In the early 1990s, one of the world’s leading industrial companies was considering the construction of a new plant which was to cost well in excess of half a billion dollars. However, senior management and the board were uncomfortable with the project’s overall economics and decided to fundamentally rethink the investment. Two years later, the plant was opened at a capital cost of $350 million, 40 percent below the estimate first proposed. Capacity is the same as originally planned, but production unit cost is 30 percent lower than the company’s other operations and control over product quality—a key factor in customer satisfaction—is considerably better. Moreover, the plant is more compact and much simpler to operate and maintain.

To achieve all this, no revolutionary technology was needed, nor any change in product mix specifications. What did change was management’s attitude and approach to the project based on its recognition that more value could be extracted. Management’s insight and determination can dramatically improve the productivity of capital spent on major projects. The key is an approach called clean sheet capital redesign (CSCR). CSCR’s aim is simple: to extract maximum economic value from a project. Starting with a clean sheet, management must...