail la newsletter Finyear, une sélection quotidienne des meilleures infos et expertises de la finance d’entreprise et de la finance d'affaires.

Les 4 lettres mensuelles digitales :
- Le Directeur Financier
- Le Trésorier
- Le Credit Manager
- Le Capital Investisseur

Le magazine bimestriel digital :
- Finyear Magazine

Un seul formulaire d'abonnement pour recevoir un avis de publication pour une ou plusieurs lettres