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Capital Plan

One of many types of plans that are developed by organizations to ensure responsible stewardship of their assets.

The outcome of the planning process specifying a number of capital projects to be developed in a defined planning horizon, typically over a 5-Year period.  


Components of the Plan

Listed below are the key components of a capital plan

      A.  The Context
  • The PESTLE context
  • Capital Planning Framework - A simple diagram that represents a conceptual model of the overall architecture of the capital planning process
  • Capital Planning Goals
  • Capital Planning Policies
      B.  The Asset Portfolio
  • Asset Inventory
  • Prioritization Scheme
  • Capital Project Lists
     C.  Measurement & Evaluation
  • Data accuracy and reliability
  • Trade-offs between departments
  • Decision-making criteria
     D.  Reference Materials
  • Definitions



Attributes of the Plan
Listed below are the primary attributes of an effective capital plan.
  • It is aligned with the organizations policies and objectives
  • It is integrated with the other plans
  • It has the commitment of top management
  • It is realistic



Architecture/Structure of the Plan

  • Asset classes



Definitions/Concepts
Listed below are some the key concepts associated with capital plans.

     A.  Physical Concepts
  • Capital Asset
  • Capital Project
  • Planning Horizon
     B.  Financial Concepts
  • Capital Needs
  • Capital Expense
  • Financial Capacity
  • Replacement Reserve
     C.  Governance Concepts
  • Approvals


Capital Planning Framework

ToolCapital
Strategy
Capital
Plan
Capital
Budget
Timeframe10yrs+3 yrs1 year
PurposeStrategic choices about investmentSet shorter term prioritiesApprove funding for projects



Capital Plan in the Hierarchy
The organization's capital plan occupies one of the central layers of the inspirational-and-aspirational hierarchy. 
Without an adequate capital plan the organization will encounter difficulties when developing some of the other layers of the aspirational-inspirational hierarchy.


Risks Associated with the Plan
Included below are some of the primary risk associated with the development and implementation of a capital plan.

     A.  Development Risks
  • Lack of buy-in from certain stakeholder groups
  • Disagreement over priorities
  • Inaccurate capital estimates
     B.  Implementation Risks
  • Insufficient funds
  • Unexpected failures of assets


Process of Developing the Plan
Listed below are some of the key steps in developing the capital plan.

      A. Before

  • Review the organization's policies and objectives
  • Determine the organization's existing maturity levels on sustainability: a) depth of the framework, b) integration into AMS
  • Review the PESTLE context
  • Develop the capital plan framework
      B. During
  • Commission a Capital Needs Assessment (CNA)
  • Conduct workshops with knowledge resources
  • Prepare the draft plan
  • Approve the plan
      C.  After
  • Action the plan
  • Track and measure progress/performance of the plan
  • Review and update/refine the plan
Analyzing the words inside ISO 55000/55001 to reveal patterns in the requirements
Fig. Analyzing the approximate 27,0000 words inside ISO 55000/55001 to reveal patterns in the requirements.
Planning features prominently.


Planning must be iterative, dynamic and continuous. If it becomes static it starts to look more like an old dusty blueprint rather than a live roadmap
Fig. Planning must be iterative, dynamic and continuous. If it becomes static it starts to look more like an old dusty blueprint rather than a live roadmap.


The hierarchy of plans in ISO 550001 from OCP to SAMP to AMPs
Fig. The hierarchy of plans in ISO 550001 from OCP to SAMP to AMPs.


The aspirational-inspirational hierarchy of organizations with plans represented as one of the layers
Fig. The aspirational-inspirational hierarchy of organizations with plans represented as one of the layers.


Planning is one of the seven chapters of ISO 55000
Fig. Planning is the 3rd chapter of the seven chapters of ISO 55000/55001.


Some organizations struggle with "paralysis through analysis" (and never feel comfortable to finalize a plan) and others who perhaps fail to "look before you leap" (start too quickly).
Fig. Some organizations struggle with "paralysis through analysis" (and never feel comfortable to finalize a plan) and others who perhaps fail to "look before you leap" (start too quickly).

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