Transforming CapEx in chemicals: your guide to maximizing ROI through value engineering
In today's competitive chemical industry landscape, optimizing capital expenditure (CapEx) is crucial for maintaining a competitive edge and ensuring long-term profitability. Value engineering is a powerful tool for optimizing CapEx projects in the chemical industry. By focusing on value, engaging cross-functional teams, and leveraging data and analytics, companies can achieve significant cost savings, improved performance, and accelerated project delivery.
As a leader in operations strategy and performance improvement, EFESO understands the unique challenges facing chemical companies when it comes to CapEx projects.
Explore how value engineering approach can help you maximize your return on investment (ROI) and achieve significant cost savings.
Our track record in optimizing CapEx spend and maximizing value for engineering
Our approach has consistently delivered impressive results for our clients
10-22%
increase in
CapEx Savings
8-12%
decrease of
Total Cost of Ownership (TCO)
15-25%
Reduction of
project cycle time
15-20%
increase in
Engineering productivity
CapEx demand is consistently increasing
Key trends
The European Union is currently under significant pressure, particularly due to the rising energy costs and stringent regulatory measures. This pressure has been further exacerbated by the recession of 2023/2024, which has led to an intense cost pressure, amplified by the increase in imports into the EU. However, amidst these challenges, there is a strong push towards sustainability and decarbonization, presenting a significant business opportunity.
This shift towards greener practices is not just confined to the EU, but is also evident in the increasing coverage of the full value chain in China and the Middle East, which are emerging as future centres for hydrogen production. In addition, there is a noticeable shift in the focus of capital expenditure (CapEx) investments towards the United States. This shift is incentivized by regulatory measures and CapEx subsidiaries, coupled with a lower total cost of ownership (TCO) for the run phase, making the US an attractive destination for such investments.
Typical CapEx project characteristics in the chemical industry
Mix of Greenfield & Brownfield investments
Both asset revamps and capacity expansions, as well as greenfield installations of new capacity, especially for new products and technologies.
Sustainability and Decarbonization Focus
Increasing importance of sustainability contributions in investment decisions, often as an element of NPV calculations or scoring models for projects. Some companies even have separate budgets for "pure-play" sustainability projects.
Balance of CapEx / TCO / Speed
These are typically long-term investment projects with high Total Cost of Ownership (TCO) dependency. Companies need to find an optimum balance between CAPEX spend "today" and TCO/Speed, often utilizing means from Advanced Process Control (APC), digitalization, and automation.
Big CapEx with Multi-Desciplines
Due to safety and complexity considerations, these are often larger engineering projects that need to integrate multiple views and aspects, including process and equipment engineering, safety, compliance, and business and operations perspectives.
Important Role of Partners / EPCMs
In addition to (or sometimes in place of) internal engineering functions, there's typically a very strong role and interaction with external Engineering, Procurement, and Construction Management (EPCM) partners.
We help you tackle the complex chemicals challenges in CapEx optimization
Complex multi-disciplinary projects requiring integration of various perspectives
Implementing effective gate keeping and targeted engagement management ensures proper project oversight and stakeholder involvement.
- How to translate business requirements into project setup – finding appropriate mix of CAPEX, Speed & TCO optimization
- How to ensure a robust gate keeping process & governance – matching the real situation & project progress?
- How to build a resilient project team – including EPCMs and business stakeholders?
Strong focus on technical functionality, potentially limiting commercial potential
Adopting a robust and comprehensive value engineering approach allows for systematic cost optimization without compromising quality or functionalitybody piercing of any type.
- How to ensure effective FEL phases & clear requirement definition (based on real business needs)?
- How to practically come to relevant Should-Cost & challenge cost estimates?
- How to land on “fair” actual CAPEX for agreed project scope?
Strict regulatory frameworks and long approval timelines
Developing differentiated project archetypes and processes enables tailored solutions for various project types, enhancing efficiency and effectiveness.
- How to differentiate different project types & requirements?
- How to ensure entrepreneurial thinking also in safety considerations (without compromising on safety and risk)?
- How to optimize overall project cycle times considering also approval timelines?
Need for effective collaboration between business and engineering teams
Adopting a robust and comprehensive value engineering approach allows for systematic cost optimization without compromising quality or functionalitybody piercing of any type.
- How to structurally “anchor” mutual understanding & collaboration between engineering & business?
- How to build trustful exchange from Day 1?
- How to secure attractiveness of engineering as a partner for the business side?
Discover our Client Success Stories
Delivering tangible results
