Capex Planning to Optimize your process
Capital expenditure planning (capex planning) is a critical process for businesses to strategically allocate funds towards long-term investments in assets like property, equipment, or infrastructure. The process involves assessing current needs, forecasting future requirements, and aligning expenditures with organizational goals.
Typically, it begins with identifying opportunities for growth or improvement, followed by detailed cost estimation and financial analysis. Prioritization of projects based on ROI and other financials, risk assessment, and potential impact on operations is crucial.
Once projects are selected, a thorough budgeting process ensues, often involving input from various departments. Regular reviews and adjustments ensure that CAPEX planning remains dynamic and reflective of evolving business needs.
Planning for Budget Creation
Capexplan comes filled with tools to help you conduct capex planning across your entire company. At each step of your capex planning process we have included the functions to help you maximize your company’s planning objectives. It all starts with your strategic alignment and budget constraint. Here, Capexplan provides you the abilities for long term (up to 50 years at a time) planning of your budgets. Users with permissions can view all budgets individually, and they can also consolidate in groups and do total roll-ups, up to your company’s top level. This gives users such as C-Level executives a consolidated view of your entire company’s planned budgets, in any currency. Users can create their budget proposals and then submit them for approval. Capexplan will use your budget approval policies to reach out to the approvers.
Strategic Alignment:
- Ensure that your company's budgets and each of your capex align with the company's long-term strategic goals and vision.
- Help you support your organization's growth objectives, whether it's expanding into new markets, improving efficiency, or launching new products/services.
Budget Constraints:
- Capexplan allows you to create consolidated budget views so you can rapidly see how much your company is budgeting each year.
- Determine the available funds for capex projects and prioritize each of them based on budgetary constraints.
Strategic Alignment:
- Ensure that your company's budgets and each of your capex align with the company's long-term strategic goals and vision.
- Help you support your organization's growth objectives, whether it's expanding into new markets, improving efficiency, or launching new products/services.
Budget Constraints:
- Capexplan allows you to create consolidated budget views so you can rapidly see how much your company is budgeting each year.
- Determine the available funds for capex projects and prioritize each of them based on budgetary constraints.
Flexible Timing and Phasing of Budget Creation
During the capex planning process, Capexplan will help you with budget planning in detail.
Users can enter they costs on an either monthly, quarterly, bi-annually, or annual basis.
Timing and Phasing:
- Consider the timing and phasing of your projects. Determine if certain projects need to be completed in a specific order or if they can be phased over time to spread out costs.
- Budgets can be created for up to 50 years in time.
- Users can create envelopes, projects and regular standalone capex at the budget stage.
- Create budgets in local currency and consolidate all budgets into any currency using your pre-determined monthly, quarterly or annual FX rates.
financial analysis and KPIs
Capex planning needs to consider elements such as cost of capital, interest rates, depreciation and tax implications. Capexplan includes all the tools so you can include detailed information. During your capex planning, Capexplan provides you with all the metrics and KPIs needed to evaluate each project. This gives you the ability to approve budgets based on the financial merits of each of your projects. Metrics can include ROI, but also any other needed, such as NPV, IRR, Payback, Savings, and Cost Avoidance. Users can sort, and see weighted averages for your budgets. Finally, users can compare sites together and add Key Performance Indicators (KPIs) .
Cost of Capital:
- Evaluate the cost of capital and the impact of financing on your capex decisions.
- Compare the cost of borrowing to the expected return on investment to make informed decisions.
Depreciation and Tax Implications:
- Understand how your capex investments impact your company's financial statements, particularly regarding depreciation.
- Consider tax implications, including potential tax benefits or incentives for certain types of investments.
Customize your financial templates
Capexplan can be customized to replicate your own financial templates. Need to include sales, savings, extra cost in your capex? Need to see the impact of your project on EBITDA or margin EBITDA, Interest, debt, depreciation, cash flows, or any other financial information? Capexplan has you covered. All financial information and fields required as part of your capex planning can be added and in the exact format that you need. Once completed, you can create your financial analysis directly in Capexplan or import your data from a spreadsheet.
ROI, NPV, IRR, Payback, and other metrics:
- Conduct a thorough Return on Investment (ROI) analysis for each proposed project.
- Calculate other metrics such as NPV, IRR, Payback
- Evaluate potential revenue streams, cost savings/avoidance, and other benefits against the initial investment.
Benchmarking:
- Compare planned cost of capex per business unit or group of business units
- Add Key Performance Indicators (KPIs), such as volume produced or others to compare the amount of capex planned per KPI
Customize all your budgets
Capexplan allows you to include in your budgets any field that is required in your capex requests. You can for example, include fields related to your risks and other elements of your projects such as contingency planning, lifecycle costing, fields related to compliance, regulations to meet, availability of resources to validate, as well as potential stakeholders to keep informed or active in the process.
Any field, default or custom, that needs to be part of your capex planning, can be added to your budget worksheets. Once users create requests, all information will automatically flow from your budgets to your capex requests, eliminating the need to enter the information a second time, as well as eliminating possible errors.
Risk Assessment:
- Capexplan includes risk assessment functions for creating detailed risk evaluation templates
- Other factors such as risk premiums per country can also be added
Lifecycle Costing:
- Look beyond the initial investment and consider the entire lifecycle costs of assets.
- This includes maintenance, operating costs, upgrades, and eventual disposal or replacement.
Resource Availability:
- Consider the availability of internal and external resources required.
- Add calculated fields when building up your budgets.
Stakeholder Communication:
- Engage with all key stakeholders throughout the Capex planning process.
- Users can comment and approve budget plans, make request for changes
Compliance and Regulations:
- Ensure that all your proposed capex projects comply with relevant company policies and regulations by adding checklists for users to review and approve before submitting their requests for approval.
- Set any important field as mandatory, so users need to complete them.
Contingency Planning:
- Add assumptions unexpected events that could impact your projects.
- Add contingency costs to mitigate risks and minimize disruptions.
complete capex planning for your company
Capexplan helps you at each step of your capex planning process, from creating budget proposals, adding financial details as well as other important information to your capex and opex requests. Users can rapidly view their plans, make changes, approve them, and lock them. Capexplan can replicate every step that your company takes during your planning process.