Course Outline
Introduction to CAPEX and the Investment Mindset
- Defining capital expenditure in a manufacturing context.
- The role of financial evaluation in operational decision-making.
- Common pitfalls for non-finance managers.
- Linking CAPEX to strategic business objectives.
Time Value of Money, Discount Rates, and WACC
- Understanding present value and future value concepts.
- Calculating and selecting appropriate discount rates.
- Weighted Average Cost of Capital (WACC) and project-specific rates.
- Practical exercises on discounting cash flows.
Net Present Value (NPV), IRR, MIRR, and Payback Period
- Calculating NPV as the primary investment criterion.
- Using IRR as a secondary screening tool.
- Avoiding reinvestment assumption issues with Modified IRR (MIRR).
- Applying Discounted Payback Period as a liquidity gate.
Economic Value Added (EVA) and Shareholder Value
- Calculating EVA: NOPAT minus (Capital Invested x WACC).
- Aligning CAPEX budgeting with shareholder value creation.
- Comparing EVA with traditional accounting metrics.
- Case study on value-based management in manufacturing.
Building the CAPEX Business Case
- Structuring cash flow projections for capital projects.
- Separating operating and capital cash flows.
- Working capital and terminal value considerations.
- Building a complete investment case from operational data.
Scenario and Sensitivity Analysis
- Developing three scenarios: Base, Optimistic, and Pessimistic.
- Building tornado diagrams for sensitivity ranking.
- Identifying value drivers and critical assumptions.
- Practical exercises in Excel.
CAPEX Processes, Templates, and Capex Cards
- Stage-gate approval processes for capital projects.
- Designing one-page Capex Cards with strategic alignment.
- Including financial metrics, risk ratings, and timelines.
- Standardizing Requests for Funding documentation.
Risk Analysis, Monte Carlo Simulation, and Real Options
- Applying Monte Carlo simulation with spreadsheet add-ins and Python.
- Managing uncertainty in manufacturing investment decisions.
- Real options analysis for production flexibility and expansion.
- When to use probabilistic versus deterministic models.
ESG, Sustainability, and Regulatory Considerations
- Integrating ESG and sustainability metrics into cash flows.
- Carbon costs, energy efficiency, and green capex incentives.
- Adjusting risk premiums for environmental compliance.
- Communicating sustainability benefits to financial stakeholders.
Executive Narrative, Storytelling, and Requests for Funding
- Crafting a clear executive summary for CAPEX proposals.
- Structuring the ask and linking it to strategic value.
- Storytelling techniques for non-finance audiences.
- Reviewing and critiquing sample funding requests.
Post-Investment Review and Benefit Realization
- Establishing post-investment review (PIR) frameworks.
- Tracking actual versus projected benefits.
- Feedback loops to improve future CAPEX proposals.
- Creating a culture of accountability in capital spending.
Requirements
- An understanding of manufacturing operations and plant management
- Experience with spreadsheet software such as Microsoft Excel
Audience
- Manufacturing managers and plant supervisors without a financial background
- Engineering managers preparing capital expenditure proposals
Testimonials (3)
Good communication, open for discussion, kept it interesting and engaging
Ahmet Keyman - Keytrade AG
Course - Management Accounting and Finance for Non-Finance Professionals
Experience of the trainer and his way of conveying the content
Roggli Marc - Bechtle Schweiz AG
Course - FinOps
Experience and provide necessary information to the topics
