Question

Name who is involved in the capital investment decision process

Answer 1

Capital investment decision process is a long drawn process and involves people at different levels and hierarchy in the organization. I have shown below different steps of capital investment decision process and shown who all are involved at each stage. Please go through he same. This should help.

Sl. No.	Step / stage	Activities	Who is involved?
1.	Identification of requirement/opportunity	Assessment of the type of capital expenditure project required in line with a company’s goals and objectives Crucial most important step in the process and also leads to the initiation of the capital budgeting process	Department Head Department manager
2.	Search	Preliminary research and exploration of all the options and alternatives available around the capital investment theme Proposal diligence by each department in the entity’s value chain to pass only value-accretive projects to the next stage	Research analyst of the firm Research team of the firm
3.	Evaluation	(Qualitative as well as quantitative) Analysis of available information to estimate the potential cash flows and the profitability of the projects that pass through the Search stage: Quantitative - Estimating initial capital outlay, subsequent years’ cash flows, the net working capital requirements, the salvage value Qualitative; Non financial measures such as customer expectation and satisfaction, need for training, government requirements, tech evolution etc. are also considered while evaluating the project	Analyst in the firm Evaluation committee comprising of the Strategic Business Unit Head or accountants of the firm
4.	Selection	At this stage the company chooses projects for implementation on the basis of financial analysis (NPV, IRR or payback period) and non financial considerations. Risk and return profile of all the projects compared Post assessment, projects whose risk / return passes the internal benchmarks (qualifying criteria)of the company are selected	Board of Director CEO or COO or CFO or two or all of them Chief Strategy Officer
5.	Financing	Once the projects are shortlisted, Management starts exploring funding avenues for the project. Source of funding can be internal accruals, debt or equity.	CFO Director (Finance)
6.	Implementation & monitoring	This is the final stage in which the project is implemented and monitored over time to ensure project develops as per schedule.	Implementation team Internal audit team members