Strategic CAPEX procurement for infrastructure projects
Capital expenditure (CAPEX) investments are at an all-time high, driven by the growing demand for modernized and resilient systems across transportation, utilities, and construction sectors. However, challenges such as delivery delays, cost overruns, and strained supply chains persist. To succeed in this competitive landscape, adopting innovative procurement strategies is essential. Explore our video series for actionable insights, expert strategies, and transformative approaches to CAPEX procurement.
The growing importance of strategic CAPEX procurement
CAPEX investments are rising rapidly as organizations allocate more resources to meet the demand for improved systems and facilities. This surge, however, intensifies competition, further straining supply chains already under pressure from simultaneous large-scale projects.
Adding to the complexity, many companies are venturing into new territories with infrastructure upgrades and green initiatives aimed at modernizing their capabilities. Yet, delivery delays affect 35% of CAPEX projects, and cost overruns frequently escalate into billions. These challenges underscore the need for organizations to rethink their procurement strategies, unlocking value through innovative and structured approaches.
#1 What are the main challenges currently being faced in CAPEX procurement?
#2 How can infrastructure clients achieve value beyond costs savings?
Five key levers for CAPEX project success
Infrastructure CAPEX projects require a tailored approach that moves beyond standard processes to address their often unique and large-scale nature. Our experience has identified five critical levers for success:
- Early Procurement Integration: Align procurement with planning from the outset to ensure commercial and technical objectives are balanced.
- Supply Chain Engagement: Generate supplier interest by promoting market opportunities and fostering competition.
- Risk Mitigation: Proactively stress-test strategies to anticipate and address potential delays, such as through direct procurement of long-lead-time equipment.
- Category-Specific Strategies: Enable smooth delivery of CAPEX projects alongside ongoing business operations by developing targeted plans for each category.
- Balanced Risk Sharing: Adapt contracts to share risks fairly, reflecting the maturity and capabilities of both clients and suppliers. By applying these levers, organizations can achieve better outcomes and reduce risks in large-scale infrastructure projects.
Building strategic supplier relationships
Infrastructure organizations are launching increasingly ambitious investment plans, making strong supplier relationships essential for success. These partnerships enable supply chain resilience, innovation access, quality improvement, faster delivery, and cost-efficiency.
In today’s supplier-driven market, where suppliers often prioritize their preferred customers, excelling at supplier relationship management (SRM) can provide a competitive edge. Collaborative practices, such as capacity planning and joint investments, create shared value but require senior-level commitment and a clear roadmap.
For example, we worked with a client to design a best-in-class SRM playbook, tailored specifically to their needs. This included a phased implementation plan, detailed engagement strategies, and initial supplier interactions. The results? Improved visibility, stronger supplier trust, and a competitive advantage in securing supplier priority for critical infrastructure investments.
#3 What role does supplier management play in the successful delivery of CAPEX projects?
Do you have any further questions? Then contact our experts!
