Prioritizing your capital project portfolio
Most organizations categorize potential investments either qualitatively or quantitatively. Qualitative investments typically include strategic projects or those that address new mandates or regulatory requirements. Most quantitative investments have clear financial goals.
To prevent “pet projects”from moving under the radar, managers should be able to compare and prioritize investments across the capital project portfolio on an apples-to-apples basis – even across disparate categories.
One chemical company forced a management discussion to compare quantitative facts with qualitative rankings of its portfolio. The conversation led to informed tradeoffs on productivity, growth and maintenance categories, increasing portfolio net present value (NPV) by more than 30 percent.
This is piece is part of a larger article recently co-authored by Finario and McKinsey & Company. To access the full article, click here.