27 Dec Capital Budgeting – Tips for Success
With limited funds and resources to invest in projects, organizations must ensure they are selecting the right work that leads to greatest value to the business. Once project proposals are completed, the overall budget should be allocated to projects that align with strategic goals, have the highest ROI, and provide the most benefit to the organization.
Capital budgeting is a common practice used for long term projects, those with high expenditures, and for projects that are critical for the organization’s future success. Unfortunately for many organizations, the evaluation and approval process is often done in systems or spreadsheets that are disconnected from the PPM processes and solution. This inhibits the ability to sort and prioritize each project according to the predefined criteria in real-time and provide reports and analytics that can be leveraged for better decision-making.
In order for budgeting to be effective, you must capture all capital budget requests and manage the benefits and expenses through the entire life of your portfolio. Here are a few tips to get you started:
- Capture all capital expenditure requests electronically
- Forecast spend across labor, hardware and software, and all other types of expenses
- Track and compare approved portfolio budget to actuals spent
- Automate the submission of annual capital budgeting requests
- Integrate with existing financial applications
- Eliminate consolidation hassles and the risk of data errors
- Compare capital budgets across long-term planning cycles
Doesn’t sound so simple, but it is! By integrating the PPM process with capital budgeting, teams are able to work and succeed together. The capabilities of a capital budgeting solution connected with PPM allows organizations to apply a standard, integrated approach to developing, estimating, selecting, approving, and monitoring capital investment projects. Ultimately, this creates one single source of truth – eliminating the need for project updates and allows for information share at the click of a mouse. One tool for:
- Portfolio Planning and Budgeting
- Request and Approval
- Capital Budgeting
- Capex Approval
- Project Forecasting
- Forecasting and Reporting
For more information on an online portfolio management and capital budgeting solution for your organization, view our capital budgeting webinar here.