Second, capital performance is typically a black box. When it comes to capital projects, executives rely on a select few people with experience in capital delivery. First, capital expenditure is often not a core business instead, organizations focus on operating performance, where they have extensive institutional knowledge.
Project management processes code#
Cracking the code on capital expenditure managementĭespite the importance of capital expenditure management in executing business strategy, preserving cash, and maximizing ROIC, most companies struggle in this area for two primary reasons. This dynamic reinforces the age-old challenge for executives as they carefully allocate marginal dollars toward value creation.Ĭompanies can improve their odds of success by focusing on areas of the project life cycle- capital strategy and portfolio optimization, project development and value improvement, and project delivery and construction-while investing in foundational enablers. In addition, ill-considered cuts to key projects in a portfolio may actually jeopardize future operating performance and outcomes. Yet managing capital projects is complex, and many organizations struggle to extract cost savings. In our experience, organizations that focus on actions across the whole project life cycle, the capital project portfolio, and the necessary foundational enablers can reduce project costs and timelines by up to 30 percent to increase ROIC by 2 to 4 percent.
This strategy is even more vital in competitive markets, where ROIC is perilously close to cost of capital.
0 kommentar(er)
