Businesses see procurement and execution as key to future capital expenditure success

With the global economy enduring a chaotic 2025, constraints on capital expenditure projects have plagued many companies. With half of companies saying the cost of materials is causing them to delay their projects, two-thirds have earmarked project execution and procurement as areas they could find the efficiencies to free up more capital in the future.

A capital expenditure project is an investment in a company’s long-term future, involving the purchase, creation or upgrade of an asset which is core to the firm’s business model. Capital refers to a company’s financial resources, and so spending those funds mean that such a project can be very risky, and firms may be less likely to undertake that risk amid a difficult economic period.

Prior to 2025, crises including the Covid-19 pandemic, rampant inflation and supply chain conflicts had meant companies were already guarded on giving CapEx projects the green light. But amid the chaotic threats of trade tariffs from the US, and rising geopolitical conflict in Europe and the Middle East, that caution has managed to further ramp up.

With that being said, a new poll from EFESO Management Consultants finds that executives see CapEx projects as more important than ever. With increased pressure to invest in the digital technologies billed as essential to future business – including AI tools – 71% of organisations said they would spend 10%-30% more on CapEx in the coming three years, compared to the last three. A further 4% said they would push that up by 30% or more.

Asked specifically what they thought was a top-three item on the agenda, 53% majority said they would be spending on the transformation of their entire business, while the same number said supply chain resilience was a key goal. And while it was far from the top priority, automation and digitisation was still prominent at 27%.

Caught between a rock and a hard place – believing they must invest to survive and thrive, but knowing that the turbulent global economy means that investment comes with heightened risk – executives are looking for ways to shore up their spending.

Looking to identify key blockers to their CapEx ambitions, leaders noted three top risks. Amid further spikes in inflation, 50% said the increasing cost of equipment was a major concern for their projects. Responding to this requires quick and decisive adaptation from firms, so 47% said their current decision-making process and organisational alignment was a key issue. And with their current alignment threatening to drag out those decisions, 46% said delivery on time was a top challenge.

Holger K Peterkord, global lead for CapEx excellence at EFESO, commented, "The three frequently mentioned challenges require a high degree of coordination and collaboration across departments. The key to success lies in creating uniform and reliable processes, methods, and tools."

To that end, leaders told EFESO that they had clear ideas of where they could best improve their CapEx delivery. Most broadly, 63% said ‘project execution’ could be bettered, while more specifically, 61% said this could be achieved via a more responsive procurement process. And 52% added that an overhaul of their organisational set-up could help make their company more responsive to change, and better aligned around those solutions.