Demand is recovering and companies are experiencing record new orders and production levels. Businesses are planning the next phase of growth and improvement, particularly through capital investment. This chart from the Federal Reserve shows that capital spending is at an all-time high, and growing. Now is the time to have a robust and well executed capital project pipeline.
Capacity expansion, cost reduction and new product launch initiatives deliver new revenue and expand margins, and often require significant capital investment. Strategically chosen and managed capital projects ensure this value is delivered. Capital portfolios have lifecycle stages, and two stages in particular: strategy and execution, are the focus of this article.
Strategy
Capital strategy must align with the company’s strategy, for example to enter new markets or to improve competitiveness in existing ones. A constant flow of investment ideas must be generated across the corporation, so that executive leadership can choose the most promising investments. Screening criteria allow project evaluation based on attractiveness and fit with corporate strategy. Projects accepted by top management receive both human and financial capital for execution. Creating this flow of investments should be built into the annual business cycle across the enterprise.
Execution
Strong execution is essential, because world class strategy executed poorly does not deliver results. Large strategic initiatives warrant a seasoned senior project executive, while smaller projects may be grouped under a project manager or incorporated into a functional leader’s annual performance goals. Project leadership, team competencies, process tools and executive engagement are key success ingredients for the capital execution phase.
Next Steps
Wilmarco Technologies has strong service offerings to address all stages of the capital investment lifecycle. From strategy to process, from execution to final asset disposition, we can help you deliver results through your capital investment portfolio. Contact us today for an exploratory discussion.