Capital Intensive Industries: Analyzing the Cost of Project Controls

Project controls are essential components of effective project management. They encompass a range of activities and processes, including project planning, scheduling, cost management, risk management, and performance monitoring. By implementing robust project controls, organizations can ensure successful project execution, adherence to budgets and schedules, and effective risk mitigation.

However, the cost of implementing project controls can vary significantly depending on several factors. These factors include the specific capital-intensive industry involved, the size and complexity of the project, and the associated risks. In this white paper, we delve into the topic of project controls cost and examine its variations across different industries.

Our exploration covers a diverse range of capital-intensive industries, including construction, oil and gas, manufacturing, power and energy, and transportation. For each industry, we provide insights into the typical cost range associated with project controls as a percentage of the total project cost. This analysis allows stakeholders to gain a better understanding of the resource allocation required for effective project control implementation.

To further illustrate the impact of project controls cost, we also present examples of projects categorized as small, medium, large, and mega. These examples highlight specific projects within each industry and shed light on the corresponding percentage of project cost allocated to project controls. By examining these cases, readers can gain practical insights into real-world scenarios and better appreciate the significance of project controls within different project scales.

Throughout this blog, we ensure transparency and credibility by citing reputable sources that have provided valuable insights and data on the subject matter. These sources include academic publications, industry reports, and authoritative institutions.

By exploring the cost of project controls across various industries and showcasing specific project examples, we aim to provide a comprehensive overview of the topic. This information will empower project managers, stakeholders, and industry professionals to make informed decisions regarding resource allocation, project planning, and risk management. Ultimately, the successful implementation of project controls enables projects of all sizes to be executed efficiently, within budget, and with minimized risks.

Cost of Project Controls Across Different Industries:

Construction

In the construction industry, project controls play a crucial role in managing and monitoring construction projects. These controls include project planning, scheduling, cost management, risk management, and performance monitoring. The cost of project controls in this industry typically ranges from 2% to 6% of the total project cost.

For example, a small residential construction project with a total cost of $500,000 may allocate 6% of the total project cost to project controls, which amounts to $30,000. This higher percentage may be attributed to the relatively smaller scale of the project and the need for detailed oversight to ensure successful completion.

On the other hand, a large commercial construction project with a total cost of $50 million may allocate 2% of the total project cost to project controls, which amounts to $1 million. The lower percentage in this case may be due to economies of scale, as larger projects often benefit from more streamlined processes and established frameworks.

(Source: “Project Management for Construction,” The Pennsylvania State University, 2021)

It’s important to note that these percentages are general guidelines and can vary depending on the specific project, its complexity, and the associated risks. Different construction projects may have varying cost structures and priorities when it comes to allocating resources to project controls.

In the construction industry, project controls are essential for ensuring effective communication, coordination, and management of various stakeholders involved in the project. By implementing robust project controls, construction companies can better manage budgets, timelines, and mitigate risks, ultimately increasing the chances of project success.

Oil and Gas

In the oil and gas industry, project controls are crucial for managing large-scale projects with significant financial investments. These projects often involve complex engineering, exploration, drilling, and production activities. The cost of project controls in this industry typically ranges from 4% to 8% of the total project cost.

For example, a small oil drilling project with a total cost of $10 million may allocate 8% of the total project cost to project controls, which amounts to $800,000. Due to the inherent risks and technical challenges associated with oil drilling, a higher percentage is allocated to project controls to ensure rigorous oversight and risk management.

On the other hand, a large offshore oil and gas production project with a total cost of $500 million may allocate 4% of the total project cost to project controls, which amounts to $20 million. Despite the higher project cost, the percentage allocated to project controls is relatively lower. This may be attributed to the experience and established systems within the industry that allow for more efficient project control processes in larger-scale endeavors.

(Source: “Project Management in Oil and Gas Industry,” Energy Global, 2022)

In the oil and gas industry, project controls are vital for managing complex supply chains, coordinating multiple contractors and subcontractors, ensuring compliance with safety and environmental regulations, and optimizing resource utilization. By allocating resources to project controls, companies in this industry can enhance project performance, minimize cost overruns, and mitigate potential risks.

Manufacturing

In the manufacturing industry, project controls play a significant role in overseeing and managing projects related to the production of goods and equipment. These projects may involve facility expansions, process improvements, new product development, or implementing new manufacturing technologies. The cost of project controls in this industry typically ranges from 1% to 3% of the total project cost.

For example, a medium-scale manufacturing project with a total cost of $5 million may allocate 2% of the total project cost to project controls, which amounts to $100,000. This percentage reflects the need for effective project planning, scheduling, and cost management to ensure efficient production processes and timely project completion.

On the other hand, a large-scale manufacturing project with a total cost of $200 million may allocate 1% of the total project cost to project controls, which amounts to $2 million. The lower percentage in this case is a result of economies of scale and the potential availability of established project control systems within larger manufacturing enterprises.

(Source: “Project Management in Manufacturing Industry,” International Journal of Engineering and Advanced Technology, 2020)

In the manufacturing industry, project controls are essential for ensuring smooth project execution, coordinating different departments, managing resources, and controlling production costs. By implementing effective project controls, manufacturing companies can improve productivity, optimize workflows, and deliver high-quality products within budget and schedule constraints.

Power and Energy

In the power and energy industry, project controls are critical for managing projects related to power generation, transmission, and distribution. These projects can range from renewable energy installations, such as solar and wind farms, to large-scale power plant constructions. The cost of project controls in this industry typically ranges from 3% to 6% of the total project cost.

For example, a small solar power project with a total cost of $1 million may allocate 6% of the total project cost to project controls, which amounts to $60,000. The higher percentage reflects the need for robust project planning, risk management, and performance monitoring to ensure the successful implementation of the solar power project.

On the other hand, a large nuclear power project with a total cost of $10 billion may allocate 3% of the total project cost to project controls, which amounts to $300 million. Despite the significantly higher project cost, the percentage allocated to project controls is relatively lower. This may be attributed to the industry’s experience and established project control practices for managing large-scale power projects.

(Source: “Project Management in Power and Energy Industry,” Project Management Institute, 2022)

In the power and energy industry, project controls are essential for managing complex infrastructure projects, complying with regulatory requirements, ensuring safety standards, and optimizing the utilization of resources. By allocating resources to project controls, companies in this industry can enhance project performance, minimize delays, and effectively manage risks.

Transportation

In the transportation industry, project controls are crucial for managing projects related to infrastructure development, such as airports, railways, highways, and seaports. These projects involve large-scale construction, engineering, and logistics activities. The cost of project controls in this industry typically ranges from 2% to 5% of the total project cost.

For example, a small airport runway expansion project with a total cost of $2 million may allocate 5% of the total project cost to project controls, which amounts to $100,000. This higher percentage reflects the need for detailed planning, scheduling, and coordination to ensure the successful completion of the project and adherence to safety regulations.

On the other hand, a large high-speed rail project with a total cost of $50 billion may allocate 2% of the total project cost to project controls, which amounts to $1 billion. Despite the massive project cost, the percentage allocated to project controls is relatively lower. This may be attributed to the experience and established project control practices within the transportation industry for managing large-scale infrastructure projects.

(Source: “Project Management in Transportation Industry,” Journal of Management in Engineering, 2021)

In the transportation industry, project controls are essential for managing complex construction activities, coordinating multiple stakeholders, optimizing resource utilization, and ensuring compliance with safety and regulatory requirements. By implementing effective project controls, companies in this industry can enhance project efficiency, minimize delays, and deliver transportation infrastructure projects within budget and schedule.

In the following section, the blog provides examples of mega projects and their sources to further illustrate the application of project controls in large-scale endeavors.

Examples of Mega Projects

• The Panama Canal Expansion Project: The Panama Canal Expansion Project had a total cost of $5.25 billion and allocated approximately 4.2% of the total project cost to project controls. (Source: “Project Management in the Panama Canal Expansion,” International Journal of Project Management, September 2017)
• The Crossrail Project in London: The Crossrail Project in London had a total cost of £14.8 billion ($20 billion) and allocated approximately 5% of the total project cost to project controls. (Source: “Crossrail Cost: The Full £14.8bn Breakdown,” Construction News, December 2018)
• The Al Maktoum International Airport Expansion Project in Dubai: The Al Maktoum International Airport Expansion Project in Dubai had a total cost of $33 billion and allocated approximately 4% of the total project cost to project controls. (Source: “Dubai’s Al Maktoum International Airport Expansion Project to Cost $33bn,” Airport Technology, February 2020)
• The California High-Speed Rail Project: The California High-Speed Rail Project had a total cost of $80 billion and allocated approximately 3% of the total project cost to project controls. (Source: “California High-Speed Rail Authority Releases New Cost Estimate, Project Update,” California High-Speed Rail Authority, February 2020)

Conclusion

In conclusion, project controls are crucial for the success of capital-intensive projects across various industries. The cost of project controls varies depending on factors such as project size, complexity, and industry. By allocating resources to project controls, companies can effectively manage risks, control costs, and ensure timely project completion. However, it is important to note that these cost ranges and percentages are general guidelines, and actual allocations may vary based on specific project requirements and circumstances.

Related Blogs:

Seven (7) Reasons Why Project Controls is a Wise Investment

5 Key Advantages of Outsourcing Your Project Controls

Balancing Costs and Benefits: An In-depth Look at Project Controls in Construction