Capital Project

See Also:
Cash Flow Projections
Return on Capital Employed (ROCE)
Return on Invested Capital (ROIC)
Paid in Capital (APIC)

Capital Project Definition

A capital project, defined as any project which requires capital flows for completion, usually refers to a project which requires large sums of capital. It is generally any project which requires consistent flow and management of capital to ensure successful completion. Due to this fact, an example of a project would be the building of a sky scraper, creation of an oil pipeline, or in the context of government, the building of a highway system. Capital project analysis is a constant struggle in works or large scale.

Capital Project Explanation

A capital project, explained sometimes as a function of “big” government or business, requires excellent skills of project management. If a sky scraper were to be built, a management team would have to be put in place. Materials, subcontractors, government permits, and many other issues would have to be solved for everything to receive a finishing touch. For this reason, capital project management must be executed to a “T”. There must be a team of human resources for every sub project, say permits and compliance. In this way, a capital project justification starts from an initial opportunity and flows from the initial founder to the detail oriented specialist. Obviously, this would require large amounts of capital.

Capital Project Example

Vince is the owner of a large commercial real estate firm. He has grown his success, over time, and now owns buildings in many major cities. Vince wants to see where his luck will take him. Essentially, Vince works on capital project planning all day long.
Vince starts by creating a plan. Once he has decided how he will finance, build, and market the building he steps into action. He begins by speaking with an investment banker. To keep it all in place, he begins the process of capital project accounting now by hiring an accounting team as soon as possible.
Vince has used the connection he has with an investment banker to receive funds from the investment branch of a major corporation. Only a company of massive size will be able to assist in an operation this large. He will need to control his capital project fund carefully to ensure a smooth process.
Vince begins the next project by speaking with an architect. The company he finds eventually provides blueprints and referrals to quality contracting companies.
Vince knows he has his work cut out for him. Still, he appreciates growing the scale of his work. Vince wants to challenge his boundaries and sees this as an excellent opportunity. Though Vince has a lot of stress at work, he leaves every day with a smile.
Excel can be cumbersome…. When you are building those capital project spreadsheets, equations break, you spend hours of your time, and no one really understands what’s going on. That’s why Planeamatic was created. Planeamatic is like a magic board… In minutes, you can create a budget (including your Balance Sheets, P&L Statements, and Cash Flows). Sign up for your free 15-day trial to explore, then it’s only $89 / month for 6 months.
capital project

ARTICLES YOU MIGHT LIKE

The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »

IN CRISIS? GET A STRATEGIC CFO! – CEO Blindspots Podcast

Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

SHARE THIS ARTICLE

JOIN THE NEXT STRATEGIC CFO™ SERIES

Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®

Days
Hours
Min
Sec

September 12-15th 2022