CapEx project planning insights to help avoid risk and improve your return on investment:
The increasingly complex supply chain, technical requirements and regulatory landscape along with decarbonization initiatives - make planning and execution of successful capital programs challenging.
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For organizations to excel in today’s competitive marketplace Capital Planning should be fused with comprehensive project planning to prioritize and allocate resources in a manner which furthers strategic goals.
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HIPP’s integrated planning services help our clients optimize their business strategies to drive growth and reduce operational cost. We do this by giving executive leadership teams the insights necessary for cost-efficient growth and strategic change by unifying project planning, delivery strategy and capital budgeting.
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While each engagement is unique, our human-centered approach typically involves a long-term partnership which facilitates success through a “data driven decision making” process. This approach combines deep industry expertise with advanced analysis to provide strategic insights at the enterprise portfolio and site levels.
CAPITAL PLANNING ROI TIPS
When building a capital plan to underpin your organization’s strategic initiatives here are a few considerations to improve ROI and further strategic goals through positive project delivery outcomes.
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Unexpected price escalation due to regional competition for trade labor and materials can be detrimental to even well capitalized projects. Mitigate this risk by first gathering data about large projects planned near your plants over the next 5 years. Next collaborate with design and construction management firms who understand the local markets to develop 5 year cost escalation factors based on expected local market pressure to support budgeting at each plant. Note: As a starting point, the state economic development group for each plant location is a great resource.
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As part of your economic decision-making process, consider the use of modular off-site construction strategies which allow you to classify traditional “stick-built” labor and material cost as equipment; thereby allowing for greater depreciation and higher after-tax returns.
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Make projects are a strategic success for your organization by ensuring the necessary resources are budgeted and scheduled to deliver operationally ready projects. A new manufacturing facility isn’t of much use, it can’t be FDA licensed.
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For cGMP capital projects be sure to integrate your CQV team as part of the total project delivery team from project start. Having CQV resources participating in design reviews while supporting the development of user requirement specifications, change control, and validation master planning will pay major dividends by accelerating the CQV phases of the project.
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Allocate enough capital early in the project to build an integrated project delivery team in the conceptual design phase. Early participation of IPD teams results in greater cost efficiency and reduced project risk.
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Ensure your capital budgets and project planning account for the growing cost and schedule impacts of Cybersecurity Risk Assessments on process equipment.