Project Management

Growth-oriented capital planning

Issue link:

Contents of this Issue


Page 0 of 0

Growth-Oriented Capital Planning at the right time The right spend Capital investment, when allocated to the right place at the right time, enables strong, viable business strategy and growth. Most companies believe they are delivering profitability and productivity through their capital budgets. Yet the average company misses its plan by at least 12 percent 1 . Even sophisticated companies come up against this 'capital monster.' When money is held back rather than The capital monster can unintentionally inhibit growth unless companies: • Develop an accurate, strategic capital budget • Prioritize spending effectively • Manage their spend with centralized oversight • Execute spending consistently and holistically Overspending causes financial strain throughout your organization, raises risk and damages shareholder trust. But have you considered the risk of underspending? It may signal a worse problem lurking beneath the surface. When money is held back rather than invested in opportunities like improvements, the impact on your future ROI, rents and potential foreign investments should not be underestimated. The value of your portfolio is at stake. Are you meeting your growth goals? What looks like costs saved today could actually mean missed investment opportunities. $8.8 bi ion JLL research shows Forbes 1000 companies underspend by this much annually >30 per nt 2 In some cases, informed prioritization —in which managers compare and rank projects—across categories can increase portfolio net present value. 10 to 30 per nt 3 Reductions in spending for non-major projects can enable reallocations for increased benefit. Optimize your growth and meet your goals If you're consistently coming in under budget of your capital plan, learn what you're missing out on. 1 JLL Research | 2 McKinsey 2017 | 3 McKinsey 2017

Articles in this issue

view archives of Project Management - Growth-oriented capital planning