Capital Planning Implementation Questions

Document created by Bob Gill on Feb 1, 2018
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To capture implementation planning questions, specific to capital planning, in a wiki-style living document where updates from any and all contributors are encouraged. These implementation planning questions, along with other insights may help reduce implementation project risk by ensuring a thorough review of how the business process will be automated is done at the planning stage. We are not trying to explain capital planning. We are trying to reduce risk on the implementation of capital planning tools.


Base Case

Let's assume we are starting discussions around putting together a tool to help us plan for capital projects or assets in an enterprise. Let's also assume we need the system to allow one group of users (Managers) to make requests for capital projects or assets, and another group of users (Finance) approves or rejects these requests. Each approved asset needs to have key accounts calculated


Key Accounts

  • Depreciation Expense - The expense account(s) holding the current period depreciation expense attributable to a particular asset.
  • Work in Progress - The asset balance sheet account(s) holding the full purchase price of an asset from the time of purchase until the asset goes into service. 
  • Asset - The asset balance sheet account(s) for each asset class that hold the book value, or purchase price, of an asset until the asset is disposed.
  • Accumulated Depreciation - The liability balance sheet account(s) for each asset class that hold the life-to-date sum of all depreciation expense.


Asset Attributes

  • Code
  • Title
  • Description
  • Quantity
  • Unit Price
  • Purchase Price
  • Purchase Date
  • In-Service Date
  • Disposal Date (Optional)



Asset Classes

Each asset class may have a different set of key accounts attributed to it. It may also have a specific life expectancy for all assets in that class, or a formula to be used to derive the life expectancy.


Implementation Planning Questions

  • At what grain are assets tracked? Do business units own assets, or are all assets owned by the enterprise?
  • What asset classes are relevant, and which accounts are appropriate for each class?
  • What methods of depreciation are relevant? 
  • What is the work for capital asset request approvals? Who submits them? Who approves them? Are there multiple layers of approval?
  • Does depreciation start in the same period as the asset purchase?
  • Is depreciation in the first period of asset purchase prorated in the period, or assumed to be a full period?
  • In addition to asset requests, will we be loading a listing of existing assets on top? In other words, for assets already purchased, do we have a source for the future depreciation expense attributable to those existing assets? If we do, then we can improve our accuracy by including those figures.
  • What criteria are used to reject or approve assets? Do we want to automate the approval process for requests that meet predefined criteria?
  • What metrics or milestones can we use to mark progress from the start of the capital planning process to the final approvals?
  • Do we need to be able to compare asset registers between revisions of our plan?
  • Do we have a set of sample assets we can use to test the system calculations to be confident in their accuracy?
  • For each of the user groups, what information should they be able to see? ..edit? What information should they be restricted from seeing?
  • What visualization is relevant to present key performance indicators? Is it just depreciation expense over time, from purchase to disposal?
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