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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Randy Jones says
I enjoyed your blog on CapEx Schedules. Being a manufacturers rep for the product typically needed in these capital expenditures, I can relate to these issues that often occur. Timing is usually our biggest challenge. I can’t tell you how many times, I have received a phone call from a property requesting goods to be ordered and billed out in the same day to keep from losing the funds that are currently available for the particular product. Unfortunately I have never been on the other side to know exactly how the CapEx works. I think your article lays the process out in a very manageable way.
Randy, I appreciate your comments. CapEx is certainly a process that can have many twists and turns before getting set into motion. I hope you and others will continue reading my blogs to pick up insights to the many facets of capital expenditure programs. Remember, you can get automated “blog” updates each time that I add new material…register at the upper right corner of any of my website pages.