Nico Röpnack · March 2026 · 6 min read
Most manufacturing companies know how much an investment costs. But only a few know when the money actually flows, what can still be salvaged in the event of a cancellation, and why they continue to throw good money after bad projects.
In many companies, CAPEX planning is reduced to a single moment: the investment decision. The board gives its approval, the budget is released, and then the real work begins. What comes next—cash timing, cumulative cash outflow, sunk costs, potential exit costs—is rarely managed with the same care as the original decision.
This article explains the four concepts that should structure every investment project in manufacturing: commitment curve, spending curve, sunk cost curve, and exit exposure. It also shows how the gate review system that Lighthouse Consultings implemented at FEW Automotive Group has brought precisely this transparency to everyday project work.
The challenge
Three classic mistakes
in CAPEX management
Investment projects rarely fail because of the idea itself. They fail because of poor management. Here are the three most common mistakes we see in the manufacturing industry.
Error 01
Confusing a decision with an issue
The investment decision and the cash outflow are often 12 to 24 months apart. Anyone who equates the two loses sight of liquidity planning. The commitment curve and the spending curve are two completely different curves.
Error 02
Do not explicitly track sunk costs
What has already been spent and cannot be recovered is rarely reported as a separate figure. This leads to poor decisions to discontinue projects: companies stick with projects because they have "already invested so much."
Error 03
Exit exposure never calculated
What does it cost to stop a project? Outstanding supplier liabilities, contractual penalties, and non-refundable advance payments quickly add up to an amount that forces continuation, even though stopping would make good business sense.
of all investment projects in the manufacturing industry are completed within the planned budget and timeframe.
Source: McKinsey & Company
The Three Curves
Commitment, Spending, Sunk Cost:
Three curves everyone needs to know
Every CAPEX project can be described by three curves that run at different times and provide different control impulses.
1. Commitment Curve: When decisions are made
The commitment curve shows when decisions are made that lock in future costs. In the early project phase, typically the first 20 percent of the project duration, 60 to 80 percent of the total costs are often determined. This phase is the critical control zone.
2. Spending curve and payment schedule
The spending curve describes when cash actually flows out. For capital goods in manufacturing, the payment schedule usually follows a three-stage pattern:
Level 1
Order / Deposit
When placing an order: initial payment, often 30 to 40 percent. The project has started, but the system does not yet exist.
Level 2
FAT: Factory Acceptance Test
Approximately 12 months after ordering, from the supplier. Second installment due, often another 40 to 50 percent.
Level 3
SAT: On-site acceptance
Approximately 24 months after ordering. The remaining installment is due upon acceptance. Only then is the transaction complete.
3. Sunk Cost Curve: What is no longer recoverable
The sunk cost curve shows the cumulative proportion of expenditure that cannot be recovered if a project is terminated. This curve rises steeply with each milestone payment and is the key instrument for deciding whether to terminate a project.
"The three curves diverge at the beginning and converge at the end of the project. If you only look at the spending curve, you will always see the past. If you know the commitment curve, you can control the future."
Nico Röpnack, Lighthouse Consultings
Exit exposure
What does itreally cost to halt a project
?
Exit exposure =
Payments already made
+ Outstanding contractual liabilities to suppliers
– Refundable advance payments and customer refunds
– Residual value of reusable components
In practice, exit exposure is usually only calculated when a project is in serious trouble. At that point, it is at its highest and freedom of choice is minimal. This is the classic sunk cost trap, and it can be structurally avoided through systematic controlling.
practical example
FEW Automotive Group:
Transparency as a system performance
Lighthouse Consultings has implemented a 5-step gate review system at FEW Automotive that anchors the three curves and exit exposure as a standard component of each project phase. Investment decisions are not made once and for all, but are actively confirmed or corrected at defined milestones.
Smartsheet forms the technical basis, with a clear separation between process sheets for operational control and project reports for management. The result: real-time transparency regarding commitments, spending, and sunk costs, without manual processing.
Gate review stages with defined decision points
Curves in real-time controlling: commitment, spending, sunk cost
Integrated system: Smartsheet as a single source of truth
self-check
How is your company doing today?
Can you name the exit exposure for every ongoing CAPEX project today without spending three days searching through spreadsheets?
Does your company distinguish between the commitment date and the payment date, or are both considered the "investment date"?
Do your CAPEX projects have defined gate points at which the decision to continue is actively confirmed?
Is the sunk cost portion of your project controlling a separate key figure, or is it hidden in the overall cost overview?
Would your management be able to halt a project that proves to be a poor investment, or would the amount already invested dominate the decision?
Next step
Where does your CAPEX controlling stand today?
In just a few minutes, the CAPEX Quick Assessment will show you which of the three curves in your company are currently being controlled blindly and where the greatest leverage lies.
