mckinsey.com
Source: mckinsey.com
- Most companies struggle with capital spending because they lack transparent tracking and rely on a few experienced people, making projects unpredictable and costly.
- By carefully reviewing which projects actually create value and using standardized tools to rank them, companies can cut capital spending by 20-30% while actually increasing returns.
- One manufacturer reduced spending on evaluated projects by 30% while boosting project value by over 70%, then freed up billions company-wide by rolling out the same approach.
Capital expenditure - the money companies spend on large projects, equipment, and infrastructure - is critical to business strategy and cash flow. Yet most organizations treat it like a black box: executives struggle to understand why projects succeed or fail, costs balloon unexpectedly, and billions get wasted on projects that don't deliver real value. The problem isn't lack of money or bad luck; it's that companies haven't built the systems and discipline to manage capital spending effectively