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Facility Maintenance Decisions
Management Insight PAGE Big-Ticket Purchases: Financial Justification Capital Investments: Review, Evaluate Historical Performance Financial Justification: Develop Capital-Budgeting Policies

Financial Justification: Develop Capital-Budgeting Policies

By Bruce Wesner October 2010 - Facilities Management   Article Use Policy

Submitting appropriate financial justification for investments in big-ticket capital acquisitions is an essential step, so managers should require it and prohibit any exceptions. Managers can help supervisors and front-line technicians understand the reasons for required financial justification, as well as the way a more disciplined process will benefit them and the company's overall performance.

World-class companies require capital-budgeting policies, and required governance and internal control processes help ensure investment decisions are financially justified and properly analyzed. These policies also ensure efficient use of a company's most treasured asset — its cash.

Now is the time for managers to take a fresh look at their organizations' processes for evaluating new capital investments. They can reach out to peer networks for examples of good capital-acquisition procedures and find an example that fits a company's culture.

Finally, managers can work with the organization's leadership team to implement a new system for big-ticket capital acquisition. To ensure the new system works effectively, they also need to pay attention to the people side of this change. An effective change-management plan is an essential step in achieving this goal.

Bruce Wesner is a managing principal with Life Cycle Engineering. He has more than 25 years of maintenance, engineering and management experience.

Agree? Disagree? Have something to say? We want to hear from you. Visit myfacilitiesnet.com/members/BWesner/default.aspx, and "Start a Conversation."


Continue Reading: Management Insight

Big-Ticket Purchases: Financial Justification

Capital Investments: Review, Evaluate Historical Performance

Financial Justification: Develop Capital-Budgeting Policies



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