Everyone wants a Rolls-Royce: Managing In-House Design Changes on a CAPEX Project

On a major CAPEX project, some of the most difficult design changes do not come from contractors or suppliers. They come from inside the organisation. On a first-of-its-kind CAPEX projects roughly one in five euros is spent on design changes, often stemming from in-house engineering teams.  

Engineering teams are trained to optimise, they see opportunities to improve reliability, performance and resilience and understandably want to pursue them. But every improvement has a price, and every project has a budget. Naturally a problem arises; how do you keep a hold of the budget while not stifling your team's enthusiasm? 

Domingo Asuero (DA), experienced CAPEX Project Director based in Spain, puts it: ‘Everyone wants a Rolls-Royce. The only problem is that we cannot afford it.'

We sat down with Domingo Asuero in Madrid to hear exactly how he manages design changes, how he says no, and keeps his team enthusiastic.  

On one project, design changes accounted for a substantial proportion of the investment during the early design stages. More importantly, many of those additional design costs originated from our own people rather than external contractors. That changes the management dynamic completely. 

If a contractor proposes a change, you can assess it commercially and technically and then approve or reject it. With your own engineering team, it is more complicated. They are doing exactly what good engineers are trained to do: looking at a design and asking how it can be better. The issue is that the technically optimal solution isn't necessarily the optimal solution for the project. 

Engineers are trained to find optimal solutions. Give a design to a group of engineers and they will find opportunities to optimise it. There will almost always be something that could be more reliable, more resilient or better engineered. 

But eventually you reach a point of diminishing returns. The design might technically keep improving, but the advantages of each additional improvement become smaller as the project progresses.  

A project director has a different responsibility. It isn't simply to build the best possible project; it is to deliver a good, safe and affordable project. 

You may want the Rolls-Royce. Your engineers may be capable of designing a Rolls-Royce, but if the business case only supports something less elaborate, continuing to add premium features isn't optimisation, It's gold-plating. 

A must-have could result from a change in law or applicable regulation. It could address a design deficiency that creates a genuine safety or environmental risk. It could protect asset integrity, production, or product quality. Those aren't discretionary improvements, so they have to be addressed. 

Likewise, a proposal delivering clear CAPEX savings, or a significant enough OPEX reduction to justify investigation, warrants serious analysis. 

But nice-to-haves require more discipline. 

A design can theoretically be optimised forever; the more mature that design becomes, however, the smaller the potential return from another round of optimisation can become. You need to recognise where you are on that curve and whether additional engineering work still creates enough value.  

People become invested in their ideas. They may have spent days or weeks discussing them with suppliers, contractors and colleagues. They have put effort into developing what they believe is the optimal solution. Then somebody says no. If that isn't managed correctly, rejecting the proposal can feel like rejecting the person. I call rejecting everything the Mr. No approach, while it saves investment it can lead to discouraged team members and missed flaws.  

There is also the temptation to compare decisions; someone sees that five of another colleague's proposals have been accepted while none of theirs have. Suddenly a technical and commercial process starts to feel personal. The danger is obvious. If you become Mr. No often enough, people eventually stop bringing ideas to you, and that isn't what you want. 

You can put everybody in a room, allow everyone to contribute and discuss each idea collectively. But that can turn into endless brainstorming. One suggestion creates another and another, and the whole thing starts snowballing. You can consume a huge amount of project resources and time while the people involved aren't doing their other work.  

And there is another problem: the people voting on the idea may not be accountable for the CAPEX consequences of the decision. They have expertise, but they don't necessarily have ‘skin in the game’. 

Select a limited number of people to analyse a specific proposal. Importantly, give one person responsibility for providing the recommendation to approve or reject it, and make sure that person has skin in the game. A CAPEX Accounted for example.  

Then require the group to base its recommendation on evidence. 

Not: ‘I prefer this.’  

Nor: ‘We did this on my last project.’  

But: ‘Here are the facts. Here are the metrics. Here is why we recommend accepting or rejecting this change.’ 

That gives the project director an objective basis for the decision and gives the engineer who proposed the change a clear explanation of what happened to their idea. 

It’s important to clearly state that the proposal was considered seriously and that the decision is professional rather than personal. At the same time, keep encouraging people to bring forward ideas. 

You don't want your engineers to stop challenging the design. Their knowledge can uncover genuine deficiencies, identify CAPEX or OPEX savings and improve the project. You're trying to create a system where people understand that: 

‘No, not this idea’ does not mean ‘Don't bring me another idea.’ 

Managing that distinction is as important as the decision itself because enthusiasm and commitment are project assets too. Poorly managed rejection can leave you with a disengaged team, which creates its own execution risk. 

Tell people how proposals will be evaluated and separate genuine requirements from discretionary improvements. Give CAPEX accountability to the people making recommendations, base decisions on facts and metrics, explain why ideas are accepted or rejected and keep encouraging the team to challenge the design. 

Most importantly, make sure everybody understands what the project is actually trying to achieve. We aren't trying to build the most elaborate solution imaginable simply because we're capable of designing it. We're trying to build the right solution. 

Because everyone wants a Rolls-Royce. But somebody has to pay.  

If you want a partner who understands the ins and outs of CAPEX projects around the world, consider CMC. With global offices and years of experience we deliver expertise when and where you need it. Schedule a call with us today.