Overview

A capital expenditure program review examines the organization's:

• Total asset management plan
• The capital works program that is generated from this plan.

The link between total asset management and capital expenditure is the process by which asset investments are managed.

The capital expenditure program is a combination of the processes the organization has followed and the accuracy of the cost and timing elements that have been included, as shown below:

Capital expenditure is used to overcome many of the key asset failure modes, which include:

• Capacity failures due to increased demand or higher levels of service
• System failures due to old age of assets
• System failures due to reliability issues
• Cost failures where capital expenditure can significantly reduce operations, maintenance and other associated costs or improve the value of the asset.

These failures fall into the capital categories shown below:

Capital expenditure items need to be blended with an appropriate level of maintenance and operational activity. This ensures that the program is balanced against recurrent asset and management expenditure.

All capital investment must relate to the current organization environment, so that appropriate organization returns are achieved.