Capex Reduction
Reducing capital expenditure requirements by 20-80%
Newton’s business is based around improving operational and financial performance without the need for capital expenditure, so when we’re asked to review and assess new capex plans our approach is challenging, rigorous and typically results in considerably less expense than originally anticipated.
The main reasons for capital expenditure are normally to increase capacity, to reduce costs, to provide new capabilities, or to meet increased compliance requirements. More often than not, it’s a combination of all these factors.
Our objective is to determine whether there is a real need for expenditure, and if there is, to reduce the investment required. To achieve this, we pull the plan apart, analysing and questioning each element on its merits. At the same time, we look for opportunities to deliver the improved performance from existing equipment. We then re-build the plan from the bottom up to provide an expert assessment of what’s actually required.
We identify if expenditure can be prevented, delayed or reduced and provide an independent view of cost, risk, benefit and phasing. We save our clients from unnecessary expense by identifying that individual pieces of expenditure, like a new specific additional machine, are not needed, and we frequently succeed in reducing larger capex plans by 20-80%.
For example, our work has resulted in a 22% increase in efficiency for a beer canning plant, avoiding the need for a new line. A private equity due diligence project on a bakery reduced planned capex from £21.5 million to £10.5 million. And we saved £4 million of unnecessary expenditure for a medical product manufacturer by producing a detailed assessment of regulatory and
capacity requirements.