Long-Term Capital Planning

Capital planning is an integral part of an organization’s strategic planning process. It provides a long-range plan for the capital asset portfolio in order to meet the goals and objectives in the entity’s strategic and annual performance plans.

Strategic and annual performance plans should identify capital assets and define how they will help the agency achieve its goals and objectives. Leading organizations also view strategic planning as the vehicle that guides decision making for all spending.

Almost all private and public sector organizations are fully dependent on their fleet to provide services and goods to its customers; a reliable, safe, and modern, the fuel-efficient fleet is therefore mission-critical to optimal service delivery.

A comprehensive needs assessment identifies the resources needed to fulfill both immediate requirements and anticipated future needs based on the results-oriented goals and objectives that flow from the organization’s mission. A comprehensive assessment of needs considers the capability of existing resources and makes use of an accurate and up-to-date inventory of capital assets and facilities as well as current information on each asset’s condition. Using this information, an organization can then properly determine any performance gap between current and needed capabilities.

A fleet long-term capital planning (LTCP) service and a new software tool were developed by the Fleet Challenge team in 2016.  For fleet managers, the LTCP tool takes the annual drudgery out of long-term capital budget planning processes and makes the process easy and simple.

Data doesn’t lie – using our planning processes, capital budgets are fully supported and defensible by the fleet’s actual historical cost/age data.

LTCP is a component/module of FAR and complements LCA as a follow-on step. It quickly and easily calculates five-year (or longer – up to 15 fiscal years) fleet capital replacement plans with the objective of balancing go-forward budgets and in doing so, avoiding year-to-year cost spikes, while at the same time minimizing operating expenses, increasing uptime and reductions GHG emissions.

The LTCP tool calculates and displays whether replacing vehicles due for replacement would save the organization money or cost additional money, on a unit by unit basis.

The Long-Term Capital Planning tool is a semi-automated system that calculates the financial impacts then empowers fleet managers to use their knowledge of their fleet to make the ultimate, logic-based, ‘well-informed-by-data’ business decisions to either: “replace”, “defer to next year” or “dispose” of units due for replacement.  

The tool calculates and displays the impacts of those choices, thusly enabling balanced multi-year capital budget planning that helps avoids the undesirable “saw tooth” budget effect.

Screen Capture of the Long-Term Capital Planning Dashboard

Software tools we use in our consulting projects, including LTCP are incuded in the overall price and we license the tools we use in perpetuity at no charge to our clients for their own use post-project. Optionally, the software tools can be purchased for clients own use.