Course Outline
Introduction to CAPEX and the Investment Perspective
- Defining capital expenditure within the manufacturing sector.
- The impact of financial analysis on operational decision-making.
- Typical errors made by managers without finance expertise.
- Aligning CAPEX with broader strategic business goals.
Time Value of Money, Discount Rates, and WACC
- Comprehending present and future value principles.
- Determining and choosing suitable discount rates.
- Weighted Average Cost of Capital (WACC) and project-specific rates.
- Practical drills on discounting cash flows.
Net Present Value (NPV), IRR, MIRR, and Payback Period
- Calculating NPV as the primary investment benchmark.
- Utilizing IRR as a secondary screening mechanism.
- Mitigating reinvestment assumption flaws using Modified IRR (MIRR).
- Applying Discounted Payback Period as a liquidity filter.
Economic Value Added (EVA) and Shareholder Value
- Computing EVA: NOPAT minus (Capital Invested x WACC).
- Aligning CAPEX budgeting with shareholder value generation.
- Evaluating EVA against conventional accounting measures.
- Case study on value-based management in manufacturing.
Developing the CAPEX Business Case
- Organizing cash flow forecasts for capital projects.
- Distinguishing between operating and capital cash flows.
- Considering working capital and terminal value.
- Constructing a complete investment case from operational data.
Scenario and Sensitivity Analysis
- Creating three scenarios: Base, Optimistic, and Pessimistic.
- Constructing tornado diagrams for sensitivity ranking.
- Recognizing value drivers and key assumptions.
- Practical Excel exercises.
CAPEX Processes, Templates, and Capex Cards
- Stage-gate approval workflows for capital projects.
- Designing one-page Capex Cards with strategic alignment.
- Incorporating financial metrics, risk ratings, and schedules.
- Standardizing Requests for Funding documentation.
Risk Analysis, Monte Carlo Simulation, and Real Options
- Implementing Monte Carlo simulation using spreadsheet add-ins and Python.
- Handling uncertainty in manufacturing investment choices.
- Real options analysis for production flexibility and expansion.
- Deciding between probabilistic and deterministic models.
ESG, Sustainability, and Regulatory Factors
- Integrating ESG and sustainability indicators into cash flows.
- Carbon costs, energy efficiency, and green capex incentives.
- Modifying risk premiums for environmental compliance.
- Communicating sustainability advantages to financial stakeholders.
Executive Narrative, Storytelling, and Requests for Funding
- Drafting a clear executive summary for CAPEX proposals.
- Structuring the request and connecting it to strategic value.
- Storytelling techniques for non-finance audiences.
- Evaluating and critiquing sample funding requests.
Post-Investment Review and Benefit Realization
- Establishing post-investment review (PIR) frameworks.
- Monitoring actual vs. projected benefits.
- Feedback loops to enhance future CAPEX proposals.
- Fostering a culture of accountability in capital spending.
Requirements
- Familiarity with manufacturing operations and facility management
- Proficiency in spreadsheet applications like Microsoft Excel
Target Audience
- Manufacturing managers and plant supervisors lacking a finance background
- Engineering managers drafting capital expenditure proposals
Testimonials (4)
How to manage business financials
surprise mtileni - Hatima Holdings (Pty) ltd
Course - Learning Xero
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
The trainer did not leave a single minute unexploited! He was up a storm throughout every lesson and provided much material for whatever he dealt with.
