Developers and operators across the energy value chain are facing investments at a time where there are surging interest rates and high commodity price volatility, evidently affecting their ability to seize profitable growth opportunities and remain competitive.

Volatility in commodity prices has increased significantly during 2020-2024M3 compared to 2017-2019. In addition, during more volatile times, commodity prices tend to become more strongly correlated.

Navigating commodity price volatility and correlations between cost elements in the budget will be defining factors for successfully budgeting megaprojects. 

KPMG proposes a three-step model to budget megaprojects for success in an uncertain market:

  1. Identify correlations between cost elements in the budget
  2. Estimate a viable contingency for unforeseen risks
  3. Identify the potential losses for the megaproject until the asset is commissioned

Learn more in the report below.