Nine practices for better capital-investment management
by Jack Large
McKinsey&Company’s latest article on capital-investment management, see, shows how Executives can improve performance by mastering several practices and adopting a capital-portfolio-management system powered by a comprehensive digital application. The nine practices they recommend are:
- Make the capital portfolio a priority by using a clear capital-allocation strategy to build winning portfolios, and linking strategic imperatives to a target capital portfolio
- Tap the organization’s collective wisdom by sourcing project ideas from experts across the business
- Set clear investment objectives and compare even seemingly disparate projects by combining qualitative and quantitive assessments
- Scrub the business case for each project multiple times throughout the life cycle of the project
- Use ROI throughout the investment life cycle including postcompletion reviews
- Streamline approvals and make contextually informed decisions in which approvers need to answer three key questions
- Forecast more frequently to enable tactical shifts utilizing digital tools to enable more frequent reporting and forecasting
- Implement a unified cross-platform approach by adopting a capital-portfolio-management system that is unified across the investment life cycle, from project inception to postcompletion review
- Adopt a culture of continuous improvement organizations need to identify past errors and correct course.
The authors of this excellent article - Matt Banholzer, Ashish Chandarana, and David Straden - finish with, “In our experience, most organizations can institute a far more efficient and effective project-management process in four to six months and see project and portfolio NPV improvements of well over 10 percent within a year.”
CTMfile take: Well worth a read.
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