Get EY - Spotlight On Oil And Gas Megaprojects - Ernst & Young

O&G companies can draw on a wide variety of management practices and technologies to improve capital-project performance. In our view, four are especially promising: PPM, automation and digital technologies, advanced analytics, and agile ways of working (Exhibit 1).

It's beneficial to start a capital project because it can speed up growth within an organization. Regular capital investments are essential since they increase efficiency and improve the organization's value to its customers, employees, investors and other stakeholders .

A capital project is a long-term, capital-intensive investment to build upon, add to, or improve a capital asset. Capital projects are defined by their large scale and large cost relative to other investments that involve less planning and resources.

A capital project is a project to construct either new facilities or make significant, long-term renewal improvements to existing facilities. A capital project using general obligation bonds usually has a useful life of at least 13 years and typically requires the involvement of an architect and/or engineer.

In the realm of project management, a clear distinction exists between capital projects and non-capital projects. While capital projects primarily encompass construction endeavors, non-capital projects refer to projects where costs are not capitalized—they are not treated as capital assets on financial statements.

Key Takeaways Capital expenditures are a company's major, long-term expenses while operating expenses are a company's day-to-day expenses. Examples of include physical assets, such as buildings, equipment, machinery, and vehicles. Examples of OpEx include employee salaries, rent, utilities, and property taxes.