How We Reduced a $40M Capital Project Backlog to $20M Without Sacrificing Business Value

As companies prepare their capital project budgets for 2025, one common challenge is balancing a mountain of project requests against a limited budget. It’s not unusual for project requests to exceed available funds, and without a sound decision-making process in place, businesses are often left scrambling to choose between arbitrary cuts or pushing responsibility down to individual departments. Both approaches, while convenient, tend to create more problems than they solve.

In this case study, I’ll share how I inherited a $20M maintenance capital budget with over $40M in project requests and how we reduced the project backlog to under $20M—without sacrificing critical business value. Using a structured Decision-Making Framework (DMF), we empowered our teams, improved transparency, and streamlined decision-making in a matter of weeks.

The Challenge: A Capital Project Backlog That Far Exceeded Budget

When I took over as Vice President of Operations for a large biomass manufacturer, I was immediately confronted with a major challenge: the company’s capital project budget for maintenance was set at $20M, but the total project requests for the following year added up to over $40M.

The situation was complicated by the fact that most of the project justifications were poorly written. Few showed any clear return on investment (ROI) or risk assessments, and the only alternatives proposed were to either fund the entire project or not fund it at all. This left us in a difficult position—making informed decisions in a short amount of time was nearly impossible.

The Common Approaches That Don’t Work

When it comes to handling a capital project backlog, many companies fall into one of two common traps:

1. Let the plants decide: Leadership informs each department or plant of their allocated budget and directs them to submit projects that add up to that amount. While this seems efficient, it often results in individual plants making decisions in isolation without considering the broader business strategy. Executive leadership is then surprised when critical issues remain unfunded simply because a plant prioritized something else.
2. Arbitrary executive decision-making: Alternatively, the leadership team takes matters into their own hands and arbitrarily "draws a line" in the budget, funding everything above that line. This might solve the immediate problem of budget limits, but it leaves teams in the dark about why their projects were cut. Without clear reasoning, the plant teams feel disconnected from the decision-making process, which erodes trust and morale.

Both approaches lead to poor outcomes. In the first case, crucial projects can fall through the cracks, while in the second, the executive team lacks the best information to make informed decisions. So, how can you reduce a capital project backlog while ensuring you’re making the right decisions for the business?

A Better Approach: The Decision-Making Framework

Rather than taking either of the two common paths, I implemented a Decision-Making Framework (DMF). The goal was simple: teach the project engineers to rethink their business cases, frame their problems better, and analyze cost-effective alternatives, all while ensuring transparency and collaboration across the board.

Here’s how we did it:

1. Train the Team on Decision-Making: I gathered all of the project engineers and put them through our Decision-Making Framework training. This training focused on helping them rethink their business justifications—framing problems, brainstorming potential solutions, and conducting economic analysis to determine the most cost-effective alternatives.
2. Rewrite the Business Cases: Armed with a new approach to decision-making, the engineers went back and re-evaluated their project requests. They were able to rewrite business cases, focusing on critical elements like potential ROI, risks, alternative solutions, and the drivers of success and failure.
3. Refine and Prioritize Projects: By the time the engineers finished revising their business cases, something remarkable happened. The total project requests dropped from over $40M to less than $20M. Why? The engineers realized that in many cases, their original proposals weren’t the best or most efficient solutions. They identified alternatives that were more cost-effective and offered better returns.
4. Collaborate Transparently: One of the most important aspects of this approach was that decisions were made jointly with the plants. Rather than feeling disconnected from the process, the plant teams understood why certain projects were prioritized while others were deferred. This built trust and strengthened the relationship between leadership and the teams on the ground.

The Results: A Streamlined, Transparent Decision-Making Process

By implementing the Decision-Making Framework, we were able to achieve several key outcomes:

• Reduced capital project backlog from $40M to under $20M
• Improved decision quality through a more "fit for purpose" economic analysis
• Built trust and transparency between executive leadership and the plant teams
• Empowered teams to take ownership of their project justifications, leading to more informed and strategic decisions

Perhaps most importantly, the framework allowed us to submit a budget to the board that I felt confident about. The decisions were not only aligned with the business’s strategic goals, but they were made collaboratively, giving the plant teams a sense of empowerment and accountability.

What This Means for Your Capital Project Budget

As your organization prepares for 2025, you may find yourself facing a familiar challenge: more capital projects than you have budget for. So, how are you going to handle it?

• Will you ask each plant or department to prioritize their own projects without the benefit of broader business insights?
• Or will you, as executive leadership, make the decisions yourself, with limited information and context?

Instead of relying on these ineffective approaches, consider implementing a Decision-Making Framework. This framework provides a structured, collaborative way to evaluate project requests, ensuring that the right decisions are made for the business as a whole.

Why the Decision-Making Framework Works

The Decision-Making Framework is effective because it doesn’t rely on arbitrary cuts or one-size-fits-all solutions. Instead, it:

• Empowers teams: By teaching your team how to frame problems and assess alternatives, you give them the tools to make better decisions.
• Encourages transparency: Decision-making is done openly and collaboratively, preventing the frustration that comes from top-down, arbitrary cuts.
• Prioritizes ROI: By focusing on economic analysis, the framework helps ensure that the projects with the greatest return on investment rise to the top.

Conclusion: Facing Your 2025 Capital Project Backlog

Budgeting for 2025 will likely present the same challenges as before—too many project requests and too little budget. But with a structured approach like the Decision-Making Framework, you can reduce your capital project backlog, empower your teams, and make decisions that are aligned with both short-term needs and long-term strategic goals. And you can do this without arbitrarily saying "no" or spending a bunch of money on some fancy new IT system.

If you're interested in learning more about how to implement this approach and tackle your capital project budget with confidence, I’m hosting a webinar where I’ll walk through the exact steps I used to streamline decision-making and reduce project backlogs in weeks, not months, and without requiring additional IT systems.

?? Register for the webinar here: https://bit.ly/3BlFEwu

Chris Seifert is the author of Enabling Empowerment: A Leadership Playbook for Ending Micromanagement and Empowering Decision-Makers. With over two decades of experience in transforming organizations through strategic leadership and decision-making frameworks, Chris has helped teams cut through bottlenecks, optimize capital project budgets, and build cultures of accountability. He is passionate about teaching leaders how to empower their teams to make smarter, faster decisions without sacrificing business value.