What Is Capital Planning?

A formal planning process necessitates you and your company zooming out, way out. Individuals within an organization are frequently preoccupied with the day-to-day. Hence, they have little time to consider strategies for the next quarter, let alone one to five years down the road.

Planning Avoids Problems

Capital planning is a fine line to walk. On the one hand, there are executives and department heads. They over-promise and expect you and the Capital Planning team to “make the numbers work” on near-impossible projects. On the other hand, a group of financial professionals frequently say, “it doesn’t make financial sense for the company to pursue this project/idea/dream at this time.”

It is possible without the proper due diligence that every capital investment requires. Intense offers custom-built Management Software that enables every company to complete the due diligence necessary for both sides of this tightrope. The Capital Planning team can cut through the busy structuring work, finding Excel formulas they’ve long forgotten. Formatting version after version to fit individual aesthetic preferences thanks to Inpensa’s streamlined and robust solution offering.

With this information, a Capital Planning team can quickly begin work on the actual numbers and planning of all projects, not just the Major Capital categories. It resulted in improved performance on the Capital Planning team. It increased profits, lowered risk, and more effective long-term success.

Effective Capital Planning

Ground Your Plan in Reality – Many organizations that are just getting started with capital planning make the mistake of not basing their plans on past performance and current numbers. Organizations frequently make the mistake of wishing for 300 percent growth in the next five years, despite the previous five years producing 85 percent growth. It is far preferable to be realistic and grow at a rate of 105 percent over the next five years with a Capital Plan based on reality than to wish for 300 percent growth and only achieve 80 percent. Understanding future liquidity needs and performance drivers, as well as a macro view of your organization’s business and commodity cycles, requires a thorough examination of the previous five-year financials and operating performance. Dream big, but have a plan in place to bring your organization’s vision to fruition.

Create a Five-Year Strategic Plan for Your Company – Plans and priorities are required. Tools such as Inpensa’s Capital Planning software can assist you in estimating capital requirements and aligning them with the organization’s long-term goals.

Financial modeling is where Inpensa excels. Intense simplifies financial modeling. Without a program like Inpensa’s case management software, you can quickly become entangled in increasingly complex and non-uniform economic models. Financial models quantify the impact of capital, ground your numbers in historical performance, and provide decision-makers with easy-to-read financial reports and overviews of the expected capital needs and gains as projects progress.

Assess and Prioritize Needs

Capital planning must begin with a needs assessment to assemble, define, and prioritize facility demands. This open accounting of facility conditions yields a comprehensive understanding of where challenges or problems exist that will necessitate investment.

A needs assessment identifies the most critical facility concerns and aids in organization facilities into need portfolios when done correctly. A state or city government may categorize its facilities based on age; a healthcare facility may be categorized based on function. A higher education campus may organize its facilities based on the program.

Large-scale capital investments attract the most attention and, as a result, naturally rise to the top of any project priority list. That comes as no surprise. Big projects that address long-standing needs provide enormous value to many stakeholders all at once; they make the most significant impact.

Consider a single topic to demonstrate how capital planning can lead to operational improvements: energy efficiency. Above all, energy efficiency is advantageous to the entire organization.

The preliminary needs assessment should identify areas where even small capital investments in equipment can result in immediate energy savings. Replacing aging HVAC equipment, implementing control technologies, and retrofitting or upgrading lighting are expected improvements that can be implemented faster than large-scale capital projects and result in energy savings that accelerate the investment return. These savings are only possible through careful capital planning.


Giving institutional community members a say in the plan’s development is often the best way to ensure buy-in. Meeting with leaders from various colleges, departments, or sections and inquiring about their challenges and needs will reveal priorities and opportunities. It is also critical to identify the purpose behind each identified need as you engage with stakeholders.

The final component of this step is to identify. It is critical to identify the needs of assets currently in use. However, it may not be prudent to design projects for facilities nearing the end of their useful life.

Create Options for Funding

Each faction of an institution has its own set of goals and objectives. Facilities are concerned with the long-term management of their assets. Finance is the process of balancing debts and funding. Academics are concerned with providing students with the best possible experience from freshman year to graduation. The goal of recruitment is to increase the size of the incoming class. These disparate focal points necessitate immediate plans to accommodate varying timeframes, needs, and, as 2020 demonstrated, the unknown. With so many different planning horizons, defining a 10-year focus is critical.

It isn’t easy to gain support for a flexible 10-year plan. However, one of the most effective approaches is to present funding and timeframe options to leadership. Instead of getting bogged down in details, developing opportunities allows leadership to discuss strategy and consider the following steps while seeing examples of the results. Project prioritization occurs almost automatically because of the objective tools and high-level selection criteria.

When developing funding and budgeting options for projects, it is critical to be strategic and thoughtful. Leaders can maximize the use of their facility investments by aligning building conditions and funding sources. Using facility budgets to complete small projects on a poorly maintained building will not improve the user experience of that space. It will result in less facility money for smaller projects in a well-maintained building. The idea is to keep up with facility maintenance, repairs, and renovations rather than catching up. It may be difficult to contemplate. However, divestment of unused, aging, or poorly maintained space can be a viable solution to funding problems.

Actively seeking and developing new funding opportunities is a proactive way to ensure that your plans are more than just fantasies.

Generate a Plan for Action

A comprehensive capital plan gives finance and facilities leaders confidence that additional investments will direct toward the most critical areas, not just the systems in the worst shape or those with the loudest voices. It is when component-level detail is required the most. Component information enables you to plan specific projects and combine individual needs to create a more significant and more impactful project at the same time. A detailed facilities condition assessment of these prioritized spaces will provide the knowledge required to make confident decisions about which individual projects to execute.

By following these steps, leaders can ensure that resources allocate where needed and have the most significant impact on the institution’s future. Developing an effective capital plan is neither quick nor straightforward.


Even in the absence of a pandemic, capital planning in higher education is distinct from other industries. Only in higher education do business and government capital planning challenges collide. A board, like a business, debates and ultimately makes significant decisions. However, the committee makes these decisions by soliciting constant input from stakeholders, similar to how politicians solicit constituent feedback. When it comes to capital planning, higher education leaders must balance the institution’s long-term future and its short-term needs. Their juggling act is quite impressive when you factor in the challenges of stakeholder demands and limited resources.




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