Depending on the size of the company, and the services required, other services discipline tasks may be required. Tactically, the services provided by the PMO may consist of planning, engineering, project management, finance and accounting, project controls, cost estimating, project scheduling, risk management, benchmarking and quality control and assurance. Management of the projects typically use a group of company officers and management of skilled technical resources or a program management office (PMO), to facilitate monthly updates of the project status. This is the simplistic explanation for how capital spending is forecasted by typical corporations.ĭuring the execution of the asset management strategy or portfolio plan there is a group assigned to facilitate the execution of the portfolio projects within the plan. If the spending plan shows the annual expenditure totals exceed the capital and O&M budgets approved for those years, the plan forecast needs to be adjusted annually to reflect the approved spending targets. Once the annual spending is totaled, the corporate governance needs to approve the actual annual spending budget. Once the annual plan is developed, the total capital spending by fiscal spend year, represents the sum of all the individual spending in all years. All organizations plan fiscal spending cycles that correspond to company business financial spending years.įigure 2–Portfolio Cash Flow (Time Phased Monetary Plan)Īs illustrated in Figure 2, all projects in consideration need to be placed into an annual spending plan over time. All projects under consideration need to be placed into an annual model that shows capital expenditure outlay ( Figure 2-Time Phased Monetary Plan) in order of most viable, in the earlier years, to less viable in later years for prioritization.
The different business units within the company compete for capital resources by producing business plans and economic studies to show that their project(s) warrant being approved in the upcoming business planning cycle.
The planning process can include the company’s long-term outlook of new technologies required for maintaining or developing business, or of maintaining or developing business with existing technologies. The organization develops a strategy for the long-term production plan for the goods and services they will offer in their respective competitive markets. Many organizations plan the capital and maintenance work in a fiscal year or cycle, at least in the year previous to when the spending will occur.
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