Capital projects enable businesses to expand capacity, introduce new technologies, and adapt to evolving market demands. Yet, many fail to deliver on their business cases, often operating at less than 60% of intended productivity. This shortfall erodes profitability and undermines confidence in future investments.
Why do so many capital projects falter? The root causes are often found in two critical stages: front-end scoping and conceptual design and vertical startup and operational integration. Addressing these phases strategically allows businesses to turn capital projects into catalysts for world-class performance.
The Pitfall of Poor Front-End Planning
Underperforming capital projects often stem from inadequate front-end scoping and conceptual design. A lack of stakeholder alignment results in unclear objectives, scope creep, and ineffective design choices.
Common Front-End Issues
- Insufficient Stakeholder Engagement: Critical input from operations, maintenance, and end-users is often overlooked, leading to design flaws that surface during execution or startup.
- Vague Business Objectives: Projects may begin with poorly defined success metrics, making it difficult to align design decisions with long-term goals.
- Rushed Conceptual Design: Pressure to begin execution can lead to bypassing robust design reviews, opting for quick but flawed solutions.
The Solution: A Strategic Approach
To mitigate these issues, companies should prioritise disciplined front-end planning:
- Define Business Objectives: Set clear success metrics such as product format and recipes, capacity targets, operational efficiencies, sustainability and cost parameters.
- Collaborate Across Teams: Engage cross-functional teams early, ensuring that commercial, operational and maintenance needs shape the design.
- Conduct Feasibility Analyses: Use simulations, pilot testing, and scenario planning to assess design options against real-world conditions.
A global food manufacturer recently adopted a category-led operational strategy, unlocking commercial growth while advancing sustainability goals. This initiative improved packaging recyclability, delivered shelf-ready packaging formats, and increased supply chain efficiencies. By aligning commercial and operational teams in project scoping, the company boosted project ROI by 300% while achieving sustainability and commercial commitments.
The Challenge of Vertical Startup
Even well-designed projects can falter during startup. The transition from construction to full operational integration is where many projects experience delays, extending the time needed to reach intended performance levels.
Common Startup Issues
- Unrealistic Commissioning Plans: Compressed timelines lead to inadequate testing and debugging, causing extended ramp-up periods.
- Skill Gaps & Lack of Standards: Operators and maintenance teams may not be adequately trained, and standard operating parameters may be undefined.
- Resistance to Change: New processes may disrupt established workflows, leading to pushback from teams.
The Solution: Integrated Startup Strategies
To achieve a seamless vertical startup, companies should:
- Prioritise Training & Standards: Equip teams with hands-on training during construction to ensure readiness from day one.
- Implement Phased Ramp-Up: Gradually increase production capacity, refining processes based on early operations.
- Emphasize Change Management: Foster a culture of innovation, ensuring teams are engaged in adopting new technologies and workflows.
An Australian snack food company invested in a strong operational readiness program for their $250M greenfield facility. The result? A packing operation that ran for 16 hours without a single stop on its first run—demonstrating a true vertical startup.
Capital Projects as a Catalyst for Excellence
When executed effectively, capital projects can exceed productivity goals and elevate businesses to world-class performance. By investing in robust front-end planning and strategic startup practices, companies can:
- Exceed Productivity Targets: Optimised systems and well-trained teams ensure rapid achievement of operational goals.
- Establish an Operational Excellence Framework: A new site or operation offers an opportunity to drive best practices across the organisation.
- Enhance Competitive Advantage: Superior performance positions companies as industry leaders, attracting customers and investors alike.
In today’s market, businesses cannot afford for capital projects to fall short. By refining front-end planning and embracing vertical startup as a transformational opportunity, companies can unlock the full potential of their investments—turning challenges into stepping stones for industry leadership. With the right approach, capital projects become powerful enablers of long-term success and operational excellence.
Ready to transform your capital investments into world-class performance? Partner with Argon & Co’s manufacturing experts to optimise front-end planning, accelerate vertical startup, and unlock sustainable operational excellence. Learn more about our Manufacturing services here.
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Evert Westerhof
Associate Partner Australia
Warren Proctor
Associate Partner Australia
