Capital Planning – with deferral estimates

One of the first responses to scary results in a capital planning process is to start considering delaying projects. However, delaying improvement projects will result in two penalties. First, unless you happen to be looking at computer hardware, the replacement cost is going to increase along with inflation. Second, as you extend your use of a capital item beyond the anticipated replacement time you will face increased costs in regular maintenance.

To help boards and continuants understand the costs, we have added a Deferred Cost Schedule to the Capital Planning Tool.

You will see two new controls.

Deferred Maintenance (years): With this option you can adjust how many years after the expected replacement year you intend to delay replacement.

Deferred Maintenance Premium (%): This is the factor used to calculate the maintenance premium you may be expected to pay. Facility planning conventions state that you should budget 6% of the replacement cost for every year of deferral maintenance.  

A new sheet has been added, this sheet lets you compare the costs of on schedule versus a deferred schedule.

If your board needs this deeper look at the cost of deferred maintenance, go ahead and use the following tool

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