ch21 capital budgeting

ch21 capital budgeting - FACILITIES MANAGEMENT PROCESS...

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FACILITIES MANAGEMENT PROCESS CAPITAL BUDGETING ACG 3482 Chapter 21
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Learning Objectives 1. Understand the Facilities Management Process 2. Identify the major steps in Capital Budgeting 3. Identify the appropriate data to use in Capital budgeting 4. Apply the 4 Capital Budgeting Evaluation Techniques 5. Evaluation and Goal Congruence Issues 6. Determining Cost of Capital
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Learning Objective One Understand the Facilities Management Process
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The process of identifying, evaluating, acquiring, managing, and accounting for facilities Facilities Management Process
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Master Budget
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Identification & Definition Evaluation & Selection Acquisition Authorization Delivery or Construction Authorize Payment Cash Payments Monitoring & Review Operations, Maint.,Disp. Facilities Management process
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Retail store outlets. Robotic manufacturing equipment. Digital imaging systems for healthcare facilities. Chairlift for a ski resort. Fleets: ships, planes, cars Equipment for food preparation. Facilities Management Process -- Examples
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Types of Facilities Investment Assets to meet regulatory, safety, health, and environmental requirements. Assets to enhance operating efficiency and/or increase revenue. Assets to enhance competitive effectiveness.
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Effectively forecast and plan for future capacity needs Acquire facilities consistent with firm strategy, capacity and technology needs Maximize value of facility expenditures Establish effective maintenance and insurance procedures Manage facilities acquisitions so as to minimize operating costs Protect facilities from unauthorized consumption or loss Facilities operation comply with laws Accounting for facilities consistent with GAAP Facilities Management Process -- Objective
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RISK: 1. Insufficient capacity 2.Excess deterioration due to poor maintenance 3. Casualty losses 4. Lack of resources to acquire facilities 5. Cost overruns and delays 6. Inaccurate cost measurement 7. Unauthorized usage 8. Unreasonable amortization CONTROL: 1. Long Term Planning; Backup sources 2. Appropriate training; outsourcing of maintenance 3. Safety inspections, appropriate insurance 4. Effective capital budgeting, creative financing (eg., leasing) 5. establish milestones, monitor costs 6. est. procedures, documentation 7. Physical security, maintain inventory 8. Establish policies by type, review with auditors Facilities Management Process -Typical Risks and Controls
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Capital Budgeting Process A capital investment is an investment that requires commitment of a large sum of funds and whose expected expenditures and benefits stretch well into the future. It is an integral part of a company’s Master Budget.
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Learning Objective Two Identify the major steps in capital budgeting
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Capital Budgeting Capital budgeting is a six-stage process: 1. Identification stage 2. Search stage 3. Information-acquisition stage 4. Selection stage 5. Financing stage 6. Implementation and control stage
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Learning Objective Three Use appropriate data in analyzing capital investments
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ch21 capital budgeting - FACILITIES MANAGEMENT PROCESS...

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