Companies always look to make the best decisions when selecting capital projects to work into the budget; simple metrics like Return on Investment and Internal Rate of Return tend to dictate how the budget for these projects is written each year. In an effort to increase the bottom line, investments are often times funneled toward projects and purchases that directly affect sales rather than decreasing operating costs, but sales growth is never guaranteed.
In other cases, capital projects are indefinitely suspended, forcing companies to make due with what they have until either more funding becomes available or sales increase. [Read more…]