How High-Performing Operations Teams Build Reliability Into Capital Projects

Capital Projects & Reliability

“The organizations that get the most from their capital investments don’t try to eliminate the tension between CAPEX and operations. They build the governance to hold both conversations at once.”

The division between a capital project team and the operations team that will run the finished asset is one of the cleaner organizational arrangements in industrial companies. The project team has a defined mandate: deliver the asset on time, on budget, within scope. Operations has a different mandate: run it reliably and cost-effectively for the next fifteen to twenty years. Both are legitimate. The tension that develops in the design phase — when operational requirements compete with project cost targets — is structural, not personal, and most experienced teams on both sides of the table have learned to navigate it as a feature of the work.

What I’ve observed in the organizations that navigate it best is that they’ve added something specific to how that navigation runs. In a project review I was part of some years ago, the operations director was the most prepared person in the room. When value engineering surfaced a list of items, he had a number for each one: the estimated cost to address it as a post-commissioning modification, compared to incorporating it now. Not a maintenance argument. A cost comparison. The conversation moved differently than it does in most rooms.

That preparation is not exceptional. It is the consistent distinguishing habit of the operations leaders who build the most durable reliability records out of capital projects — and it represents a specific layer that the best programs add to the standard CAPEX-operations dynamic.

Why Both Mandates Are Right

The CAPEX mandate is not a bureaucratic constraint. It is the discipline that makes complex, expensive capital projects deliverable. A project team that consistently brings assets online on schedule and within budget is creating real value for the organization. The scope management, cost control, and change management disciplines that produce that outcome are exactly the disciplines the job requires.

The operations mandate is equally real. The asset delivered by a capital project will run for fifteen to twenty years. The decisions made during design and procurement will shape maintenance cost, downtime frequency, and safety performance across every one of those years. The operations director sitting across the table from the project team during value engineering is not asking for extras. They are carrying the entire operational life of the asset into a conversation that is, by structural necessity, focused on the next twelve months.

These two mandates are not in conflict because one is right and the other is wrong. They are in tension because they operate on different time horizons. Project teams optimize for the delivery window. Operations teams are accountable for what follows it. The organizations that navigate this tension most productively have found a way to hold both time horizons in the same conversation — and to make the full cost of design and procurement decisions visible to everyone making them.

What the Best Operations Leaders Add to This View

The operations leaders I’ve seen navigate this most effectively share a specific habit: they arrive at design and procurement conversations with a number the project team can put into the same analysis as the project budget.

That number is the cost of deferral — what it will cost to incorporate a flagged operational requirement as a post-commissioning modification, compared to addressing it at the design stage. The engineering research on this relationship is consistent across industries. The cost multiplier between a design-phase change and an operational-phase modification typically ranges from a factor of ten to a factor of one hundred, depending on asset complexity. When that number is on the table — backed by a credible methodology, not just an internal estimate — the value engineering conversation changes character. The choice is no longer “add to this project’s budget or don’t spend the money.” It becomes “spend it now at design cost, or spend considerably more after startup.”

The second addition is structural. The organizations that have made the most durable progress here have extended project team accountability beyond the handover date. A post-commissioning reliability review — tracked at 12 and 24 months following startup — as a standard element of capital project closeout changes the incentive structure of the design phase in ways that earlier engagement alone rarely replicates. When the project team’s evaluation includes the operational outcomes they helped design, both teams are working toward a shared definition of success.

McKinsey’s research on maintenance in asset-intensive operations has documented that maintenance costs represent between 20 and 60 percent of total opex spend across industries. The operations teams that produce results at the lower end of that range are not doing less maintenance. They are running assets that were built to be maintained — and that design intention starts at the project table, during value engineering, when both teams are still making decisions together.

The Fuller Mental Model — Three Conversations at the Table

The CAPEX-operations divide persists in part because both teams arrive at the design table with one lens each — and they are different lenses. The organizations that manage this well don’t try to collapse the two mandates into one. They add a third conversation and build the governance to make all three run simultaneously.

The Delivery Lens

What does this project need to reach handover on time, on budget, and within scope? This conversation is non-negotiable. The operations leaders who engage with it most effectively know the project team’s constraints as well as their own — and they use that fluency to make their requirements legible in project terms, not just operational ones.

The Reliability Lens

What does this asset need — in terms of design, specification, and procurement — to operate reliably across its full service life? This is the conversation the operations team is uniquely positioned to lead. The teams that lead it most effectively arrive with documented requirements tied to specific operational outcomes that the project team can evaluate against defined project criteria.

The Total Cost of Ownership Lens

What will this asset cost to own and operate across its full service life, under the specification being proposed — and under the alternative? This is the conversation that connects the other two. Organizations that add this lens to their design reviews consistently find that it changes the nature of scope and cost decisions, because it makes the full consequence of those decisions visible to everyone in the room.

What This Changes About How You Operate

When all three conversations are in the room simultaneously, four things tend to shift.

Design Decisions Carry Their Full Cost

When the deferral cost is on the table at the design stage, scope decisions can be evaluated for what they actually are: a choice about when the organization pays, and how much. Organizations that build this into the project approval process consistently find that more operational requirements survive the budget review — not because the budget discipline has softened, but because the full economics of each decision are visible to everyone making it.

The Operations Case Becomes More Compelling

An operational requirement tied to a credible total cost of ownership estimate is a fundamentally different conversation from the same requirement framed as a maintenance preference. The operations leaders who make this shift find that they earn more of the design conversations that matter — and that they build a different kind of working relationship with the project team, because they are speaking the project’s language.

Post-Commissioning Modification Spend Drops

The most visible operational consequence is a reduction in the capital the operations team absorbs in the first three to five years after startup. That spend — the cost of addressing requirements that were identified during the project and not incorporated — is common enough across process industries to be treated as a planning assumption. Organizations that address the underlying cause find it changes the character of the operations capital budget permanently.

The CAPEX Team Earns a Longer Definition of Success

Extending project team accountability to include a 12-to-24-month post-commissioning reliability review creates a shared success metric that both teams can own. The project team gets to see their work deliver the operational performance it was designed for. Operations gains a genuine partner at the design stage. Over two or three capital cycles, this tends to change the relationship between the two teams in ways that governance changes alone rarely produce.

How to Make the Shift — Five Moves That Build the Foundation

The shift from two separate conversations to three simultaneous ones does not require a new organizational structure or a major initiative. It requires a series of deliberate moves, most of which can be in place before the next project advances past the 30 percent design gate.

Build the Deferral Cost Before the Value Engineering Review

The most effective preparation an operations team can make for a capital project design review is arriving with a credible total cost of ownership estimate for the requirements they are carrying into the conversation. For each significant operational item, the estimate covers a 10-to-15-year horizon under two scenarios: the full specification and the alternative being proposed for cost reasons. The model does not need to be precise. It needs to be credible and present — because its presence changes what the project team can evaluate alongside the project budget. The estimates carry the most weight when they draw on failure mode analysis tied to the specific asset class and on documented modification costs from comparable post-commissioning programs. That depth is what separates a directional estimate from one that holds up in the budget conversation.

Define Which Decisions Require Operations Sign-Off in the Governance Structure

The categories where most post-commissioning modifications originate are consistent across industries: maintenance access, instrumentation specifications, redundancy criteria, and vendor selection. Organizations that formalize operations sign-off for these categories — as a project governance requirement, not a courtesy review — find that the relevant decisions receive the attention they need. Not because operations holds veto authority, but because the decision must be documented as reviewed by the team accountable for its consequences over the next twenty years. For organizations formalizing this for the first time, a structured external baseline review — one that documents each asset class against defined reliability criteria — gives the sign-off process a methodological foundation that internal estimates alone rarely provide.

Add a Design-for-Reliability Gate at 30-to-60 Percent Design Completion

A formal reliability review at this stage — with joint participation from operations and maintenance leadership — changes the cost economics of the design conversation in a way that earlier or later engagement does not fully replicate. The scope is specific: maintenance access for planned activities, instrumentation for condition monitoring, redundancy on critical equipment, and spare parts strategy. The output is a documented record of accepted and deferred items that follows the project through to handover and is referenced in the post-commissioning review. Having this review facilitated by someone with cross-industry failure mode experience tends to surface design gaps that internal teams miss — the pattern recognition from seeing the same failure recur across ten different operations is different from the judgment that comes from deep familiarity with one.

Include Post-Commissioning Reliability Metrics in Project Closeout Evaluations

Extend the measurement window for project team performance to include a 12-to-24-month reliability review following startup. Track operational performance against the baselines established during design. Make those numbers part of the project closeout documentation and the project team’s performance record. This structural change aligns incentives in the design phase more directly than any governance policy — because it ties the project team’s record to the outcomes the operations team has to deliver.

Track and Attribute Post-Commissioning Modification Spend

The modifications operations funds in the first three to five years after startup are a direct consequence of project design and scope decisions. Most organizations absorb them entirely within the operations capital budget, where they are invisible to the project governance that produced them. Tracking those modifications, attributing them to the originating project, and including them in the post-commissioning review creates a feedback loop that improves decision quality across every capital cycle that follows. Over two or three projects, it typically becomes the most compelling internal argument for investing in operational requirements at the design stage — because the cost of not doing so is documented, specific, and traceable to decisions both teams made.

A QUESTION TO TAKE BACK TO YOUR LEADERSHIP TEAM

Before the next capital project advances past the 30 percent design gate, bring this into the review: for each operational requirement on the deferred list, what is the expected cost to address it as a post-commissioning modification — and how does that compare to incorporating it now?

The organizations that have built that question into their project governance have found that it changes how scope decisions are made, how the CAPEX-operations relationship develops across the project, and what the first three years of plant operation look like.

The tension between the two mandates is not going away — and it shouldn’t. Both are legitimate. Both are necessary. What the organizations doing this well have added is the third conversation: the one that puts the full cost of each design decision, across the full life of the asset, into the room where the decisions are being made.

Alain Pellegrino

Alain is President of Reliability Solutions and brings over 25 years of expertise in industrial reliability and predictive maintenance. He began his career as a PDM Consultant and predictive maintenance coordinator before spending nearly two decades at Laurentide Controls, where he rose to Vice President of Industrial Reliability Solutions. He now leads Reliability Solutions with a focus on helping organizations build world-class reliability programs.