A capital planning process for the facility manager – ‘Tis the season

Each year, the capital plan is put forward, and an optimistic spend curve is defined, planned, socialized and approved by operations, stakeholders and finance. Then, it’s business as usual: sales projections are revised, capital projects are delayed, accelerated, put on hold, rescoped, canceled and/or relocated to another building, site, state, country, etc., and the original plan has so many holes in it the facility manager is wondering how he or she can recover and reprioritize the plan to still deliver. For these very reasons, I’d like to introduce the seasons of capital planning. Think of it like the progression of the seasons, and plan activities accordingly to ensure an updateable roadmap to success. Just like buying new sod for the yard in the middle of winter is not a smart decision on where to spend your money, be smart with your capital planning process and management. Plan, but anticipate the inevitable because it will occur.

Understanding the basics of capital plan management is the first step in this process. Next, we’ll go through each season and the major activities you should be doing for your capital plan. We’ll start with fall or as I like to call it, “FallCap.”

FallCap – Capital Planning Process

The time of the year when the end of the current cycle is in sight, yet there are still hundreds of moving parts. FallCap activities are analogous to common fall tasks including raking leaves, putting away the outdoor furniture, etc. 

Major activities are described below:

• Hold monthly status meetings with stakeholders.
• Update the plan. Check spending forecasts and authorize additional projects if base capital spend is significantly lower than planned, or place low-priority projects (not yet started) on hold if capital spend for high-priority projects is significantly higher than planned.
• Call for entries for next year’s capital budget.
• Prefunding for larger requests to better define scope, schedule and overall budget.
• Close out and set up current capital project operational items, including predictive maintenance (PM), depreciation schedules, etc.
• Finalize activities to include in the planned winter shutdown.
• Reprioritize current year capital.

WinCap – Capital Planning Process

This is where some activities go dormant, but others proceed uninterrupted. No more cutting the grass and raking the leaves but there is still the snow shoveling and the salting of the sidewalk.

Major activities are described below:

• Hold monthly status meetings with stakeholders.
• Update the plan. Check spending forecasts and authorize additional projects if base capital spend is significantly lower than planned or place low-priority projects (not yet started) on hold if capital spend for high-priority projects is significantly higher than planned.
• Finalize winter shutdown project work.
• Identify and finalize the call for entries for new capital projects for the coming year.
• Obtain the results from the prefunding work and update the planned projects cost and schedule datapoints.
• Rank projects and submit the vetted and scheduled capital plan for next year to the capital management committee.
• Publish the capital plan list once it’s approved.
• Inform the operating groups of approval.
• Start design and engineering on projects, or finalize the design and engineering for larger, longer duration projects that commenced the prior year.
• Assign project responsibilities to project managers.
• Reprioritize current year capital.

SpringCap – Capital Planning Process

A season with a lot of activity behind the scenes but not much from a building standpoint to show. Just like the first flowers of spring poking through the snow, design and engineering is getting completed and projects are going out for permitting and bidding.

Major activities are described below:

• Hold monthly status meetings with stakeholders.
• Update the plan. Check spending forecasts and authorize additional projects if base capital spend is significantly lower than planned or place low-priority projects (not yet started) on hold if capital spend for high-priority projects is significantly higher than planned.
• Finalize summer shutdown project work.
• Staff construction teams for peak manpower loading for projects.
• Finalize equipment logistics for arrival and placement.
• Reprioritize current year capital.

SumCap – Capital Planning Process

This is typically the busiest time of the year (at least in the northern regions). Milder weather and longer daylight hours allow for the most work to be done from a construction standpoint. Project sites are in full swing while keeping ongoing operations operational. This is achieved through intense coordination and late hours to ensure construction site logistics and weekend shutdown tie-in activities are planned so as not to affect ongoing operations. All of the garden is bearing fruit, the flowers are in full bloom, the bees are busy pollinating,  and pruning of the bushes and trees is a bi-weekly occurrence

Major activities are described below:

• Hold monthly status meetings with stakeholders.
• Update the plan. Check spending forecasts and authorize additional projects if base capital spend is significantly lower than planned or place low-priority projects (not yet started) on hold if capital spend for high-priority projects is significantly higher than planned.
• Finalize summer shutdown project work.
• Staff construction teams for peak manpower loading for projects.
• Finalize equipment logistics for arrival and placement.
• Reprioritize current year capital.

The Process

Here is a quick synopsis of the capital planning process:

1. Define your capital planning  year. Is it the calendar year, or is it your fiscal year?
2. Finalize the capital request form.
3. Confirm capital project drivers.
4. Define membership in the capital planning group and the capital planning committee.
5. Vet the new capital requests according to the importance of the drivers.
6. Rank the proposed capital plan projects and submit this ranked list to the capital planning committee for approval.
7. Plan the work and work the plan.
8. Update the plan. Check spending forecasts and authorize additional projects if base capital spend is significantly lower than planned or place low-priority projects (not yet started) on hold if capital spend for high-priority projects is significantly higher than planned.
9. Communicate, communicate, communicate.
10. Think smart; plan for the unexpected.

CRB’s Strategic Facility Planning consultants can assess operational needs and link these with your business plan drivers to create a roadmap for the next three, five or 10 years. Interested?

Let’s talk.