We have categorized 19 documents as Capital Budgeting. All documents are displayed on this page.

A Business Case (not to be confused with a Business Plan) is a document, typically an Excel-based financial model, that outlines the potential costs, (financial and non-financial) benefits, risks, return, and payback period of a proposed capital investment. For clarity, a Business Case is sometimes referred to as a Capital Budgeting Business Case or Capital Investment Business Case. Learn more about Capital Budgeting.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

DRILL DOWN BY SECONDARY TOPIC


DRILL DOWN BY FILE TYPE

  Open all 19 documents in separate browser tabs.
  Add all 19 documents to your shopping cart.


Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab




Read Customer Testimonials

  •  
    "As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.

    Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I "

    – Nishi Singh, Strategist and MD at NSP Consultants
  •  
    "FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The "

    – Roderick Cameron, Founding Partner at SGFE Ltd
  •  
    "As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor "

    – Michael Duff, Managing Director at Change Strategy (UK)
  •  
    "As a consultant requiring up to date and professional material that will be of value and use to my clients, I find Flevy a very reliable resource.

    The variety and quality of material available through Flevy offers a very useful and commanding source for information. Using Flevy saves me time, enhances my expertise and ends up being a good decision."

    – Dennis Gershowitz, Principal at DG Associates
  •  
    "Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."

    – Chris McCann, Founder at Resilient.World
  •  
    "[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it give me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."

    – Royston Knowles, Executive with 50+ Years of Board Level Experience
  •  
    "One of the great discoveries that I have made for my business is the Flevy library of training materials.

    As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy "

    – Ed Kemmerling, Senior Lean Transformation Expert at PMG
  •  
    "As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."

    – Michael Evans, Managing Director at Newport LLC



Flevy Management Insights: Capital Budgeting

A Business Case (not to be confused with a Business Plan) is a document, typically an Excel-based financial model, that outlines the potential costs, (financial and non-financial) benefits, risks, return, and payback period of a proposed capital investment. For clarity, a Business Case is sometimes referred to as a Capital Budgeting Business Case or Capital Investment Business Case.

A Business Case is typically used by organizations to evaluate the feasibility and potential return on investment of a capital project, such as the construction of a new factory or the acquisition of a new piece of equipment. It is an important tool for ensuring that organizations make informed decisions about their capital investments, and that they are able to generate a positive return on those investments.

Business Case Development requires a number of skills, including:

  • Analytical skills: Developing a Business Case involves analyzing a range of data and information in order to understand the potential costs, benefits, and risks of a proposed project or investment. This requires strong analytical skills, including the ability to collect, organize, and interpret data, and to identify patterns and trends.
  • Financial skills: It also requires the evaluation of the potential financial impact of a proposed project or investment. This requires knowledge of financial concepts and techniques, such as cost-benefit analysis, net present value, and return on investment—and the ability to use these concepts to make informed decisions.
  • Communication skills: The potential costs, benefits, and risks of a proposed capital project must be communicated to a range of stakeholders, including executives, managers, and other decision makers. This requires strong communication skills, including the ability to write clearly and concisely, to present complex information in a simple and easy-to-understand manner, and to persuade others of the value of the proposed project or investment.
  • Problem Solving skills: Developing a Business Case often involves identifying and addressing challenges or obstacles that may arise during the project. This requires strong Problem Solving skills, including the ability to think creatively, to identify and evaluate potential solutions, and to make decisions based on incomplete or uncertain information.

If a capital project has been justified by the Business Case (both financially and non-financially) and receives the go-ahead from executives, the Business Case financial model is then continuously maintained and adjusted to track the project's progress against the initial financial projections and assumptions. This Business Case financial model then becomes a working document used during the Project Management process.

For effective implementation, take a look at these Capital Budgeting best practices:

Explore related management topics: Project Management Capital Budgeting Business Case Business Case Development Business Case Return on Investment

Integration of Environmental, Social, and Governance (ESG) Criteria in Capital Budgeting

In recent years, the integration of governance target=_blank>Environmental, Social, and Governance (ESG) criteria into Capital Budgeting decisions has emerged as a critical trend. This shift reflects a broader recognition of the importance of sustainability and corporate responsibility in driving long-term business success. As investors and consumers increasingly prioritize ESG factors, companies are adjusting their capital investment strategies to align with these values. This involves evaluating potential projects not only on their financial returns but also on their environmental impact, social contributions, and governance practices.

The challenge for executives is to balance traditional financial metrics with ESG criteria, which can sometimes lead to short-term costs for long-term benefits. For instance, investing in renewable energy sources may have a higher upfront cost compared to traditional energy sources but can lead to significant savings and reputational benefits over time. To navigate these complexities, companies are developing sophisticated models that incorporate ESG metrics alongside financial indicators, enabling a more holistic assessment of capital investments.

Actionable recommendations include establishing a clear ESG framework for evaluating investments, incorporating ESG risk assessments into the capital budgeting process, and engaging stakeholders to understand their expectations regarding sustainability and corporate responsibility. By doing so, companies can not only enhance their competitive advantage but also contribute to a more sustainable and equitable global economy.

Explore related management topics: Competitive Advantage Environmental, Social, and Governance Sustainability Governance

Adoption of Digital Technologies in Capital Budgeting Processes

The adoption of digital technologies is transforming Capital Budgeting processes, enabling companies to enhance accuracy, efficiency, and strategic decision-making. Advanced analytics, artificial intelligence (AI), and machine learning (ML) are being leveraged to analyze vast amounts of data, predict future trends, and provide deeper insights into potential investments. These technologies can significantly improve the precision of financial forecasts and risk assessments, leading to more informed capital allocation decisions.

However, integrating digital technologies into Capital Budgeting processes presents several challenges, including the need for significant investments in technology and talent, as well as the management of data privacy and security risks. Companies must also overcome cultural resistance to change and ensure that decision-makers are equipped to interpret and act on insights generated by AI and ML algorithms. To address these challenges, executives should prioritize the development of a digital transformation roadmap, focusing on building the necessary infrastructure and capabilities while fostering a culture of innovation and continuous learning.

Actionable recommendations for executives include investing in training programs to enhance the digital literacy of finance teams, partnering with technology providers to access cutting-edge tools and expertise, and implementing robust data governance practices to ensure the integrity and security of financial models. By embracing digital transformation, companies can position themselves to capitalize on emerging opportunities and navigate the complexities of the modern business environment more effectively.

Explore related management topics: Digital Transformation Artificial Intelligence Machine Learning Data Governance Data Privacy Analytics Innovation

Global Economic Uncertainty and Its Impact on Capital Budgeting

Global economic uncertainty, fueled by factors such as geopolitical tensions, trade disputes, and pandemics, has profound implications for Capital Budgeting. Fluctuations in currency exchange rates, commodity prices, and interest rates can dramatically affect the costs and expected returns of capital projects, making it increasingly difficult for companies to forecast future financial performance accurately. This uncertainty requires executives to adopt more flexible and resilient capital allocation strategies, capable of adapting to rapidly changing economic conditions.

To mitigate the impact of economic volatility, companies are adopting scenario planning and stress testing as integral components of the Capital Budgeting process. These approaches allow executives to evaluate how different economic scenarios could affect the viability of proposed investments, enabling more informed decision-making. Additionally, there is a growing emphasis on maintaining liquidity and building diversified investment portfolios to cushion against unforeseen economic shocks.

Actionable recommendations for navigating global economic uncertainty include enhancing the agility of the Capital Budgeting process, regularly reviewing and updating financial forecasts, and establishing contingency plans for critical investments. By taking a proactive and flexible approach to Capital Budgeting, companies can better manage risks and seize opportunities in a volatile global economy.

Explore related management topics: Scenario Planning

Capital Budgeting FAQs

Here are our top-ranked questions that relate to Capital Budgeting.

How can executives effectively balance the quantitative and qualitative aspects of capital budgeting decisions?
Executives can balance capital budgeting by integrating Quantitative Analysis with Qualitative Insights, emphasizing NPV and IRR while considering Strategic Alignment, Innovation, and Stakeholder Engagement for long-term value creation. [Read full explanation]
How should companies adjust their capital budgeting processes to better manage and mitigate risks associated with cyber security threats?
Companies should integrate Cyber Security into Strategic Planning, allocate appropriate resources, and adopt a Risk-based Approach in their Capital Budgeting processes to mitigate cyber threats. [Read full explanation]
What are the best practices for maintaining and updating the Business Case financial model throughout the project management process?
Best practices for maintaining the Business Case financial model include regular review and update cycles, adapting to external changes, and engaging stakeholders to ensure financial viability and strategic alignment. [Read full explanation]
In what ways can the integration of AI and machine learning into Business Case development improve decision-making accuracy?
Integrating AI and ML into Business Case development enhances decision-making accuracy, efficiency, and strategic insight, improving Strategic Planning, Operational Excellence, and Risk Management. [Read full explanation]

Recommended Documents

Related Case Studies

Capital Budgeting Framework for a Hospitality Group in Competitive Market

Scenario: A multinational hospitality company is facing challenges in allocating its capital resources effectively across its global portfolio.

Read Full Case Study

Esports Infrastructure Expansion Assessment

Scenario: The organization is a rising name in the esports industry, looking to strategically allocate its capital to expand operations.

Read Full Case Study

Capital Budgeting Strategy for Maritime Industry Leader

Scenario: The organization is a prominent player in the maritime sector, grappling with allocating capital effectively amidst volatile market conditions.

Read Full Case Study

Overhaul of Capital Budgeting Process for a Growing Medical Devices Firm

Scenario: A high-growth medical devices company is wrestling with an overly complex and ineffective capital budgeting process.

Read Full Case Study

Ecommerce Platform Scalability for D2C Health Supplements

Scenario: A Direct-to-Consumer (D2C) health supplements company in the competitive North American market is struggling to create effective business cases for its new product lines and market expansion strategies.

Read Full Case Study

Capital Allocation Framework for Semiconductor Firm in High-Tech Sector

Scenario: A semiconductor company operating in the high-tech sector is grappling with the challenge of effectively allocating capital to sustain innovation and growth while managing the cyclical nature of the industry.

Read Full Case Study

Explore all Flevy Management Case Studies




Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.



Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.