Capital Planning: a critical process Public Institutions
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- All levels of government are in the wake of budget compressions and spending cuts
- Administrators need to:
• Reduce real estate portfolio costs to help improve financial standing
• Address declining asset conditions and evolving agency requirements
• Make sure each capital request is fully vetted
Administrators have decisions to make under tight schedules
The Pressure Is On
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Challenges
- Making trade- offs on different projects
• Each project must be evaluated on its own as well as part of an overall strategy
- Identifying and eliminating personal or departmental biases
• Capital allocations must be made based on value of overall mission
- Mitigating vulnerabilities
- Developing realistic budgets and schedules prior to adoption of capital budget
- Developing a real estate strategy and aligning it with the capital budget
As funding decreases, administrators face various challenges
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The Solution
- Prevents budget shortages or unspent assigned monies
- Substantially mitigates planning risks
- Monitors, measures and reports on capital project
implementation and performance
- Aligns the government’s capital spend and operational strategy
across all agencies to best support the overall mission
- Establishes a prioritization process to provide objective
recommendations across disparate competing needs
A data driven, flexible capital planning process
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Of a data driven, flexible capital planning process
- Fair and defensible
- Justifies capital requests with credible return on investment analyses
- Flexible and able to adapt to changing market and operational conditions
- Shifts the emphasis from reactive to proactive
The Benefits
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Thinking Holistically
- Capital plans should be developed in the context of a long- term strategic plan
- Developing a three to five year capital budget outlook is helpful for aligning budgets and mission requirements over the mid-term
• A formal strategic real estate master plan is ideal
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Unsure? Ask yourself the
following questions:
Does your department need an improved
capital planning process?
- Are our projects usually over budget and behind schedule?
- Do we monitor, measure and report on our performance once projects are in progress?
- Is our capital spending aligned with our government’s priorities, initiatives and real estate strategy?
- Do we conduct sensitivity analyses and evaluate various scenarios prior to submitting budget requests?
- Can we justify capital requests with credible payback periods and ROI calculations?
- Do rapid increases or decreases in capital budgets impact our staffing capabilities?
- Do we have mechanisms to reinvest cost savings in our capital plan?
COPYRIGHT © JONES LANG LASALLE IP, INC. 2014
For more information, please contact
Jennifer Hill
Managing Director, Public Institutions
+1 (202) 719- 5726
Contact us.
We’re here to help.
