Recent project failures have put into question the use and relevance of benchmarking and also independent reviews, forcing a rethink of traditional processes and procedures.
With cost estimates and schedules dramatically varying from lows seen around the global financial crises, to peaks experienced in the recent mining boom, benchmarking has ranged between essential to misleading.
Profound shifts are now underway in future project delivery strategies, which will need to be addressed in terms of changes to cost plus “EPCM” strategies and their market drivers.
Peer reviews performed over the last decade have, in hindsight, ranged from failures in not preventing wrong projects proceeding to, in some cases, successfully ensuring Owners did not proceed with doomed investments.
It has been recognised by Owners and Engineers that neither the traditional benchmarking, nor independent reviews, or a combination of both, are now absolutely assured of producing reliable forecasts of project outcomes.
To be of value, benchmarking now needs to recognise highly volatile responses of the engineering and construction industry to the current and future markets for their services. A cost model is proposed of the capital costs and schedules of projects, able to be used to reflect changes in market forces over the life of a project.
Independent peer reviews need to become both realistic of past and current outcomes and more aware of predicting impacts of future dynamic markets, if the conclusions are to be of value.
By around mid-2015 the commodity cycle is forecast to be at the bottom, so ensuring benchmarking and independent reviews evolve into reliable and transparent processes becomes even more important. This can only be achieved with more transparent and analytical benchmarking, and business orientated independent peer reviews, that both recognise and can calculate the impacts of dynamic markets.