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.