Part Two
The challenges of CapEx
Balancing Risks and Rewards: Optimizing CapEx for Competitive Advantage
The drive towards CapEx optimization is clear but to achieve a competitive edge, organizations must be prepared to adopt the risks along with the benefits. Challenges are dependent on industry and circumstance but addressing them is key to improving the efficiency and success rate of CapEx projects, ultimately contributing to better overall business performance and competitiveness.
However, we must better understand the biggest pain points to better tackle them. When asked what their most significant challenges are when delivering CapEx projects, half of respondents shared they are struggling with the increasing cost of equipment and 47% are trying to overcome decision-making processes. This indicates the top challenge in delivering projects is financial and organizational. Not addressing these could result in delays, cost overruns, and complications.
The overall satisfaction with CapEx projects appears to be quite positive, with 71% of respondents expressing satisfaction. The fact that no one reported being "highly satisfied" may point to a general recognition that even successful projects could be further optimized. The very low percentage of "unsatisfied" respondents (1.5%) indicates that significant problems or failures are uncommon.
If more leaders are to become highly satisfied, it is important to understand where there is room for improvements in CapEx projects. Project execution (63%) and procurement (61%) are viewed as the most important areas for improvement, indicating inefficiencies or challenges in how projects are managed, and how materials are sourced.
Looking ahead, the future of CapEx projects lies in addressing these key points and focusing on areas ripe for improvement. Organizations that successfully navigate these challenges and capitalize on emerging trends will likely gain a significant competitive advantage. The coming years will see a greater focus on flexibility in CapEx planning, increased collaboration across departments, and a more holistic approach to measuring project success beyond just financial metrics. As the business world continues to evolve, so too will the strategies for optimizing CapEx projects, driving innovation, and creating lasting value for stakeholders.
What challenges do you face when delivering your CapEx projects? (Respondents were asked to select three options)
Increasing cost of equipment
Decision-making process (organisational alignment)
Delivery on time
Reaching sustainability targets
Delivering on budget
Ramp-up/quality (reaching desired performance)
Financing CapEx
Other, please specify
"The three frequently mentioned challenges require a high degree of coordination and collaboration across departments. The key to success lies in creating uniform and reliable processes, methods, and tools."
Holger K. Peterkord, Senior Principal & Global Lead CapEx Excellence at EFESO
How satisfied are you with your CapEx projects?
Highly satisfied
Satisfied
Well balanced
Unsatisfied
Where do you see room for improvement with your CapEx projects? (Respondents were asked to select three options)
Project execution
Procurement
Organizational set-up
Release/approval process
Costing
Value engineering
“Scaling machinery and equipment plays a vital role in navigating the exciting challenges of technology and market dynamics. We believe this response shows that companies need to prepare for changes ahead.”
Bas Koetsier, Senior Partner & Global Lead CapEx Excellence, EFESO
