The end of the year marks a busy time for capital asset planning. Among key tasks is the development of capital plans for the next year. Many organizations often have limited financial resources to spend. They must decide which assets need immediate capital and which ones can wait.
Facilities capital planning is one of the most important processes for an organization. But many continue to do it with little direction or strategy. Organizations often take one of two approaches:
- Asset lifecycle approach: Wait until an asset reaches or nears its lifecycle. Once that happens, divide enough capital to keep it running or to replace it.
- Competitive-ask approach: Divide the capital based on business cases set by individual departments. Focus on “fair” allocation among the various groups involved.
Both are rarely ideal for developing a capital investment strategy. The first approach takes a critical, rigid view of assets. It is important to know that building performance can improve through strategic investment. This approach ignores that, focusing on time and replacement cost instead. It plans for asset failure rather than its optimization.
The second approach is not as effective either, as it lacks the overarching organizational view and planning needs. It ignores broader objectives covering performance and capital strategy. There is too much focus on specific departmental needs.
Unfortunately, capital planning software today supports these two strategies. It fails to optimize allocations around organizational performance. As a result, all your future decisions may become misaligned with larger business objectives.
What’s Missing in Facilities Capital Planning Software
Most capital planning software lacks the following important functions. These principles are not just important to know for deciding what kind of software you want to use. They can also help in planning your organization’s entire work process as well.
- Centralized data and interoperability: Interoperability describes how different programs and technology share information. For example, a centralized management system for key operating data. Most software focuses on optimizing investments in a siloed module or supports a single workflow. It does not work with other data to drive operating performance. Organizations should be wary of programs limiting interoperability across departments, workflows and data sources.
- Alignment with financial plans: Effective strategic planning requires clear business goals, be it financial, sustainability or others. You need to have a clear image of what you want in order to give context to your capital deployment. Capital planning software should help organizations track deployment. Yet, it should also develop workflows to achieve larger business objectives and be adaptable as business drivers evolve.
- True performance optimization: Capital plans tend to be multi-year and multi-phased. Most organizations need to adapt their strategies to changing business conditions. This is especially in the event of highly unexpected disruptions outside of their control. Yet most capital planning software fall short of this. It requires users to build potential scenarios themselves, and is more concerned with financial outcomes. Software should instead help firms develop the scenarios at the outset and be able to be adjusted real-time as conditions change.
Managing your facilities capital planning is more important than ever. The software you use needs to be on par with today’s standards. However, the approaches that you take in using it is equally integral to your success. Otherwise, you may end up with a waste of valuable resources.
Capital Asset Performance Software and 4tell™
Our powerful platform and suite of products can help you create well-defined capital investment strategies. We can ensure you reach your business objectives and understand how decisions will impact your portfolio in the future. Contact us for more information.
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