The Process of Facilities Capital Planning and Management: Step Six

January 30, 2013

Creating a Defensible Budget

Lack of budget credibility is one of the main causes of under-funding in any organization. Strategic planning rooted in accurate data and predictive tools, however, help formulate a realistic and defensible multi-year capital budget. This is the crucial next step in the process of facilities capital planning and management.

With a ranking strategy for prioritization in place, funding can be applied based on established variables such as budget years, inflation rate, overhead costs, assumptions about budget constraints, etc. Funding scenarios take all these factors into consideration. Ideally, organizations can create scenarios that apply a ranking strategy to all or part of a portfolio. When combined with a defined assumption of cost and funding, these tools provide an objectively sound budget forecast, resulting in a budget that supports the dynamic nature of facility capital planning.

Budget scenarios can be reapplied to visualize the future impacts as funding levels change. If priorities change, either within a particular capital project or throughout the entire portfolio, ranking strategies can also be modified to reflect those changes accordingly. Reprioritizing is inevitable with any budget, but knowing what the impact will be is crucial to maintaining an accurate vision of the facility portfolio.

How are you prioritizing your budget today? Are you able to demonstrate the impact of under-funding? And can you adapt your budget to new variables?

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