And CapEx management is a notoriously challenging area of business management – with such large amounts of money being accounted for and the longevity of the investment, CapEx management involves a lot of planning, tracking and budgeting with input from an array of business stakeholders.
For that reason, managing CapEx projects efficiently and close management of budget and schedule are key to executing successful investments for business growth.
In this article, we explore everything you need to know about CapEx – from learning what they are to why they are so important to your business development and how capital management software can help you.
What are CapEx projects?
Capital expenditures, also known as CapEx refers to the fixed, non-consumable assets of a business, such as property and buildings, business equipment, machinery and vehicles and other fixed expenses that typically serve the business for longer than one accounting period.
CapEx projects might include the acquisition, maintenance or upgrade of those fixed assets and the processes involved in that acquisition, such as initial proposal, approval and assessing the up-front costs against the benefits to the business over time, the time it will take to gain a return on the initial investment and how long the asset will serve the company.
Many CapEx projects run over budget and behind schedule which can prove costly to businesses and incur a longer time until you can make a return on investment, so many businesses highlight CapEx project planning as an important factor when it comes to operational software to support business processes.
CapEx vs. OpEx
So, what makes an expense a CapEx (capital expenditure) rather than an OpEx (operational expenditure). CapEx typically refers to the large business assets that serve the business over more than one year and often add value to the company’s portfolio – such as buildings, land or equipment. On the other hand, OpEx refers to the day-to-day operating expenses incurred by a business – such as utilities, salaries or rent.
In most cases, it is clear which category a business expense falls into, but sometimes non-tangible expenses such as software or patents may be better considered a CapEx depending on the lifespan and value to the company and the amount of budget it might incur. In these cases, it is often best to consult a tax specialist to confirm what is best.
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Examples of CapEx |
Examples of OpEx |
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Property and buildings Vehicles Equipment and machinery Patents and copyrights Licenses Software
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Staff salaries Insurance Marketing Utilities Property taxes General repairs and maintenance of existing fixed assets (unless the improvements will increase the useful life of the asset) |
Why CapEx is important
Your CapEx investments can usually significantly impact your company’s long-term success – the investments you make to grow your business now may improve efficiency and productivity in time, but the bottom line is profitability – realised by either an increase in sales or a decrease in operating costs.
But your CapEx planning and projects can also affect you in the short term as well. These projects often involve multiple people and pass through several layers of proposal, planning and review which all take huge amounts of time – another cost to your business. Similarly, a project that runs over schedule can delay your business from benefitting from the investment or projects that run over budget can throw all your budgets out. Efficiency is key when it comes to CapEx planning – which is where technology can help.
What is capital planning software?
CapEx project management is a weighty task for any business whether it’s their first or hundredth project and capital planning software, sometimes known as capital programme management software (CPMS) is the technology that creates a more efficient workflow to progress projects, often providing a shared workspace where all the parties involved can review the project at different stages.
Capital planning software can help businesses gain greater visibility over the impact of CapEx projects on their investments so they have full visibility over process, budget and schedule and can see how the project is progressing over time and the eventual ROI of the project.
Access Maintain offers a project module that enables business operators to manage their CapEx projects and budgets from discovery to completion across multiple sites. For each project, you can review and monitor the KPIs for contractors, quotes, POs and invoices along with a full financial summary of what has been raised, approved and paid with an overview dashboard providing a snapshot view at all stages of the project helping you digitise and automate the processes in your CapEx projects.
Together, we can look at the benefits of optimising CapEx project management through a digital software solution:
Benefits of using cloud-based project management software for CapEx
There’s a whole host of benefits to unlock when you digitise your business’s CapEx project management to help you execute your projects more efficiently.
Such as:
Gaining an overview
An online dashboard delivers a quick-access overview of your ongoing projects that’s accessible anytime, anyplace and to anyone who’s involved – saving a whole lot of time in email chains with updates and alerts for everyone across multiple projects. Gain estate-wide visibility of multiple projects with the ability to delve into individual projects as needed.
Streamline the approval process
Large-scale CapEx projects often require input from many different people spanning multiple departments – which can inevitably slow down progress as you wait for input, feedback and approval throughout the project. Managing your project through an online platform, enables you to standardise the approval process, to make it clearer what the next steps are, what has been done already and what is required so you can benefit from shorter approval cycles.
Minimising miscommunications
With so many stakeholders involved, it’s easy for information to be left out, miscommunicated or not shared with the correct people when you’re relying on email chains. On an online platform everyone sees the same information in real-time and check lists ensure that the correct process is followed and everyone who needs to know, knows.
Automating workflows
As you can follow a standardised workflow with checklists to keep projects on track you reduce the amount of time spent on manual follow-up and admin with more efficient, automated workflows from proposal to completion of the project.
Managing a large estate
CapEx planning across a large estate of sites can quickly turn into an administrative nightmare – for one, you may have a different approval process, involved stakeholders or workflows for different sites. The planning module in Access Maintain enables you to standardise and streamline processes across multiple branches and sites.
Monitoring budgets and spend
The online platform delivers increased insight and control over ongoing spend related to each project allowing you to have a real-time view of current and expected spend while easing collaboration and speeding up completion times.
Keeping a comprehensive audit trail
Everything is in one secure, cloud-based software database – which means you can monitor, track and review every receipt, sign off and certificate along the process and refer back at a glance when needed.
Enforcing policies
You can ensure strict adherence to company policies from everyone involved in the project with an overview of every stage from a legal and company perspective.
Managing the entire process
Every element of your CapEx project can be managed in one platform:
- Financial information – Manage budgets, purchase orders, quotes and invoices
- CapEx projects processes – Approvals, check-lists, sign-offs, completion
- Contactors – Monitor external contractors and professional services records, certificates and ongoing KPIs
Maximising profits
Remember when we said that the bottom line was about profit? Ultimately, we understand that your CapEx project management needs to be as efficient as possible to minimise time and cost to your business and reap the benefits of the investment. Our software has been designed to ease the long-standing challenges of CapEx project management that historically have been slow and costly to businesses. Get ready to execute your CapEx plans in less time, with less spend.
Are you ready to streamline your CapEx project management?
In this article, we’ve delivered an overview of everything you need to know about CapEx management and how our CapEx management solution has been designed to help you alleviate the common pain points and execute your plans more efficiently. On top of all these business benefits, our solution offers a user-friendly experience that helps businesses manage all their facility management requirements.
Want to talk to us about CapEx project management? Contact us here.
Or take a look at our facility management software.
