How to build your capital project portfolio more efficiently

For six months of the year, hundreds of senior people waste countless hours in one of the most inefficient corporate processes: the annual capital project portfolio build.

Portfolio Build Activity Graphic - an essential annual portfolio management exercise

Right now, most companies plan millions of dollars of capital investments using spreadsheets and manual processes. Over months of tedious work, characterised by political infighting, a portfolio is gradually assembled in time for the start of the financial year.

"This isn’t just slow, painful and wasteful – it’s also risky."

With potentially hundreds of projects in the mix, and no possibility of rapidly aggregating spreadsheet information in a meaningful way, how can organisations ensure their capital project portfolio supports strategic priorities and mitigates risk

Often capital projects managed in spreadsheets aren't subjected to the level of risk management that is required to assess effective project portfolio risk or identify the risk profile of individual projects prior to approval.

Improve the speed, transparency, and control of your capital portfolio management.

Businesses delivering capital projects need clear strategic priorities translated into specific investment guidelines and budgets to support a more efficient portfolio-build process. This can be managed quickly and easily using software like CAPEXinsights, which can:

  • Easily communicate top-down guidance in your capital project portfolio.

Companies waste weeks, even months, during portfolio building trying to match their list of projects (bottom-up) with the expectations of management (top-down). By using software to give the right governance framework, leaders can give clear top-down guidance: the percentage of revenue to be allocated and the percentage spreads across business lines, geographies, and projects aims (e.g. cost reduction, growth, sustainability).

Having this consistent guidance overlaid across every project – and with build decisions registered in real time – proposers can allocate resources in the context of what's already been agreed upon, where the budget is left, and what is intended. When senior people clash over project approvals, top-down guidance focuses conversations constructively on company (not individual) priorities, ensuring the highest-value projects are green-lit.

Top-down guidance can also be easily distributed across every project portfolio in the world, tailored for individual site managers to ensure their project proposals align with the organisation's strategic priorities. This saves an enormous amount of time, preventing people from spending months pitching projects that were never going to get up based on this year's project portfolio management guidance.

Dashboard view of your portfolio build in CAPEXinsights

  • Update portfolio management guidance quickly

Publicly listed companies often need to revise top-down guidance quarterly in line with shareholder communications. This can easily be achieved with a platform acting as a central source of truth, informing all project owners of the new guidance and enabling them to check the ramifications for their projects. Communication that needs to go across the entire portfolio can be implemented right away.

  • Understand carryover projects before planning starts

With software, portfolio builders can immediately slot carryover capital projects into the subsequent portfolio and have top-down guidance revealing the buckets left for new projects to fill this year.

This makes portfolio construction seamless for the portfolio manager to achieve capital efficiency from the very beginning and gives decision-makers insight into the status of the portfolio before considering potential new projects.

  • Quantify strategic objectives and agendas 

Strategic horizons can vary widely and are generally between 3-10 years for organisations. At this level, top-down guidance can still be developed for each of these years and communicated to portfolio managers so that they can understand the trend in investment.

An organisation's ability to meet its strategic goals rests on teams keeping the strategic objectives a top priority.

Achieve more with project portfolio management software

Even if you are using software to manage your capital portfolio, building a complex, multi-million dollar portfolio will still take up a LARGE chunk of senior management time. But it will take dramatically less time than a manual process – and that time will be spent focused on strategic alignment, not trying to pull and analyse outdated data out of spreadsheets.

For further information about capital project efficiency or to have a personalised demonstration of our product, please don’t hesitate to reach out to us.