Regular forecasting of capital budgets is necessary but they do not need to be micro managed like revenue budgets.
For any organisation, typical high level capital budgets only need to show:
- Already sanctioned major named* projects, with forecast remaining spend for the current financial year and future years (including project end dates)
- Major named projects to be submitted for sanction in the current year, with forecast spend for the current year and future years (including project start and end dates)
- Expected annual spend for functional departmental improvement capex (minor projects)
*minimum Capex amount for named projects to be set by the organisation depending on risk and significance to the overall budget.
This should be enough for most Finance Directors but it always amazes me how much minor details Finance colleagues request for example:
- Monthly spend forecasts for all projects in the current year – major and minor. While Finance may require this for cashflow planning, apply detailed monthly forecasting only to major named projects (project managers should already hold this data). For minor projects, estimate an overall ongoing monthly total based on approved minor capex to date
- End dates for all projects in the current year – major and minor. While this supports depreciation modelling (revenue impact), specify end dates only for major projects. For minor projects, consider using the year-end actual spend instead
However I can only give a Project Manager’s view on this. I am not sure how much of the modelling is tied to accounting rules and audits etc