TCO-optimized investments in the chemical sector

By optimizing capital expenditure (CapEx), companies in the chemical industry can achieve and secure competitive advantages and long-term profitability. To do this, they should use value engineering as a powerful tool for optimizing CapEx and total cost of ownership (TCO) projects.

In “value engineering”, company organizations are geared towards value-creating measures. Ideally, this is flanked by two further points: the establishment or integration of cross-functional teams and effective data analysis and use. As a result, companies can benefit from significant cost savings and performance improvements, for example in the case of projects that are implemented more quickly and effectively.

Results

These are the results achieved by companies in the chemical industry with ROI-EFESO in CapEx / TCO projects (selection):

Classic topics for investment decisions in the chemical industry

Sustainability and decarbonization

Companies in the chemical industry are confronted with rising energy costs and strict regulatory measures, particularly in the European Union (EU). The 2023/2024 recession will exacerbate this situation with strong cost pressure, which will be further increased by the rise in imports into the EU.

At the same time, the industry needs adequate solutions to the challenges of sustainability and decarbonization. However, the horizon here extends far beyond the EU - e.g. in the area of hydrogen production, where China and the Middle East are emerging as future centers and dominant players in the value chain.

In addition to these market-shaping developments, the significant shift in the focus of global investment towards the chemical industry in the United States should not be underestimated. This shift is favored by regulatory measures and CapEx subsidiaries in conjunction with lower TCO for the operating phase. Sustainability factors are therefore becoming increasingly important in investment decisions, for example as an element of net present value calculations or in the form of scoring models for projects.

Greenfield and brownfield investments

Investments in plant renewal and capacity expansions; also in new products and technologies in the context of greenfield projects.

Balance of CapEx / TCO / pace of change

This is usually relevant for long-term investment projects with a high dependency on TCO. Companies should align their CapEx expenditure “today”, the total cost of ownership and the speed of change processes. Digitalization and automation technologies, for example for process control, are suitable for this purpose.

Multi-disciplinary CapEx volumes

Safety and complexity aspects can quickly expand the dimension of technical projects - with the corresponding impact on CapEx. This is particularly the case when several perspectives and aspects need to be integrated, such as process and plant engineering, safety, compliance with regulations or from a business context.

Partner / EPCMs

Interaction with external partners for engineering, procurement and construction management (EPCM, Engineering, Procurement & Construction) is playing an increasingly important role in CapEx management.

Challenge: Strong focus on technical functionality, limitation of commercial potential.

Solution: With our value engineering approach, we address systematic cost optimization without compromising quality or functionality criteria.

How can effective FEL phases and a clear definition of requirements based on actual business needs be ensured?
How do you arrive at relevant target costs and scrutinize cost estimates?
How to realize “fair” CapEx for the agreed project scope?

ROI-EFESO: CapEx and TCO in the chemical industry

Challenge: More effective cooperation between business and development teams.

Solution: We set up a business-oriented organizational structure with clear rules for collaboration. This improves the coordination of technical and business objectives - and subsequently the implementation and results of business-critical projects.

In which way can a trusting exchange be established from day one?
How can mutual understanding and cooperation between the two areas be structurally “anchored”?
How is the mutual interest in cooperation ensured?

Challenge: Strict legal framework and long approval periods.

Solution: We develop differentiated project archetypes and processes as well as customized solutions for different types of projects - thus increasing efficiency and effectiveness.

How can project types and requirements be differentiated?
How can entrepreneurial thinking also be ensured when it comes to security aspects - without making compromises?
What measures can be taken to optimize overall project durations and meet approval timelines at the same time?

Challenge: Complex multidisciplinary projects that require the integration of different perspectives.

Solution: We ensure effective gate keeping and targeted engagement management - and thus efficient project control and stakeholder involvement.

How do companies translate business requirements into a project setup - and how do they find the right combination of CapEx, pace and TCO optimization?
What measures can be taken to ensure a robust gatekeeping process and governance that correspond to the actual situation and project progress?
How do companies put together a resilient project team (incl. EPCM and business stakeholders)?

Further services for the chemical industry

Learn more

CONTACT

Fernando Cruzado
Partner
Phone: +49 89 1215 90-0

Send Mail

Dr. Jan Große-Wilde
Partner
Phone.: +49 89 1215 90-0

Send Mail

CLIENTS

CASE STUDIES

Lean Digital Manager ©S_L/shutterstock.com

Case Study

Lean Digital Manager

Shaping the factory of the future with Lean 4.0. How can lean principles be combined with the technologies and possibilities of networked digitization in value creation networks? By further qualifying employees to become decision-makers. The ROI-EFESO certification program for "Lean Digital Manager" shows how digitalization of lean production works. To do this, it combines strategies with Industry 4.0 technologies.

To the Project

ROI Case Studie - Smart Factory Planning

Case Study

Smart Factory Planning: Smart Planning for smart Factories

What does the ideal factory of the future look like? Do products there control their production completely independently? A pharmaceuticals and life sciences company plans the main directions for the smart factory transformation of four plants in just one month. Together with ROI-EFESO, the project team creates a "big picture" as a basis for planning and tests three prioritized technologies in pilot projects.

To the Project

Mann mit blauen Overall und Haarnetz an einer Maschine in der Chemie-Industrie

Case Study

Business Operations Strategy: Re-start for production networks

A market leader strengthens its Global Footprint structures. With a turnover of around EUR 10 billion, the company is one of the market leaders in the life science and chemicals sector. After a long period of successful global growth, developments such as tougher competition and shifts in demand between regions are jeopardizing the achievement of the ROCE (return on capital employed) targets.

To the Project

Frau mit Haarnetz bei der Produktion eines Chemie-Produkts

Case Study

Manufacturing Excellence: Optimizing instead of improvising

The global demand for thermosets is increasing, as is the case in the energy industry. A manufacturer of thermosetting resins has positioned itself as a leader in the chemical industry by providing these customers with a variety of innovative technologies, solutions and specialty products. In order to be able to react even more efficiently to market changes and customer requirements in the future, the company is realigning its production network.

To the Project

Detailaufnahme einer Machine in der Produktion

Case Study

OPEX: Redesign of the organization

The demand for high-performance plastics is increasing worldwide. A company in the chemical industry wants to increase the total capacity of its polymer production by more than 50% with a new plant complex. Together with ROI-EFESO, it is aligning its organizational structure to growth and profitability and is realizing an annually recurring benefit of more than EUR 1.5 million through process improvements.

To the Project

Case Study

Chemical company on the way to climate neutrality

In order to achieve the self-imposed goal of being climate-neutral by 2050, a manufacturer of basic chemicals has to put its entire business model to the test. ROI-EFESO supported the client with robust scenario planning to develop a sustainability roadmap that enables sustainable growth in a challenging industry environment.

To the Project

Male employee in protective clothing at sustainable chemical company

Case Study

Sustainable Chem: New start for the organization

To the Project

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