How to Stretch Your Budget with a Data-Driven CapEx Strategy
Industrial facilities are under immense pressure to make the right investments – determining where to allocate limited budgets while ensuring safe, seamless productivity today and for years to come. In this blog, we’ll dive into the reasons why many facilities don’t get it right, introduce an approach to CapEx planning, and discuss how the right technologies will optimize your efforts.
What is CapEx?
Capital expenditures (CapEx) are the funds a company allocates to buy, maintain, or improve fixed assets. A CapEx budget typically has a longer-term view compared to operating expenses (OpEx), which are the costs associated with running a business day-to-day.
Watch Software Demo: Optimizing CapEx
The Cost of Bad Data
From manufacturing facilities and mines to oil refineries and power plants, industrial sites spend more on CapEx and maintenance than they should. The reason why? They don’t have the data they need to make informed decisions. Instead, they are overspending and putting their sites at risk.
Making data-driven decisions is critical for success. However, many organizations face the challenge of having a gap in accurate, full-coverage data. Facilities rely on outdated and often unreliable methods to gain visibility into operations for CapEx budgeting and maintenance planning. Incomplete and inaccurate data can prevent decision-makers from understanding the complete picture, cause redundancies, and lead to bad decisions that increase risks.
The limited data that does exist is not formally documented or shared. It typically lives in spreadsheets or in the minds of facility workers. When data is scattered across sources, obtaining complete and accurate insights becomes a major challenge.
Facilities are left grasping at straws and basing decisions on attributes that include:
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Age of the asset
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Other like assets at the site
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Number of failures
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Visual or spot checks accounting for 1% of asset coverage
None of these attributes provide any data about the asset's actual health. With limited data, it is nearly impossible to accurately forecast and plan. It also becomes much harder to get corporate buy-in for budget allocations without a data-driven business case that justifies your request.
A New Approach to CapEx Planning
Fortunately, there is a new path forward. Organizations that leverage artificial intelligence and robotics (AIR) technology are gaining full visibility into asset health to make confident, data-driven decisions.
AI and robotics must be deployed together for a solution to work. Several solutions can offer software, and others provide some level of robotics. However, you won't get valuable insights if these two technologies aren’t ingrained into one solution.
Instead of making assumptions based on incomplete data, organizations can use AIR technologies to establish a baseline by analyzing comprehensive digital twins with health scan data covering nearly 100% of an asset’s surface. From there, software platforms can integrate additional data layers for even more visibility and clarity.
For example, fixed sensors can be installed on select points of an asset, providing real-time continuous monitoring of how the asset is aging. Software platforms can also integrate 3D visual data captured by photogrammetry drones, building rich asset models that reflect the entire picture. Process data can also be incorporated to help make operational changes that impact corrosion rates to extend asset life cycles.
Data quality is critical. Software built with complete, first-order data can perform high-quality analysis. This level of data coverage and analysis simply can’t exist when relying on traditional methods, spreadsheets, and tribal knowledge.
Optimize Your Efforts with AI and Robotics
Without a clear picture of your starting point, it becomes impossible to chart a roadmap to success. A comprehensive understanding empowers you to evaluate tradeoffs across asset fleets over time. This enhanced visibility and understanding makes it easy to prioritize maintenance activity and identify investments that can safely be deferred to a later time without increasing risks.
Analytics tools with a strong data foundation will close the loop between strategy and maintenance execution – empowering teams to understand, collaborate, and confidently make strategic decisions that ensure asset fleets are reliable today and future-proofed for tomorrow.
Simply put, better data means better decision-making. Solutions that leverage AI and robotics provide decision-makers with options, giving them the tools they need to evaluate different “what if” scenarios and determine the most impactful plan to optimize CapEx, increase production, and reduce risks in both the immediate and long term.
Learn More
Watch this software demo video to learn how you can optimize your capital allocation using the Cantilever operating platform. This quick video walks you through tools to develop repair vs. replace CapEx allocation plans, predictive maintenance plans, and dynamic budgeting to ensure you stay within budget as factors may change at your facility.