Article at a glance:

Building blocks for capital projects

Companies in the business of building large capital projects, such as power stations, have long faced a quandary. The scale and highly specialized nature of these undertakings might seem to require heavily engineered custom treatment. Yet that approach, to the dismay of the contractor's shareholders, requires large amounts of capital. Is there any way to satisfy the relatively few customers for plants of this kind while containing capital spending? One company did so by defying the instincts of many of its engineers and borrowing a number of principles from a very different operating environment: mass production.

The take-away

Managing a series of projects as a portfolio, not as a series of individual schemes, can offer builders of capital projects shortened lead times, smaller inventories, and lower engineering expenses—and generate cost savings in the hundreds of millions of dollars.