Developing a Business Process for Risk-based Probabilistic Capital Portfolio Management

Optimal use of limited capital is an important challenge facing organizations that invest and maintain capital assets. While such organizations may develop strategic, multi-year capital plans, capital management processes typically focus on planning and delivery of the next annual cycle. A majority of capital money in an annual window, then, is locked down by ongoing projects with limited capital available for new projects.

NetPoint authors are developing a risk-based capital planning approach where probabilistic dates and costs are incorporated into the annual capital planning exercise. Inclusion of “likely” durations and expenditures based on quantitative project risk analyses provides greater accuracy of capital expenditure on existing projects and allows for reserving a more reasonable amount of capital for new projects. The authors will share their thoughts on developing this approach along with progress and challenges. They will demonstrate a representative model that simulates the annual capital planning process using this approach and the tremendous value GPM-based NetPoint and NetRisk bring to this process.

Presented by: Pete Jackson, LEED AP – AstraZeneca & Herschel Baxi, PMP, LEED AP – PMA Consultants

Mr. Jackson is currently the head of project controls for Global Engineering at AstraZeneca, a global, innovation-driven, integrated biopharmaceutical company. He has over 20 years of experience in project controls, estimating, scheduling, and project management across several industries including bio-pharma, petrochemical, commercial, and hospitality. Mr. Jackson’s experience includes working for owners and as a consultant in capital project delivery. In addition to work in the US, he has completed long-term assignments and consulting work in Thailand, Switzerland, and many other countries.

Mr. Baxi is Managing Principal for the PMA Mid-Atlantic region, including Puerto Rico. He leads PMA teams implementing enterprise project management tools integrated with other corporate systems; providing project planning, cost, and schedule support for large, complex programs and projects; providing risk assessment services on diverse transportation, infrastructure, and pharmaceutical projects; supporting clients in establishing PMOs and project controls office; and supporting agency-level capital planning/forecasting and business integration services connecting project controls systems with other enterprise applications.