6 Capital Project Budget Busters

In my involvement of 500 plus capital projects, hitting the budget is rare. The reasons for missing the mark are almost always the same and avoidable. For all companies investing in new capital, meeting budget targets is a critical component of the justification. Investing the company’s funds in new capital projects is similar to our individual investing in a stock. The individual makes the investment expecting a return on the investment. The biggest difference between capital investment and equity investment is that a capital investment can be in the business’s control. This is true only if the person managing the project has an understanding of how to keep the project on track and within budget. The project was justified based on a budget, so to maximize the return on capital it must meet the budget. Here are the major reasons a capital project budget gets busted.

1. Timing – The number one reason without a doubt is a lack of time to properly execute the project....

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