The culmination of the track

We have seen CAPEX and OPEX, TCO, ROI and payback, LCOE. These notions are useless in isolation: they take on meaning in a business case — the file that turns a good technical idea into an approved decision. It is the language that lets the engineer and finance talk to each other.

The six blocks of a business case

A solid business case fits in six parts, in this order:

1. The problem. A line consumes too much, equipment fails too often, a standard requires it. Quantified: so many hours of downtime, so many euros lost per year.
2. The solution. What you propose, concretely, and why it answers the problem.
3. The cost. Detailed CAPEX, annual OPEX, and the TCO over the service life. This is where the track pays off.
4. The gain. Savings, availability gained, quality, compliance. Translated into payback and ROI, and for large files into NPV/IRR. The formal criterion: approve if the net present value is positive and the internal rate of return exceeds the cost of capital.

$\mathrm{NPV} = \sum_{t=1}^{n} \frac{CF_t}{(1+r)^t} - I_0 > 0 \qquad \mathrm{IRR} > \text{cost of capital}$

5. Risks and assumptions. What the calculation rests on (energy price, production volume, service life) and what happens if those assumptions move.
6. The recommendation. Do / don’t do, and the plan if it is a yes.

The decisive reflex: quantify the status quo

The most common mistake is presenting the project’s cost without comparing it to anything. Yet an investment is not judged in the absolute, but against the option of doing nothing.

Doing nothing also has a cost: breakdowns, over-consumption, fines, loss of competitiveness.

A good business case puts the two columns side by side. Often it is the hidden cost of inaction that carries the decision, far more than the project’s ROI.

Being honest about assumptions

A credible file states its assumptions plainly:

• the energy price used, and its source;
• expected gains in a prudent scenario, not an optimistic one;
• realistic service life and utilisation rate.

An ROI announced at 250% that collapses to 40% because the price assumption was fanciful is unforgivable. Better a modest file that holds than a brilliant one that is disproved. A sensitivity analysis (what happens to NPV if the energy price drops 20%?) strengthens credibility.

After the decision: measure

The business case does not stop at signature. You define, before launching, the KPIs that will prove the gain: availability, specific consumption, scrap rate, cycle time. You measure a baseline at the start, then track these KPIs. That is what lets you say, a year later: “the project kept its promises” — or learn why not.

Full circle

You now know how to read an industrial investment like a decision-maker:

• separate what you buy (CAPEX) from what you operate (OPEX);
• compare on total cost of ownership (TCO), not purchase price;
• judge profitability by payback, ROI, then NPV/IRR;
• compare energy sources by their LCOE;
• and assemble it all into an honest business case, compared with the status quo.

This is exactly the reasoning that decides, every day, the investments made in industry.