HBR: How to manage capital investments like a supply chain

The global economy is poised for unprecedented capital investments across technology, supply chains, and clean energy sectors, with projected spending reaching into the trillions of dollars by 2030.

Investment landscape overview: Major technological and environmental imperatives are driving massive capital expenditure across multiple sectors.

• Data center infrastructure investments, driven by AI and generative AI competition, are projected to exceed $1 trillion by 2030 according to Goldman Sachs
• Global supply chain restructuring is expected to attract $1 trillion in investments for factory development and logistics network redesign
• Clean energy and related technology investments are forecasted to grow from $2 trillion currently to $5 trillion by 2030, as reported by the International Energy Agency

Strategic shift in project management: A new approach to capital project management is emerging that treats these investments like supply chain operations rather than traditional standalone projects.

• Traditional project management views capital projects as large, singular entities with multiple components converging at completion
• The proposed supply chain approach aligns project delivery with demand-driven principles, similar to modern supply chain management
• This methodology leverages decades of refined supply chain management techniques that have proven successful in managing complex global operations

Practical implications: Supply chain principles applied to capital projects could significantly improve project success rates and return on investment.

• The approach emphasizes continuous improvement and refined management techniques developed through years of supply chain operations
• Project “demand” (desired outcomes) directly informs “supply” (upstream requirements and resources)
• This integrated, end-to-end perspective allows for better orchestration of project components and resources

Looking ahead: The success of these massive upcoming investments may hinge on organizations’ ability to adopt more sophisticated project management approaches that draw from supply chain expertise, particularly as the scale and complexity of capital projects continue to grow across multiple sectors.