Building an investment management system at an industrial enterprise
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₴1B+
annual investment program (UAH)
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+45%
rise in investment execution
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~1.5yr
average project payback period
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40+
investment projects a year
Context
Initial state
The team was engaged to assess and transform the investment function at an industrial enterprise. At the start, the company’s investment processes were unstructured and investment activity was carried out occasionally, without proper procedures for assessing project economic efficiency.
Investment decisions were made sporadically, without systematic prioritization or alignment with the enterprise’s strategic direction. Investment planning lacked a clear methodology. Responsibility for coordinating the process was split across units with no single management center.
Project details
- Industry
- Industrial enterprise
- Area
- Investment management
- Program size
- UAH 1B+
- Rise in execution
- ↑ 40%
- Reduction in payback period
- ↓ 2.5 yr
- Projects/year
- ~40
The problem
The absence of a systematic investment management model
The work uncovered key gaps that paralyzed effective management of the enterprise’s investment activity. The absence of a systematic approach and of the key elements of an investment management system made substantiated decisions impossible and led to systematic delays in delivery. As a result, the annual investment program failed to meet pressing investment needs — leading to a deterioration in the technical condition of assets, outdated technologies, and a critical need for modernization.
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No investment policy or methodology
There were no defined principles, criteria, or limits for investment activity — every decision was made ad hoc
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No mechanism to set the acceptable volume of investment
The volume of capital investment was not tied to the company's financial capacity — leading to either excessive or insufficient funding
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No system for assessing economic efficiency
Projects did not undergo a standardized assessment of key economic indicators (NPV, IRR, payback period) — decisions were made without an economic rationale
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No process for prioritizing and selecting projects
All initiatives competed for capital with no transparent criteria — stronger presentation skills counted for more than a stronger project
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No regulated process for preparing initiatives
Each unit submitted proposals in its own format — with no single requirements for the rationale or input data
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No centralized coordination
Responsibility was scattered across units — there was no single center of expertise and authority for the systematic management of the investment process
How the problem was identified
The issues were identified through a comprehensive audit of the enterprise’s finance-and-investment function, which included diagnostics of existing investment-planning procedures, an analysis of current investment initiatives, an assessment of the investment-decision process, and an analysis of how responsibility was distributed among the key participants.
The solution
Steps in building the investment function
Considering the issues identified, we delivered a comprehensive transformation of the investment process across several streams at once: organizational, methodological, and tooling.
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Substantiating the need for change
We prepared a management case proving the need for a full-fledged investment function for the enterprise's leadership and shareholders.
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Forming the investment team
We selected and structured a team with clear roles that became the single center of competence on investment matters.
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Target process model
We developed a target process architecture with a clear distribution of responsibility (RACI) for each step of the investment cycle.
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Investment policy
We developed and implemented an official document governing the principles of the enterprise's investment activity.
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Investment committee
We created a body for making sound investment decisions with broad internal expertise involved.
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Classification and prioritization methodology
We developed a system for categorizing projects and a multi-factor model for ranking them by strategic weight and economic effect.
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Financial models and sensitivity analysis
We created unified financial models to assess NPV, IRR, and payback period and to run scenario analysis for all project categories.
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Standardized initiative templates
We developed unified forms for preparing investment proposals for all units — a single standard of rationale for every initiative.
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Register of investment initiatives
We built a centralized register of all the enterprise's current and new project ideas — a single funnel for investment initiatives.
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A balanced investment portfolio
We selected and structured the portfolio with the enterprise's strategic priorities, financial capacity, and risks in mind.
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Monitoring and post-investment analysis
We implemented a system for regularly tracking program delivery and a mechanism for comparing actual results against plan.
Results
Measurable achievements after the transformation
The transformation created a full-fledged, effective investment management system at the enterprise.
Before the system
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40%
investment execution
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4-year average payback period
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Spot investment decisions
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No investment committee
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No assessment methodology
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Scattered responsibility
After the system
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85%
investment execution
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~1.5-year average payback period
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~40 projects
in a transparent portfolio
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An active investment committee
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Unified financial models and templates
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A single center of competence
Висновок
