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4 Reasons Managers Fail While Executing Capital Improvement Projects

Posted by James Dulong

Nov 1, 2016 10:18:00 AM

Printing-press.jpgTo start, let me define what I mean by Capital Improvement Project. It is similar to a Capital Equipment Project in that it requires some investment, installation and training but it is typically on a smaller scale.

Most projects we do are considered Capital Improvement Projects. We make improvements to existing Capital Equipment for a variety of reasons including improving productivity, reducing material waste, reducing VOC’s, (Volatile Organic Compounds), and minimizing quality defects.

We don’t see many failures with Capital Equipment Projects. Often, they are implemented to fill a capacity constraint and are very expensive. Due to those two factors, they get plenty of attention and resources. While not all are done efficiently, it is uncommon to see one outright fail. On the other hand, we have witnessed a handful of failed Capital Improvement Projects and, before we got smart, even been involved in one or two of them ourselves. Based on discussions with customers, and on our own experience, the most common causes of failure include:

1. Expected Results are Unclear

It’s easy to blame the supplier when things don’t go as expected. In fact, sometimes it’s even warranted. However, it’s your job as the manager of the capital improvement project to define and communicate specifically why you are undertaking this project. Simply stating that you want to improve productivity or reduce ink usage is pretty vague. We get around this by establishing SMART goals. SMART is an acronym for:

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Time Bound

We didn’t invent this acronym but establishing these goals up front has eliminated any issues we may have otherwise had regarding expectations. Instead of “we want to save ink,” we see things like “we expect to reduce ink usage by x% before the end of the second quarter.” If you cannot get your Capital Improvement Supplier to agree to specific goals, abandon the project, adjust your goals, or find another supplier.

2. Underestimated Time, Energy & Effort Required

We, as the supplier of Capital Improvement Projects, actually bring this up as part of our sales process. Budgeting for a project means more to us than us just having the money to purchase the equipment. It is imperative that we jointly understand the amount of time this project will require, the level of commitment necessary from the person leading the project and the additional effort required by those responsible for making the project successful. Implementing one of our viscosity or temperature control systems is a relatively small project but it still requires a commitment from the customer that goes beyond money. Get this part right and you go a long way toward avoiding failure.

3. Not Fully Supported by Team

Capital Improvement Projects, even small ones, generally require the support of more than one person. Not getting a full buy-in from the people most affected by the project can be a big oversight. For our projects, the Capital Improvement is designed to either minimize the requirement for manual adjustments or in some cases, completely automate a task currently performed by a person. It is not uncommon for the person being displaced to demonstrate fear or apprehension at the prospect of losing his or her job. The best we have seen this handled is to lay out the expectations clearly including a plan for the people that may be losing part of their responsibilities. Investing in training on the new equipment and directing efforts toward problem solving are often the best places for the resources that have had at least part of their job displaced. Addressing it up front helps create trust and makes a sometimes difficult transition easier.

4. Unhelpful or Unqualified Supplier

For every failed Capital Improvement Project, there are several people affected. Justifiably, each of those people is going to look at the next proposed project with a healthy, (or unhealthy), amount of skepticism. Too often, the first three reasons above aren’t addressed, and it all rests on the Capital Improvement Supplier to make everything come together. Sometimes they can’t and you’re left with a failed project. Get clear on the following three points to avoid working with unhelpful or unqualified suppliers:
  • Do they follow a proven process? Ask to review their implementation process and ask for that process early in your evaluation. Be skeptical if they can’t produce something clear, meaningful and repeatable.
  • Do they guarantee performance? We talk about this a lot. If a company will not provide a performance guarantee that could mean that they are uncertain about the results they will see. If they’re not confident they can meet your requirements, be skeptical.
  • Who else has implemented this capital improvement with success? Most qualified suppliers will have current users that you can speak with or even visit. If they don’t have somebody you can speak with either due to competitive or confidentiality reasons, request a demonstration system. If you can’t talk to another user or work with a demonstration system, be skeptical.

Capital Improvement Projects should be embraced as something that can move your business forward. Unfortunately, a few failed projects and a general skepticism toward sales people can cause many of us to avoid them. If you avoid these four paths to failure and maintain a direct and transparent relationship with your sales person, there is no reason why your next Capital Improvement Project can’t be a success.

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