Capital Planning

Abstract

A firm’s ongoing competitive edge can be attributed, in part, to its capital planning and investment process. Potential pitfalls can arise from issues created by decentralization and a narrow focus on the short-term planning horizon. In this study, we propose a comprehensive approach for the development of capital plans and attempt to simplify the maze of planning views and plans in a corporation. This process contains several action items and milestones, including setting the evaluation criteria for investments for the development of a capital plan and a standardized data request form with a detailed calendar for the entire organization to initiate the planning process each year. Finally, we develop a framework for project analysis or a business case to support a capital requirement.