Time for better foresight
‘We invest in management teams, not in companies.’ We hear this a lot from investors in energy projects. It seems like sound advice. After all, what is a company but the people who run it?
But it overlooks two vital components of success.
First, any complex project has at least one unique aspect. Whether the novelty of the engineering itself, a location with a different climate or political situation, or the involvement of more partner organizations, that aspect increases complexity and project risk.
Second, the project approach must be properly tailored to its context.
Having a bold vision is great. But, as an investor, you’re looking for returns. That’s why a key principle of ours is ‘project value over corporate aspirations’.
Standard due diligence that verifies a team’s track record and industry standing isn’t always enough. You need to make sure the team has the project risk maturity level to tackle this unique undertaking and any nasty surprises that inevitably arise.
…start safeguarding the actual value of the project. Corporate aspirations will naturally then be realized.
A large, complex project easily has enough upside to make the upfront appraisal cost worthwhile. So, rather than taking some things at face value, start safeguarding the actual value of the project.
Corporate aspirations will naturally then be realized.