For capital-intensive businesses, smart capital allocation and management are essential to long-term success.

July 20, 2021
3 min

Are you, however, considering smaller projects and examining whether they are truly profitable?

60 to 80% of capital investments are made in smaller projects; however, these are frequently given less attention (usually due to a lack of time)

Innovative businesses have understood the need to streamline the procedures associated with smaller investment initiatives. Indeed, smaller investments improve your ability to locate, oversee, and deliver CapEx value, which is something you cannot ignore.

Pay Attention to Smaller CapEx

Every small capex portfolio has different requirements. When it comes to investments of various sizes, there is no one-size-fits-all strategy. Each of them has aches and pains. For instance, even for businesses with strong governance frameworks in place, what works for larger projects might lead to procedure and bureaucratic overload. When you concentrate on expensive products, you risk missing little bets that could turn out to be profitable.

Smaller CapEx projects are not stress-tested and hence fall subject to “gold plating” (spend on high-end equipment). This has a tremendous impact on the budget and resources available. To make matters worse, organizations become unable to manage projects at all cost levels when they fail to account for lesser investments.

Smaller CapEx investments provide fresh savings, and there are numerous critical measures you need to take, as well as internal dynamics you should understand, to reduce costs in specific areas. You may continue to improve and achieve year-over-year savings by focusing on the foundations of a small CapEx planning process.

To make it count, look to the following areas of analyses:

  1. Develop a transparent spending view
  2. Evaluate cross-program synergies in projects, programs, and facilities
  3. Rethink delivery

Companies are increasingly looking for partners who can provide a single cross-facility program delivery with all the resources, tools, and track record of sophisticated high-volume multi-site delivery. When investing in CapEx, evaluating the proper partners could aid with cost reductions.

Two key steps to optimize small CapEx investments

To effectively manage high-volume and complex portfolios, make sure to find partners that have a range of capabilities.

Things like:

  1. Focus on user interface and friendliness to ensure adoption within your team
  2. Access to leading-edge technologies to foster effective decision-making

In conclusion…
Look for solutions who can manage projects across all asset classes while realizing the full potential of cost reductions (large and smaller investments). The ideal solution should centralize everything from corporate real estate to minor equipment.

You could be losing money if you fail to consider lesser investments. Vertical provides an integrated approach to projects that includes a CapEx management tool that will assist you in identifying opportunities for investment.

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