CapEx dollars do not come easy. If you are involved at the hotel level you realize each year that the property could have used more CapEx to meet the ongoing needs. Those in upper management constantly balance financial issues and also realize that there is not enough CapEx money to go around. For these reasons, processes should certainly be based on building Capital Expenditure Plans that avoid any form of waste. This directly relates to the dollars that are applied to CapEx projects, successfully setting schedules that do not excessively displace business and holding to well organized internal processes.
The following 3 items negatively influence capital expenditure programs and aggressively diminish effectiveness.
1. No master “time-line” – Time-lines are key to successful CapEx planning. They should be thought-out in advance and communicated effectively to those involved in the CapEx process. For your use, a suggested outline can be obtained FREE by typing “CapEx Time-line” in the Contact Us box.
2. Not starting early enough – The time of year to start building a CapEx plan is largely based on an organization’s efficiency in the areas of communication and approval processes. To identify a starting date, be sure to build a master time-line that takes in consideration time for the fact gathering, price estimate process, management reviews, etc. Only then can you be assured that a start date is set early enough to
accomplish the entire process.
3. Not having a “prepared” master Capital Expenditure format, software or template – Hoteliers that do not have a well-organized Capital Expenditure Plan (template or software) ready to accept “input” are already at a disadvantage. In most circumstances this can contribute to a CapEx plan that is difficult to evaluate, disguises errors and lacks the evaluation effectiveness that the hotelier may desire. An organized capital program could be in the form of a preloaded software program, Excel spreadsheet or customized data base.
Those hoteliers experienced with developing CapEx plans already know the value of well thought-out schedules and processes. Those new to the CapEx process will benefit from learning this valuable practice early in their career.
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