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Growth-oriented capital planning: the right spend at the right time

Is underspending unintentionally inhibiting business growth? Learn how growth-oriented capital planning can help you optimize your spend at the right time for future return on investment.

May 15, 2019

Capital investment, when allocated to the right place at the right time, enables strong, viable business strategy and growth. Most companies believe they are delivering profitability and productivity through their capital budgets. Yet the average company misses its plan by at least 12 percent1.

Companies are likely to unintentionally inhibit growth unless they:

  • Develop an accurate, strategic capital budget
  • Prioritize spending effectively
  • Manage their spend with centralized oversight
  • Execute spending consistently and holistically

Overspending causes financial strain throughout your organization, raises risk and damages shareholder trust. But have you considered the risk of underspending? It may signal a worse problem lurking beneath the surface.

When money is held back rather than invested in opportunities like improvements, the impact on your future ROI, rents and potential foreign investments should not be underestimated. The value of your portfolio is at stake.

Are you meeting your growth goals?

What looks like costs saved today could actually mean missed investment opportunities:

  • JLL research shows Forbes 1000 companies underspend by $8.8 billion, annually.
  • In some cases, informed prioritization — in which managers compare and rank projects — across categories can increase portfolio net present value by more than 30 percent2.
  • Setting a standard model can reduce spend for nonmajor projects from 10 to 30 percent3, enabling reallocations for increased benefit.

Optimize your growth and meet your goals

If you’re consistently coming in under budget of your capital plan, learn what you’re missing out on.

1JLL Research | 2McKinsey 2017 | 3McKinsey 2017

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