Capital Project Approval Process
A capital project is an investment activity that requires huge capital, and its benefits are realized over a long period of time. Such a project requires the consent of the top management before funds are allocated for its implementation. The capital project approval process is the assessment of the costs in relation to the benefits of a long-term investment. The type, size, benefits, total costs and source of funding for the capital project are the main factors that are considered in the approval process.
Other People Are Reading
-
Feasibility Study
-
A feasibility study must be carried out as the initial step toward determining the need and suitability of a capital project. A feasibility study is an evaluation used to examine the need, affordability, suitability, cost and benefits of a project. Professional consultancy experts need to be employed to carry out the feasibility study to ensure an extensive and decisive report that justifies the need for the project. The feasibility report is used to prepare a project proposal. The project proposal must provide a detailed account for all expenses to be incurred at each and every phase of the capital project.
Present the Proposal to the Top Management
-
The project proposal will be presented to the top management team that has the mandate to review and approve capital projects. All the concerned personnel should be given a copy of the proposal for easy reference during the presentation.
-
Address Objections to the Capital Project
-
Part of capital project approval process involves addressing objections and concerns raised in relation to the capital project. Concrete evidence in the form of statistics, endorsement from head of departments, professionals, or members of the management board may be presented as supportive documents to the relevance of the project.
Capital Project Consent
-
The top management is normally in charge of giving the final consent for capital projects. The top management gives or denies consent for the implementation in relation to the interests of the organization and recommendations from experts. The final consent involves giving authorization for funds to be released in accordance with the approved budget.
-
