You are not running an improvement program. You are buying hours, and there is a price list. The trouble is that almost nobody writes the price list down, so the hours get bought at whatever price the most familiar option happens to charge.
Two ways to buy 700 hours
Our packaging line gives away 1,750 constraint hours a year. Suppose the target is to recover 700 of them, worth $4.2mm in contribution margin. There are two credible ways to get there.
Buy new capacity. A capital request in the range of $12mm. Twelve to eighteen months before first output. Adds fixed cost, headcount, and floor space. Works out to roughly $17,000 per hour of capacity acquired. And when it is finished, the original asset performs exactly as it does today.
Collect the hours you already own. A program cost in the range of $380,000. First hours recovered inside ninety days. No added fixed cost, no new floor space. Roughly $540 per hour of capacity recovered. And the asset you will still be running either way gets better.
Both proposals deliver 700 hours. Only one of them has ever been put in front of your capital committee, and it is not the cheaper one.
Why the expensive option wins by default
This is not a story about bad executives. It is a story about proposal quality.
The capital request arrives fully formed. There is a vendor quote, a payback calculation, a specification, an installation schedule, and a name on it. The evaluation process for that document is well established, everyone in the room has assessed one before, and it is straightforward to say yes to.
The alternative proposal usually does not exist. Where it does exist, it arrives as a program with a duration and no end state, a benefit expressed as a percentage improvement, and no cost per hour figure that would let anyone compare it against the capital request sitting next to it.
Given those two documents, approving the capital request is the reasonable decision. The committee is not choosing equipment over reliability. It is choosing the only proposal it can actually evaluate.
The point is comparability, not opposition
Sometimes the new line is right. Demand may genuinely exceed what the existing asset can deliver even at full recovery. The equipment may be at the end of its usable life. There may be a product the current asset physically cannot run.
The failure is not buying capital. The failure is buying capital without having priced the alternative, because that decision was made without the comparison ever being available.
A cost per hour figure makes the two proposals comparable for the first time. It does not decide the answer. It makes the question answerable.
What this changes about your role
If you work in maintenance, reliability, or operations, you have probably spent years making the case for your work on the basis of risk, condition, or good practice. Those arguments are true and they lose to capital requests, because the capital request is denominated in the unit the committee uses and yours is not.
Cost per hour recovered is that unit. It lets you put a proposal on the table that competes on the same terms, in the same meeting, using the same arithmetic.
This week
Take your top three loss categories from the counting exercise. For each one, name a recovery action and estimate what it would cost. Rough numbers are fine at this stage.
Wednesday we turn those estimates into a ranked list, and the ranking will not be the one you expect.
