Managing large scale capital projects*

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Midstream master limited partnerships are often challenged to effectively manage high-stakes capital investment projects and organic growth programs. The ability of midstream master limited partnerships (MLP) to achieve future growth targets is generally achieved through a combination of the completion of organic growth projects and strategic acquisitions.

Certain midstream MLPs are also undertaking large scale capital constructions projects such as pipelines, processing facilities, storage or terminal facilities. This trend, together with the growth of organic growth projects, has quickly received the scrutiny and attention of Board members, investors and management teams. If such projects are not properly planned and managed, they may not be completed on time or within budget and potentially attractive returns may not be fully realized.To help ensure management and unitholders enjoy the full benefits of these significant investments, in our view, management should consider the following three steps: analyze and plan for each project’s regulatory climate and risks; establish a capital investment management framework; and develop focused management reporting.