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Why is it that investments most of the time don’t bring what we initially thought it would?

An external or internal need/demand can trigger the company to invest.

Based on the demand an investment proposal will be prepared for a certain asset, stating the who, what, why, when and how.
Not surprisingly, the proposal will show that the investment will bring a big improvement to the profitably, productivity, safety and many other.
And after a certain period, sometimes it shows that the actual numbers proof different.

Why is this the case and more important, how can this be prevented?

I noticed that in the process from demand to investments some questions are not answered or not even asked:

  • Is the investment a must have or a nice to have?
    • Can’t the demand be covered using the current assets? In some cases, the OEE of the current assets still has some free capacity which could cover the demand
    • Can it be solved in a different way, like outsourcing, change of process, upgrade the current assets?
  • How certain is the additional sales volume? Is there already a contract in place?
  • Is there a plan present which ensures a timely implementation?
  • Was a fair and comprehensive analysis made?
  • Does this investment fit in the strategic plan?
  • Can we measure the actual effects of the investment?
  • Do we know all hidden costs?
  • Did we aim for the stars? So, do we base the decision on the best case, expected case or worst case or a combination?
  • How will we finance it, buy, lease, rent?
  • What did the previous investments bring?

Of course, there are many more questions. Important is to be fair about the business and the opportunities.

This can be challenging, especially when you are occupied with and are part of the daily business.
That is why we can help you. With our knowledge and experience and a fresh look we make sure that you have all the information you need to make the right decision.