Risk Management Best Practice 5a – Monitoring for Organization-Wide Performance Risk Associated with Large Capital Projects

StrategyDriven Risk Management Best Practice ArticleLarge capital projects represent a significant investment on the part of an organization and can therefore impact, either positively or negatively, the company’s financial position, if not its viability. Consequently, executive and manager attention and financial support may be disproportionately applied to the capital project(s), particularly in the event of overruns, at the detriment of problem resolution at the organization’s other operating assets.

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Portfolio Management Warning Flag 1 – Management Distractions

At times, organizations undertake ‘bet the company’ projects, initiatives so risky because of their sheer size, strategic importance, and/or operational impact that the project’s failure could bankrupt the company. ‘Bet the company’ projects necessarily demand heightened management awareness and focus, however, excessive diversion of leadership’s attention to these types of projects and away from others and/or day-to-day operations could also jeopardize the organization.

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