Growing and sustaining a company depends in part, on deploying capital effectively. When we ask executives whether they’re confident they deploy capital spending effectively, many of them say no. Why? In our experience, the answer lies in the fact that the capital spending decisions often involve complexity, risk, and human bias.
Deloitte’s Capital Efficiency practice helps organizations make better and faster decisions by assisting them in improving the quality of their capital allocation decisions to enhance robustness, efficiency, and return on investment. Other benefits of employing a strategic capital allocation process include more control over aligning resources to strategic priorities, more insight into the risk and return of projects and portfolios, more accountability and buy-in across the organization, clear rationale for investment choices, and, ultimately, a sustained strategic advantage.
Our approach combines tools and techniques from decision analysis, corporate finance and valuation, portfolio management, data analytics, and behavioral economics to provide tailored insights that can enable your organization to:
- Analyze and quantify strategic benefits through financial analysis (e.g., multi-criteria valuation methods)
- Incorporate risk and project interdependencies in the evaluation criteria
- Develop more insightful risk-adjusted forecasts to help prepare for and respond to uncertainty
- Identify projects that generate desired returns and balance strategic alignment with organizational constraints (e.g. funding)
- Manage the biases and narrow framing that project teams often exhibit in their business cases
- Perform ‘what-if’ analyses and portfolio analyses to help respond to market changes by using a dynamic management dashboard that provides detailed information at your fingertips
- Analyze the capital structure needed for executing the strategy under a range of scenarios
- Be more confident when making strategic investment decisions to grow the business, organically or through M&A.
The full Monte Carlo: Common pitfalls and leading practices in the application of Monte Carlo simulation
Read "The Full Monte Carlo" to learn how careful framing and data analyses, thoughtful selection, and communication of outputs may go a long way toward enhancing the quality of the decision-making process.
Taking the emotion out of capital expenditures
Taking a disciplined approach to planning for capital expenditures and using a framework for decision-making can help CFOs raise efficiency and increase investment portfolio returns.
Balancing the risk-return equation
CFOs are looking for greater confidence in their forward-looking plans and the ability to manage risk. Learn more about moving beyond the traditional approaches to forecasting.
Risk-adjusted forecasting: More certainty for planning
With increased volatility, complexity and interconnectivity, existing approaches to reflect uncertainty in business planning may be no longer sufficient. One way to develop more certainty around budget projections and targets is to use risk-adjusted forecasting.
Capital expenditures: Will your investment deliver the desired result?
Capital expenditure planning provides CFOs visibility into how the portfolio is doing, where the money is being spent, and whether the company is getting the returns it wants. Read the CFO Insights article to learn more.
Capital expenditure planning: Using metrics to monitor effectiveness
A commitment to the capex planning process usually starts with implementing a framework that can help align an expenditure program to the overall corporate strategy and financial goals. Before metrics and evaluation tools can be used effectively, however, it’s important to consider the review process for capex programs as they are adopted.
Capital efficiency in a volatile market: Stop burning capital
In a recent poll of 2,000 financial executives who attended a Deloitte Dbriefs webcast, a majority identified capital deployment as the biggest challenge they face in their capital planning processes. Learn more about the ways financial executives may overcome this challenge.