How to Spot Risky, Overstated, or Poorly-Timed Investment Proposals
Capital discipline starts with asking the right questions. In ceramics—where kilns, glazing lines, and automation can require seven-figure spends—CFOs and operations directors must spot trouble early. Here are five warning signs your capital request process needs tightening.
Red Flag 1: No Revenue or Margin Linkage
If a project can’t tie back to margin improvement, product expansion, or throughput increase—it’s a red flag. Strategic investments show clear ROI; tactical requests often don’t.
Red Flag 2: Underestimated Commissioning Timeline
Overly optimistic timelines ignore delays from vendor coordination, permits, or staff training. If commissioning is scheduled during peak production, challenge the plan.
Red Flag 3: No Cross-Department Signoff
Capital investments that don’t include input from maintenance, supply chain, or QA typically overlook downstream impacts. Look for shared accountability before approval.
Red Flag 4: One-Quote Vendor Assumptions
If the proposal is based on a single vendor quote, it may be missing price competition, feature vetting, or total lifecycle cost analysis. Require at least two comparative bids for projects over $250K.
Red Flag 5: No Post-ROI Measurement Plan
If the team hasn’t outlined how they’ll track success, ROI assumptions may be inflated. High-integrity proposals include metrics, timelines, and reporting mechanisms.
