Project Production Institute
Alex Bone and Chet Carlson discuss how financial metrics influence project decisions, examining the trade-offs involved in balancing efficiency and investment strategies.
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Alex Bone opened the presentation by highlighting the financial metrics commonly used in capital investment decisions, such as Return on Invested Capital (ROIC), EBITDA margins, and free cash flow. He explained how these metrics are interconnected and how optimizing one can sometimes negatively affect others. Bone stressed the importance of recognizing these trade-offs and understanding their implications for project performance.
Chet Carlson built on this foundation by addressing the real-world impacts of focusing too narrowly on financial outcomes. For example, while metrics like work-in-process inventory or construction progress might show positive results, they can sometimes mask inefficiencies or lead to higher project costs and delays. Carlson emphasized that aligning financial goals with production system principles is essential for achieving consistent and efficient outcomes.
Together, Bone and Carlson illustrated how production system optimization (PSO) can help bridge the gap between financial and operational priorities. They provided examples of how data-driven strategies enable better decision-making, resulting in improved efficiency and project success. Their presentation underscored the need for integrating financial and production perspectives to make smarter investment choices.
PPI works to increase the value Engineering and Construction provides to the economy and society. PPI researches and disseminates knowledge related to the application of Project Production Management (PPM) and technology for the optimization of complex and critical energy, industrial and civil infrastructure projects.
The Project Production Institute (PPI) exists to enhance the value Engineering and Construction provides to the economy and society. We are working to:
1) Make PPM the dominant paradigm for the delivery of capital projects,
2) Have project professionals use PPM principles, methods and tools in their everyday work,
3) Create a thriving market for PPM services and tools,
4) Fund and advance global PPM research, development and education (higher and trade), and
5) Ensure PPM is acknowledged, required and specified as a standard by government and regulatory agencies.
To that end, the Institute partners with leading universities to conduct research and educate students and professionals, produces an annual Journal to disseminate knowledge, and hosts events and webinars around the world to discuss pertinent and timely topics related to PPM. In order to advance PPM through access and insight, the Institute’s Industry Council consists of experts and leaders from companies such as Chevron, Google, Microsoft and Merck.
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