Recently, our experts, Fernando Cruzado, Vice President and Industry Lead for Chemicals, and Holger Peterkord, Senior Principal and Capex Practice Lead, shared their insights in an exclusive interview with CHEManager.
In the interview, our colleagues discuss the importance of CapEx optimization for chemical companies to maintain competitiveness and growth in the face of evolving market dynamics and sustainability challenges.
How important is the topic of CapEx optimization for chemical companies?
Investments in new technologies and capacities remain a key component in the strategic portfolio of chemical companies to ensure competitiveness and growth. Due to the long-term nature of these investments, companies are increasingly focusing on Total Cost of Ownership (TCO), which also includes environmental factors, industrial policy incentives, long-term energy cost expectations, or the availability of feedstock. At the same time, chemical companies often operate in very different market environments, requiring different focuses between CapEx and OpEx. Naturally, every company will strive to use CapEx funds as effectively as possible.
What are the fundamental components to ensure optimized investments?
From our experience, there are four key areas:
- Firstly, there is a need for a robust stage-gate process that effectively involves multiple disciplines and stakeholders. This starts with a solid Front End Loading (FEL) phase, ensuring a good understanding of critical project factors and market conditions. This allows the project team to understand priorities and make the right decisions during project execution.
- Secondly, regulatory requirements, approval steps, and timelines must be intelligently integrated into the project plan. This includes distinguishing project types based on risk profiles. Depending on the profile, there may be adapted implementation models, such as a simplified "fast-track" option with reduced reporting and approval requirements.
- Thirdly, conditions must be created that ensure trustworthy collaboration between the various parties involved. This begins with having a business partner on the engineering side who understands the market requirements of the "internal customer" well. Part of this partnership is also agreeing on and representing a common "first number" for cost estimation, as well as establishing clear rules for collaboration.
- Finally, it is crucial to bring CapEx expenditures to a TCO-optimum while considering market conditions.
To read the full interview, visit CHEManager and learn how EFESO Group is leading the way in CapEx optimization for the chemical industry.
The author
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Fernando Cruzado, Vice President and Industry Lead for Chemicals |
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Holger Peterkord, Senior Principal and Capex Practice Lead |
