Question

Why should all departments be involved in the capital budgeting process?

Answer 1

Capital budgeting is a very impartant activity for any corporation because it will determine the success and failure of the project or investment. While performing capital budgeting each and every department of an organization should take part to maximize the chances of project being sucessful.

There are following steps are involved while performing capital budegeting and it will show why every department should take part:

1. It helps in developing the long term strategy for the corporation while developing and formulating long term strategy every department should take part because it is subject of importnace for each department wether it will be sales, marketing, operation or human resource. Each department will take part in developing these goals and there is task assigned to each departmetn to reach this set goals.

2. Monitor and control of expenditure: Here also every department has to take part to minimize the waste and optimize the resources for the successful implmentation of the project.

3. Decision making: again it will be done with the help of all department since the activites are interdependent, each department should raise there concerns during decion making of capital investment.