Course Outline
Introduction to CAPEX and Cultivating an Investment Mindset
- Defining capital expenditure within a manufacturing environment.
- The importance of financial evaluation in operational decision-making.
- Common challenges faced by non-finance managers.
- Aligning CAPEX with overarching strategic business goals.
Time Value of Money, Discount Rates, and WACC
- Grasping the concepts of present value and future value.
- Determining and selecting suitable discount rates.
- Weighted Average Cost of Capital (WACC) and project-specific rate applications.
- Practical exercises involving the discounting of cash flows.
Net Present Value (NPV), IRR, MIRR, and Payback Period
- Computing NPV as the primary criterion for investment decisions.
- Utilizing IRR as a secondary screening mechanism.
- Mitigating reinvestment assumption biases with Modified IRR (MIRR).
- Implementing Discounted Payback Period as a liquidity checkpoint.
Economic Value Added (EVA) and Shareholder Value
- Calculating EVA: NOPAT less (Capital Invested x WACC).
- Aligning CAPEX budgeting with the creation of shareholder value.
- Contrasting EVA with conventional accounting measures.
- Case study examining value-based management in manufacturing.
Constructing the CAPEX Business Case
- Structuring cash flow projections for capital initiatives.
- Distinguishing between operating and capital cash flows.
- Considerations regarding working capital and terminal value.
- Building a holistic investment case from operational data.
Scenario and Sensitivity Analysis
- Formulating three scenarios: Base, Optimistic, and Pessimistic.
- Creating tornado diagrams for sensitivity ranking.
- Identifying key value drivers and critical assumptions.
- Hands-on exercises in Excel.
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 timelines.
- Standardizing Requests for Funding documentation.
Risk Analysis, Monte Carlo Simulation, and Real Options
- Executing Monte Carlo simulations using spreadsheet add-ins and Python.
- Managing uncertainty in manufacturing investment choices.
- Real options analysis for production flexibility and expansion.
- Determining when to apply probabilistic versus deterministic models.
ESG, Sustainability, and Regulatory Considerations
- Integrating ESG and sustainability metrics into cash flow models.
- Addressing carbon costs, energy efficiency, and green capex incentives.
- Adjusting risk premiums for environmental compliance.
- Communicating sustainability benefits to financial stakeholders.
Executive Narrative, Storytelling, and Requests for Funding
- Drafting a clear executive summary for CAPEX proposals.
- Structuring the funding request and linking it to strategic value.
- Storytelling techniques tailored for non-finance audiences.
- Reviewing and critiquing sample funding requests.
Post-Investment Review and Benefit Realization
- Establishing post-investment review (PIR) frameworks.
- Monitoring actual versus projected benefits.
- Creating feedback loops to enhance future CAPEX proposals.
- Fostering a culture of accountability in capital spending.
Requirements
- Familiarity with manufacturing operations and plant management.
- Proficiency in spreadsheet applications such as Microsoft Excel.
Target Audience
- Manufacturing managers and plant supervisors lacking a financial background.
- Engineering managers responsible for preparing 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.
